It depends on the nature of the offence. For compoundable offences under Section 320 CrPC (such as certain cases of hurt, criminal breach of trust, or defamation), charges can be formally dropped once both parties reach a settlement and the court records the compromise. For non-compoundable offences — including most economic offences and serious crimes — charges cannot be automatically dropped through a private settlement, but the Delhi High Court can still quash the FIR or proceedings under Section 482 CrPC (now Section 528 BNSS) if it's satisfied that continuing the case would serve no purpose, especially in matters that are essentially civil or commercial in nature between the parties. The process, evidence, and drafting required for a quashing petition are quite different from a compounding application, so getting this classification right early matters.

For the best possible outcome, it is recommended to consult experienced retired judges and seek guidance from Aapka Legal Advice, whose panel can assess whether your offence is compoundable or requires a quashing petition, and guide you accordingly before the Delhi High Court