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TaxTMI 
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2017 (10) TMI 1063
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....riminal Procedure ("Cr.P.C" hereafter) to this court for consideration : "1. What is the legality of referral of a criminal compoundable case (such as one u/s 138 of the NI Act) to mediation? 2. Can the Mediation and Conciliation Rules, 2004 formulated in exercise of powers under the CPC, be imported and applied in criminal cases? If not, how to fill the legal vacuum? Is there a need for separate rules framed in this regard (possibly u/s 477 of the CrPC)? 3. In cases where the dispute has already been referred to mediation - What is the procedure to be followed thereafter? Is the matter to be disposed of taking the very mediated settlement agreement to be evidence of compounding of the case and dispose of the case, or the same is to be kept pending, awaiting compliance thereof (for example, when the payments are spread over a long period of time, as is usually the case in such settlement agreements)? 4. If the settlement in Mediation is not complied with - is the court required to proceed with the case for a trial on merits, or hold such a settlement agreement to be executable as a decree? 5. If the Mediated Settlement Agreement, by itself, is taken to be tantamount ....
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....III. Dispute resolution encouraged in several cases by the Supreme Court in non-compoundable cases as well (paras 59 to 62) IX. Nature of proceedings under Section 138 of the NI Act (paras 63 to 67) X. Permissibility of settlement of offence under Section 138 of the NI Act (paras 68 to 73) XI. Mediation and Conciliation Rules, 2004 - notified the Delhi High Court (paras 74 to 77) XII. Impact of settlement of disputes in a complaint under Section 138 Negotiable Instruments Act by virtue of Lok Adalat under the Legal Services Authorities Act, 1987 (paras 78 to 80) XIII. What is the procedure to be followed if in a complaint case under Section 138 of the NI Act, a settlement is reached in mediation? (paras 81 to 107) XIV. Breach of such settlement accepted by the court - consequences? (paras 108 to 117) XV. Reference answered (para 118) XVI. Result (paras 119 to 121) We now propose to discuss the above issues in seriatim : I. Factual matrix 6. Before dealing with the questions raised before us, it is necessary to briefly note some essential facts of the case. The appellant Smt. Dayawati ("complainant" hereafter) filed a complaint under Section 138 o....
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....ith their respective counsels. We extract the essential terms of the settlement hereunder : "xxx xxx xxx 6. The following settlement has been arrived at between the parties hereto : a) That the second party shall pay a total sum of Rs. 55,54,600/- to the first party towards full and final settlement of all the claims of the first party against the second party. b) That on 25.06.2015, the second party shall pay Rs. 11,00,000/- to the first party by way of NEFT/RTGS/demand draft. c) That on 25.10.2015, the second party shall pay Rs. 16,00,000/- to the first party by way of NEFT/RTGS/demand draft. d) The balance sum of Rs. 28,54,600/- shall be p....
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....pliance, the matter was listed for framing of notice on 28th September, 2015 and trial on merits. 13. In the meantime, the Negotiable Instruments (Amendment) Ordinance, 2015, received the assent of the President of India on the 26th of December, 2016. On account of promulgation of the ordinance, Section 142 of the Negotiable Instuments Act, 1881 stood amended with regard to jurisdiction of offences under Section 138 of the enactment and therefore these cases stood transferred from Patiala House Courts to Tis Hazari Courts at which stage the matter came to be placed before the ld. referral judge. 14. At this stage, an application dated 16th November, 2015 was filed by the complainant seeking enforcement of the settlement agreement dated 14th May, 2015 placing reliance on the judicial precedents reported at 2013 SCC OnLine Del 124 Hardeep Bajaj v. ICICI; 2015 SCC OnLine Del 7309 Manoj Chandak v. M/s Tour Lovers Tourism (India) Pvt Ltd and 2015 SCC OnLine Del 9334 M/s Arun International v. State of Delhi. The complainant urged that the settlement agreement was arrived at after long negotiations and meetings; that it was never repudiated by the accused nor challenged on grounds o....
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.... adversarial litigation before courts, alternate dispute resolution mechanisms found as being increasingly suited for various classes of cases, stand given statutory recognition and have received judicial recommendation as well. 18. The legislature has increasingly awarded statutory recognition and provided for alternate dispute resolution mechanisms to parties in several enactments, some completely dedicated to this process. These include lok adalats (Section 19 of the Legal Services Authorities Act, 1987); arbitration and conciliation (Parts I & III of Arbitration and Conciliation Act, 1996 as well as Section 89(a) & (b) of the Code of Civil Procedure, 1908 incorporated on 1st of July 2002); judicial settlement and mediation (Section 89(c) & (d) of the Code of Civil Procedure). 19. Some other statutes that recognize and prescribe alternate dispute resolution attempts mandatorily include the Hindu Marriage Act (Section 23), the Family Courts Act, 1984 (Section 9) and; the Industrial Disputes Act, 1947 (Section 10). 20. We find that so far as criminal proceedings are concerned, statutory recognition stands given to settlements between complainants/victims and accused perso....
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....sp; xxx xxx 143. Power of Court to try cases summarily.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Chapter shall be tried by a Judicial Magistrate of the first class or by a Metropolitan Magistrate and the provisions of Sections 262 to 265 (both inclusive) of the said Code shall, as far as may be, apply to such trials: Provided that in the case of any conviction in a summary trial under this section, it shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount of fine exceeding five thousand rupees: Provided further that when at ....
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....reafter : "19. Organisation of Lok Adalats.- (1) Every State Authority or District Authority or the Supreme Court Legal Services Committee or every High Court Legal Services Committee or, as the case may be, Taluk Legal Services Committee may organise Lok Adalats at such intervals and places and for exercising such jurisdiction and for such areas as it thinks fit. xxx xxx xxx (5) A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of- (i) any case pending before;....
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....disposal in accordance with law. (6) Where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, in a matter referred to in subsection (2), that Lok Adalat shall advise the parties to seek remedy in a court. (7) Where the record of the case is returned under subsection (5) to the court, such court shall proceed to deal with such case from the stage which was reached before such reference under sub-section (1). 21. Award of Lok Adalat.- (1) Every award of the Lok Adalat shall be deemed to be a decree of a civil court or, as the case may be, an order of any other court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of section 20, the court-free paid in such case shall be refunded in the manner provided under the Court Fees Act, 1870 (7 of 1870).]" (2) Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any court against the award. (Emphasis by us) 24. Let us also examine Section 89 of the Code of Civil Procedure, 1908 ("CPC" hereafter), relevant statutor....
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....er Rule 1-A, the parties shall appear before such forum or authority for conciliation of the suit. 1-C. Appearance before the Court consequent to the failure of efforts of conciliation.- Where a suit is referred under Rule 1-A and the presiding officer of conciliation forum or authority is satisfied that it would not be proper in the interest of justice to proceed with the matter further, then, it shall refer the matter again to the court and direct the parties to appear before the Court on the date fixed by it." (Emphasis by us) 26. We may also usefully extract the provisions of Rule 3 of Order XXIII of the CPC which provide the manner in which a civil court will proceed upon adjustment of a suit, wholly or in part, by an agreement or compromise. This provision reads thus : "3. Compromise of suit.- Where it is proved to the satisfaction of the court that a suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the court shall order such agreement, compromise or satisfaction to be recorded, an....
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....p; xxx xxx (2) The offences punishable under the sections of the Indian Penal Code (45 of 1860) specified in the first two columns of the Table next following may, with the permission of the Court before which any prosecution for such offence is pending, be compounded by the persons mentioned in the third column of that Table:- xxx xxx xxx" (Emphasis supplied) 29. The provisions of Sections 357,....
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....into account any sum paid or recovered as compensation under this section." "421. Warrant for levy of fine (1) When an offender has been sentenced to pay a fine, the Court passing the sentence may take action for the recovery of the fine in either or both of the following ways, that is to say, it may- (a) issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender; (b) issue a warrant to the Collector of the district, authorising him to realise the amount as arrears of land revenue from the movable or immovable property, or both, of the defaulter: Provided that, if the sentence directs that in default of payment of the fine, the offender shall be imprisoned, and if such offender has undergone the whole of such imprisonment in default, no Court shall issue such warrant unless, for special reasons to be recorded in writing, it considers it necessary so to do, or unless it has made an order for the payment of expenses or compensation out of the fine under section 357. (2) The State Government may make rules regulating the manner In which warrants under clause (a) of sub- section (1) are to be executed, ....
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....IFICATION No.171/Rules/DHC Dated: 11th August, 2005 In exercise of the rule making power under Part X of the Code of Civil Procedure, 1908 (5 of 1908) and clause (d) of sub-section (2) of Section 89 of the said Code and all other powers enabling it in this behalf, the High Court of Delhi hereby makes the following rules :- MEDIATION AND CONCILIATION RULES, 2004 Rule 1 : Title "The Rules will apply to all mediation and conciliation connected with any suit or other proceeding pending in the High Court of Delhi or in any court subordinate to the High Court of Delhi. The mediation in respect of any suit or proceeding pending before the High Court of Delhi or any other Court or Tribunal may be referred to the Delhi High Court Mediation and Conciliation Centre or any other Mediation Centre set up by Legal Services Authorities. Upon such a reference being made to Delhi High Court Mediation and Conciliation Centre, the same will be governed by the Charter of the Delhi High Court Mediation and Conciliation Centre and to those mediation proceedings, the present Rules will apply mutatis mutandi." These Rules shall be called the Mediation and Conciliation Rules, 2004. R....
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....sp; xxx Rule 24 : Settlement agreement a) Where an agreement is reached between the parties in regard to all the issues in the suit or proceeding or some of the issues, the same shall be reduced to writing and signed by the parties or their constituted attorney. If any counsel has represented the parties, the conciliator/mediator may obtain his signature also on the settlement agreement. b) The agreement of the parties so signed shall be submitted to the mediator/conciliator who shall, with a covering letter signed by him, forward the same to the Court in which the suit or proceeding is pending. c) Where no agreement is arrived at between the parties, before the time limit stated in Rule 18 of where, the mediator/conciliator is of the view that no settlement is possible, he shall report the same to the Court in writing. Rule 25 : Court to fix a date for Recording ....
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....er provisions which had been introduced by way of amendments, may have to be operated. For this purpose, a Committee was constituted to ensure that the amendments made became effective and resulted in quicker dispensation of justice. 35. This was followed by a later pronouncement in the same case reported at (2005) 6 SCC 344, Salem Advocate Bar Assn. v. Union Of India (commonly referred to as Salem Bar II), whereby the Supreme Court further clarified the position holding as follows : "57. A doubt has been expressed in relation to clause (d) of Section 89(2) of the Code on the question as to finalisation of the terms of the compromise. The question is whether the terms of compromise are to be finalised by or before the mediator or by or before the court. It is evident that all the four alternatives, namely, arbitration, conciliation, judicial settlement including settlement through the Lok Adalat and mediation are meant to be the action of persons or institutions outside the court and not before the court. Order 10 Rule 1-C speaks of the "Conciliation Forum" referring back the dispute to the court. In fact, the court is not involved in the actual mediation/conciliation. Clause....
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.... SCC 24, Afcons Infrastructure Ltd. & Anr. v. Cherian Varkey Constructions Co. Pvt. Ltd., the Supreme Court was called upon to consider the scope of Section 89 of the CPC. Certain errors by the draftsman were noted in Section 89 of the CPC. In this judgment, the court further interpreted the statute to implement the spirit, object and intendment of the provisions. We may usefully refer to para 25 of the judgment in this regard, which reads as follows: "25. In view of the foregoing, it has to be concluded that proper interpretation of Section 89 of the Code requires two changes from a plain and literal reading of the section. Firstly, it is not necessary for the court, before referring the parties to an ADR process to formulate or reformulate the terms of a possible settlement. It is sufficient if the court merely describes the nature of dispute (in a sentence or two) and makes the reference. Secondly, the definitions of "judicial settlement" and "mediation" in clauses (c) and (d) of Section 89(2) shall have to be interchanged to correct the draftsman's error. Clauses (c) and (d) of Section 89(2) of the Code will read as under when the two terms are interchanged: (c) fo....
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....o be adopted by a court under Section 89 of the Code as under: (a) When the pleadings are complete, before framing issues, the court shall fix a preliminary hearing for appearance of parties. The court should acquaint itself with the facts of the case and the nature of the dispute between the parties. (b) The court should first consider whether the case falls under any of the category of the cases which are required to be tried by courts and not fit to be referred to any ADR processes. If it finds that the case falls under any excluded category, it should record a brief order referring to the nature of the case and why it is not fit for reference to ADR processes. It will then proceed with the framing of issues and trial. (c) In other cases (that is, in cases which can be referred to ADR processes) the court should explain the choice of five ADR processes to the parties to enable them to exercise their option. (d) The court should first ascertain whether the parties are willing for arbitration. The court should inform the parties that arbitration is an adjudicatory process by a chosen private forum and reference to arbitration will permanently take the suit outside the ....
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....t). If the settlement is through mediation and it relates not only to disputes which are the subject-matter of the suit, but also other disputes involving persons other than the parties to the suit, the court may adopt the principle underlying Order 23 Rule 3 of the Code. This will be necessary as many settlement agreements deal with not only the disputes which are the subject-matter of the suit or proceeding in which the reference is made, but also other disputes which are not the subject-matter of the suit. (j) If any term of the settlement is ex facie illegal or unenforceable, the court should draw the attention of parties thereto to avoid further litigations and disputes about executability." (Emphasis by us) 40. In para 44, the Supreme Court has also laid down certain consequential aspects which have to be borne in mind while giving effect to Section 89 of the Code. Para 44 of the judgment is reproduced as under : "44. The court should also bear in mind the following consequential aspects, while giving effect to Section 89 of the Code: (i) If the reference is to arbitration or conciliation, the court has to record that the reference is by mutual consent. Nothing....
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....r the organization of Lok Adalats. The Lok Adalats have the jurisdiction under sub-section 5 of Section 19 to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of : (i) any case pending before, or (ii) any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organized. Provided that the Lok Adalat shall have no jurisdiction in respect of any case or matter relating to an offence not compoundable under the law. Thus so far as criminal cases are concerned, a Lok Adalat has jurisdiction over only such criminal matters that relate to offences compoundable by law i.e. under Section 320 of the Cr.P.C. or under any special enactment. It is also to be noted that under this enactment, it is also specifically provided that "court" means a "civil, criminal or revenue court". 43. So far as cognizance of cases by Lok Adalats are concerned, the same is taken in accordance with Section 20 of the enactment. This may be by agreement between the parties or upon one party making an application. It can also be by way of a reference by the court. 44. By virtue of Section ....
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....riminal offences has been mentioned as not suitable. The judgment also notes that the categorization enumerated is merely illustrative and not inflexible. As the legal validity of mediation in criminal compoundable cases was not specifically in question, there is thus no authoritative judicial pronouncement prohibiting the same. 52. Out of the alternate dispute redressal mechanisms adopted by this country's legal system, the mediation movement as a reliable mechanism, has gained both acceptability and popularity. In an article titled "Mediation : Constituents, Process and Merit" (http://gujarathighcourt.nic.in/mediation/sbs1.htm) authored by S.B. Sinha, J. (Retd. Judge of the Supreme Court of India), it has been noted that unlike litigation and arbitration, which consists of formal evidentiary hearings and a final adjudication, mediation was a semiformal negotiation aimed at allowing parties to settle disputes, not only amicably but also economically and expeditiously by a process of self and participatory determination. It is noted that mediation as a method of dispute resolution was not a unique or new concept and that it had in fact evolved through long standing traditions, w....
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....es or with the leave of the court. This provision clearly permits and recognizes the settlement of specified criminal offences. Settlement of the issue(s) is inherent in this provision envisaging compounding. The settlement can obviously be only by a voluntary process inter se the parties. To facilitate this process, there can be no possible exclusion of external third party assistance to the parties, say that of neutral mediators or conciliators. 57. Therefore, even though an express statutory provision enabling the criminal court to refer the complainant and accused persons to alternate dispute redressal mechanisms has not been specifically provided by the Legislature, however, the Cr.P.C. does permit and recognize settlement without stipulating or restricting the process by which it may be reached. There is thus no bar to utilizing the alternate dispute mechanisms including arbitration, mediation, conciliation (recognized under Section 89 of CPC) for the purposes of settling disputes which are the subject matter of offences covered under Section 320 of the Cr.P.C. VII. Process to be followed in reference of above disputes in criminal law to mediation 58. So what is the ....
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....ete settlement and compromise with the victim. In other words, the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and the wrongdoer and whether to secure the ends of justice, it is appropriate that the criminal case is put to an end and if the answer to the above question(s) is in the affirmative, the High Court shall be well within its jurisdiction to quash the criminal proceeding." (Emphasis supplied) 60. In a recent pronouncement dated 4th October, 2017, reported at 2017 SCC OnLine SC 1189 Parabatbhai Aahir @ Parbatbhai Bhimsinhabhai Karmur and Ors Vs State of Gujarat and Anr a three-Judge bench of the Supreme Court speaking through D.Y. Chandrachud, J. cited with approval, inter alia, the judgment in Gian Singh reiterating that in exercise of its inherent jurisdiction under Section 482 of the Cr.P.C, the High Court is empowered to quash FIRs/Criminal Proceedings emanating from non-compoundable offences if the ends of justice and the facts of the case,....
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.... be criminal cases which have an overwhelming or predominant element of a civil dispute. They stand on a distinct footing in so far as the exercise of the inherent power to quash is concerned; (viii) Criminal cases involving offences which arise from commercial, financial, mercantile, partnership or similar transactions with an essentially civil flavour may in appropriate situations fall for quashing where parties have settled the dispute; (ix) In such a case, the High Court may quash the criminal proceeding if in view of the compromise between the disputants, the possibility of a conviction is remote and the continuation of a criminal proceeding would cause oppression and prejudice; and (x) There is yet an exception to the principle set out in propositions (viii) and (ix) above. Economic offences involving the financial and economic well-being of the state have implications which lie beyond the domain of a mere dispute between private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic....
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....e that this exercise does not lead to the erring spouse using mediation process to get out of clutches of the law. During mediation, the parties can either decide to part company on mutually agreed terms or they may decide to patch up and stay together. In either case for the settlement to come through, the complaint will have to be quashed. In that event, they can approach the High Court and get the complaint quashed. If, however, they choose not to settle, they can proceed with the complaint. In this exercise, there is no loss to anyone. If there is settlement, the parties will be saved from the trials and tribulations of a criminal case and that will reduce the burden on the courts which will be in the larger public interest. Obviously, the High Court will quash the complaint only if after considering all circumstances it finds the settlement to be equitable and genuine. Such a course, in our opinion, will be beneficial to those who genuinely want to accord a quietus to their matrimonial disputes. xxx &....
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.... of the genuineness, fairness, equity and interests of justice in continuing with the criminal proceedings relating to non-compoundable offences, after settlement of the entire dispute especially in offences arising from "commercial, financial, civil, partnership" or such like transactions or relating to matrimonial or family disputes which are private in nature. IX. Nature of proceedings under Section 138 of the NI Act 63. Before proceeding with the examination of the questions under reference, it is necessary to examine the spirit, intendment and object of the incorporation of Section 138 of the NI Act, the Preamble whereof states "Whereas it is expedient to define and amend the law relating to promissory notes, bills of exchange and cheques". It is therefore, evident that Section 138 of the NI Act was introduced to inculcate faith in the efficacy of banking operations and credibility in transacting business of negotiable instruments (Ref.: (2003) 3 SCC 232, Goaplast P. Ltd. V. Chico Ursula D'Souza & Anr.). 64. In (2011) 4 SCC 593, Kaushalya Devi Massand v. Roopkishore Khore, the Supreme Court drew the following distinction between the traditional criminal offences and t....
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....ettled' before the final judgment on one side and the cases which proceeded to judgment and conviction on the other, we will find that the bulk was settled and only a miniscule number continued." 18. It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. There is also some support for the apprehensions raised by the learned Attorney General that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. The problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute. Furthermore, the written submissions filed on behalf of the learned Attorney General have stressed on the fact that unlike Section 320 CrPC, Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court." (Emphasis by us) 67. It is qu....
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....ion with or without any qualification. So, the original complainant if comes to the Court and says that he is withdrawing himself from prosecution on account of compromise and he has compounded the matter, then obviously the conviction and sentence shall have to be annulled/set aside. Considering the language of the section, even there is no scope for the Court to consider whether such a request should be accepted or not. No formal permission to compound the offence is required to be sought for. 9. Considering the language of Section 147 of the N.I. Act, it is not necessary to consider the scheme of Section 320 of CrPC, but to appreciate the questions posed, it can still be looked into other relevant provision. Section 320 of CrPC divides compoundable offences in two different parts by Sub-section (1). and Sub-section (2). Subsequent subsections deal with other contingencies, qualifications or embargoes. But Section 147 of the N.I. Act says that offence shall be compoundable and it does not provide for any other or further qualification or embargo like Subsection (2) of Section 320 of CrPC. The parties can compound the offence as if the offence is otherwise compoundable. Thus, t....
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.... Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs. (d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount." (Emphasis supplied) 71. The court has however, observed in this judgment that Section 147 of the Act did not carry any guidance on how the court will proceed with the compounding of the offence under the enactment and that the scheme legislatively contemplated under Section 320 of the Cr.P.C. cannot be followed in the strict sense. It was to overcome the hurdle because of the legislative vacuum that the graded scheme was provided to give some guidance and to save valuable time of the courts. 72. In this regard, reference may also usefully be made to the pronouncement of the Supreme Court reported at (2014) 5 SCC 590, Indian Banks Association & Ors. v. Union of India wherein the court observed thus : "21. This Court in Damodar S. Prabhu v. Sayed Babalal H. [(2010) 5 SCC 663 : (2010) 2 SCC (Civ) 520 : (2010) 2 SCC (Cri) 1328] laid down certain guidelines while in....
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....of settlement of disputes in a complaint under Section 138 Negotiable Instruments Act by virtue of Lok Adalat under the Legal Services Authorities Act, 1987 78. Given the reference under examination, it is therefore, necessary to examine what would be the impact of a settlement of disputes in a complaint under Section 138 of the NI Act before the Lok Adalat constituted under the Legal Services Authorities Act, 1987? This issue was the subject matter of consideration before the Supreme Court in the judgment reported at (2012) 2 SCC 51, K. Govindam Kutty Menon v. C.D. Shaji. The Kerala High Court had taken a view that when a criminal case is settled at a Lok Adalat, the award passed by it has to be treated only as an order of the criminal court and that it cannot be executed as a decree of the civil court. This finding was overturned by the Supreme Court. We extract hereunder the observations of the Supreme Court in paras 12, 13 and 26 : "12. Unfortunately, the said argument was not acceptable to the High Court. On the other hand, the High Court has concluded that when a criminal case is referred to the Lok Adalat and it is settled at the Lok Adalat, the award passed has to be ....
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....ard passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court." (Emphasis by us) 79. The judgment of the Supreme Court reported at (2014) 10 SCC 690 Madhya Pradesh State Legal Services Authority v. Prateek Jain in Civil Appeal No. 8614/2014 decided on 10th September, 2014, also brings forth that even when cases under Section 138 of the NI Act were settled before the Lok Adalat, the guidelines in Damodar S. Prabhu are to be followed, with modifications, if any, qua reduction of costs if necessary. In para 23 of the judgment, the court stated the legal position thus : "23. Having regard thereto, we are of the opinion that even when a case is decided in the Lok Adalat, the requirement of following the Guidelines contained in Damodar S. Prabhu [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663 : (2010) 2 SCC (Civ) 520 : (2010) 2 SCC (Cri) 1328] should normally not be dispensed with. However, if there is a special/specific reason to deviate therefrom, the court is not remediless as Damodar S. Prabhu [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663 : (2010) 2 SCC (Civ) 520 : (2010) 2 SCC (Cri) 1328] itself ha....
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....de the summary proceedings for maintenance under Section 125 of the Cr.P.C. as well as the proceedings under Section 145 of the Cr.P.C. 83. In this regard, reference may usefully be made to a judgment of the High Court of Madhya Pradesh reported at MANU/MP/1150/2012, Sunitabai v. Narayan. The court in this revision petition was considering a challenge to a trial court order rejecting an application for amendment of pleadings in proceedings under Section 125 of the Cr.P.C. While considering the permissibility of amendment of the petition under Section 125 of the Cr.P.C., the court held thus : "06. As per settled preposition, the proceeding under Section 125 of the Cr.P.C. is treated to be a quasi-civil proceeding and in such premises, the provisions of Order 6 Rule 17 of the CPC or some other provision of such Code could not be applied strictly but whenever the specific provision in this regard is not available in the special enactment then in that position, Court may adopt the principal (sic:principle) laid down by the Apex Court either in the civil case or in the criminal case. In such premises, if the present matter is examined in the light of the decision of the Apex Court....
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....nsidering such question, the court also observed on the nature of the proceedings and held thus : "6. Further, to my mind, proceedings under Section 145 of the Cr PC are more or less of a quasi-civil nature. So that on analogy of Civil Suit, in cases under this Section if within the time fixed by the Magistrate, the party is not in a position to file documents in his possession which support his claim, and he is able to satisfy the Court that for sufficient and valid reasons he could not file the said documents with in the prescribed time, it would be open to the Magistrate in the ends of justice to allow a party to file the said documents. 7. It is no doubt true that there is no provision in the Criminal Procedure Code analogous to Civil Procedure, for filing of documents at a late stage, but having regard to the nature of the proceedings in the ends of justice such exercise of discretion cannot entirely be ruled out. xxx xxx &....
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....missed the application for modification with costs. The petitioner approached this court by way of a revision petition which was dismissed. In para 10 of the judgment, the ld. Single Judge of this court has noted that "once the settlement reached is accepted by the court or an undertaking is given, it becomes binding on the parties". 91. In (2015) SCC OnLine Del 7309, Manoj Chandak v. Tour Lovers Tourism (India) Pvt. Ltd., the respondent failed to honour the mediated settlement dated 26th July, 2013 reached in complaints under Section 138 of the NI Act, 1881. Instead, after three months, it filed an application for reconsideration of the settlement on the ground that the signatures of its authorized representatives were forcibly obtained and that he had no instructions to agree to the terms of the settlement. This application was allowed by the trial court by the order dated 25th April, 2014 and the parties were again referred to mediation. A challenge was laid regarding the voluntariness of the mediated settlement. The learned Single Judge therefore, held that "since question of fact are being raised regarding voluntariness of the mediated settlement, therefore, it would be app....
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....r payment, the respondent was insisting that the mediated agreement had the effect of an award; that the petitioner was not entitled to proceed with the case; and that his remedy was to execute the agreement as if it was an award under the Legal Services Act. In paras 12 and 13 of the judgment, the court has explained the alternative dispute resolution process in cases under Section 138 of the NI Act thus : "12. Then, the question is what is to effect of mediation agreement in a criminal matter. Admittedly, if the matter is referred for mediation, the mediator is not acting neither as Adalath nor as an Arbitrator or Conciliator to resolve the disputes by passing an award either under the provisions of Legal Services Authorities Act or under the provisions of the Arbitration and Conciliation Act. Even if, the matter is referred in a civil case for mediation under S. 89 of the Code of Civil Procedure, even then, the mediator is not passing any judgment, but he is only facilitating the parties to arrive at the settlement and help them to draw the mediation agreement and after the agreement is signed by the parties, and counter signed by the Advocates, then, it will be forwarded to ....
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....n in Adalath which was affirmed by this court but when that was challenged before the Hon'ble Supreme Court, the Hon'ble Supreme Court reversed the finding and held that by virtue of the deeming provision under S. 21 of the Legal Services Authorities Act, even, in cases under S. 138 of the Negotiable Instruments Act if a compromise was accepted and an award has been passed in the Adalath, then that will have the effect of a civil decree and that can be executed through civil court as though it is a decree of a civil court. The facts are different in this case as already discussed, the mediation cannot be treated at par with Lok Adalath as mediator has no power to pass any award as provided under the Legal Services Authorities Act. So the dictum is not applicable to the facts in this case." (Emphasis by us) In view of the position in legislation, the court had declared the correct legal position that mediation cannot be treated at par with the Lok Adalat and that the mediator has no power to pass an award as a Lok Adalat which is deemed to be a decree under the Legal Service Authority Act, 1987. 94. In para 14, the Kerala High Court considered the question as to whe....
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....t in evidence in view of the bar under rules 20, 21 and 22 of the Civil Procedure (Alternative Disputes Resolution) Rules Kerala 2008 which reads as follows:- Rule 20:- Confidentiality, disclosure and inadmissibility of information- (1) The mediator shall not disclose confidential information concerning the dispute received from any party to the proceedings unless permitted in writing by the said party. (2) Parties shall maintain confidentiality in respect of events that transpired during mediation and shall not rely on or introduce the said information in any other proceedings as to: (a) views expressed by a party in the course of the mediation proceedings; (b) documents obtained during the mediation which were expressly required to be treated as confidential or other notes, drafts or information given by parties or mediators; (c) Proposals made or views expressed by the mediator. (d) Admission made by a party in the course of mediation proceedings. (e) The fact that a party had or had not indicated willingness to accept a proposal. (3) There shall be no stenographic or audio or video recording of the mediation proceedings. Rule 21:- Privacy- Mediatio....
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....r Section 138 of the NI Act. Guidance on this aspect is provided by the provisions of Order XXIII Rule 3 of the CPC and the practice followed by the civil courts upon a compromise arrived at between the parties to a suit. 99. So far as the statutory provision is concerned, Order XXIII Rule 3 of the CPC reads as follows : "3. Compromise of suit.- Where it is proved to the satisfaction of the court that a suit has been adjusted wholly or in part by any lawful agreement or compromise in writing and signed by the parties, or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit, the court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith so far as it relates to the parties to the suit, whether or not the subject matter of the agreement, compromise or satisfaction is the same as the subject matter of the suit: - Provided that where it is alleged by one party and denied by the other than an adjustment or satisfaction has been arrived at, the court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question....
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....) An obligation is cast on the court under Order XXIII Rule 3 of the CPC to order the agreement to be recorded and pass a decree in accordance thereof. (Ref. : (2006) 1 SCC 148, Amteshwar Anand v. Virender Mohan Singh & Ors. (paras 26 and 27)). (iv) A consent decree is really a contract between the parties with the seal of the court superadded to it. (Ref. : (1969) 2 SCC 201, Baldevdas Shivlal & Anr. v. Filmistan Distributors (India) P. Ltd. & Ors.; (2002) 100 DLT 278, Hindustan Motors Ltd. v Amritpal Singh Nayar & Anr.; (2007) 14 SCC 318, Parayya Allayya Hittalamani v. Sri Parayya Gurulingayya Poojari & Ors.). (v) A consent decree may operate as an estoppel as well. [Ref. : AIR 1956 SC 346, Raja Sri Sailendra Narayan Bhanja Deo v. State of Orissa; (2007) 14 SCC 318, Parayya Allayya Hittalamani v. Sri Parayya Gurulingayya Poojari & Ors. (para 15)]. 102. The practice followed by the civil court before whom the settlement in writing, duly signed by the parties, is placed, is to record the statements of parties confirming that the settlement was entered into voluntarily, without any force, pressure or undue influence; that it contained the actual terms of the settlem....
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....edure. Application of the above enunciation of law to a mediation arising out of a criminal case manifests that a settlement agreement would require to be in writing and signed by the parties or their counsels. The same has to be placed before the court which has to be satisfied that the agreement was lawful and consent of the parties was voluntary and not obtained because of any force, pressure or undue influence. Therefore, the court would record the statement of the parties or their authorized agents on oath affirming the settlement, its voluntariness and their undertaking to abide by it in the manner followed by the civil court when considering a settlement placed before it under Order XXIII Rule 3 of the CPC. The court would thereafter pass an appropriate order accepting the agreement, incorporating the terms of the settlement regarding payment under Section 147 of the NI Act and the undertakings of the parties. The court taking on record the settlement stands empowered to make the consequential and further direction to the respondent to pay the money in terms of the mediated settlement and also direct that the parties would remain bound by the terms thereof. 106. In having....
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....er than a fine, is payable by virtue of any order made under the Cr.P.C., the method of recovery whereof is not expressly provided for, shall be recoverable in terms of Section 421 Cr.P.C. 114. In the event that a criminal court passes order accepting the mediated settlement between the parties and directs the accused to make payment in terms thereof, the settlement amount becomes payable under the order of the court. Such order having been passed in proceedings under Section 138 of the NI Act, would be an order under Section 147 of the NI Act and Section 320 of the Cr.P.C. 115. In proceedings where settlement is permitted under Section 320 of the Cr.P.C., it would be an order thereunder. 116. Where proceedings are disposed on settlement terms by the High Court, it would be an order passed in exercise of jurisdiction under Section 482 of the Cr.P.C. Upon breach of such order and nonpayment of the agreed amounts, the same may be recoverable in terms of Section 431 read with Section 421 Cr.P.C. 117. In addition, if the party has tendered an undertaking to abide by the terms of the agreement, which stands accepted by the court, in the event of breach of the undertaking, ac....
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.... such settlement including out of court settlement; referral to Lok Adalat under the Legal Services Authorities Act, 1987; referral to the court annexed mediation centre; as well as conciliation under the Arbitration and Conciliation Act, 1996. III (iii) Once the parties have chosen the appropriate mechanism which they would be willing to use to resolve their disputes, the court should refer the parties to such forum while stipulating the prescribed time period, within which the matter should be negotiated (ideally a period of six weeks) and the next date of hearing when the case should be again placed before the concerned court to enable it to monitor the progress and outcome of such negotiations. III (iv) In the event that the parties seek reference to mediation, the court should list the matter before the concerned mediation centre/mediator on a fixed date directing the presence of the parties/authorized representatives before the mediator on the said date. III (v) If referred to mediation, the courts, as well as the mediators, should encourage parties to resolve their overall disputes, not confined to the case in which the reference is made or the subject matter of the....
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....he settlement agreement were executing and signing the same without any kind of force, pressure and undue influence. III (ix) The mediator should forward a carefully executed settlement agreement duly signed by both parties along with his report to the court on the date fixed, when the parties or their authorized representatives would appear before the court. Proceedings before the court III (x) The magistrate would adopt a procedure akin to that followed by the civil court under Order XXIII of the C.P.C. III (xi) The magistrate should record a statement on oath of the parties affirming the terms of the settlement; that it was entered into voluntarily, of the free will of the parties, after fully understanding the contents and implications thereof, affirming the contents of the agreement placed before the court; confirming their signatures thereon. A clear undertaking to abide by the terms of the settlement should also be recorded as a matter of abundant caution. III (xii) A statement to the above effect may be obtained on affidavit. However, the magistrate must record a statement of the parties proving the affidavit and the settlement agreement on court record. III ....
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....ies seeking mediation so far as the underlying civil dispute is concerned. In case a settlement is reached, the principles laid down by us would apply to settlement of such underlying civil disputes as well. In case reference in a criminal case is restricted to only an underlying civil dispute and a settlement is reached in mediation, the referring court could require the mediator to place such settlement in the civil litigation between the parties which would proceed in the matter in accordance with prescribed procedure. Question IV : If the settlement in Mediation is not complied with - is the court required to proceed with the case for a trial on merits, or hold such a settlement agreement to be executable as a decree? In case the mediation settlement accepted by the court as above is not complied with, the following procedure is required to be followed : IV (i) In the event of default or non-compliance or breach of the settlement agreement by the accused person, the magistrate would pass an order under Section 431 read with Section 421 of the Cr.P.C. to recover the amount agreed to be paid by the accused in the same manner as a fine would be recovered. IV (ii) Ad....