9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (10) TMI 1063 - HC - Indian LawsComplaint cases under Section 138 of the NI Act for amicable settlement through mediation - procedure to be followed upon settlement and the legal implications of breach of the mediation settlement - Settlement of disputes outside the Court - Binding the parties to a settlement agreement - Held that - Section 320 of the Cr.P.C. enumerates and draws a distinction between offences as compoundable, either between the parties 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. 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. It is quite apparent that proceedings under Section 138 of the NI Act have a special character. They arise from a civil dispute relating to dishonouring to a cheque but may result in a criminal consequence. Even though the statute is punitive in nature, however, its spirit, intendment and object is to provide compensation and ensure restitution as well which aspects must received priority over punishment. The proceedings under Section 138 of the NI Act are therefore, distinct from other criminal cases. It is well settled that they are really in the nature of a civil wrong which has been given criminal overtones. There is no legal prohibition upon a criminal court seized of such complaint, to whom a mediated settlement is reported, from adopting the above procedure. 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. In having so proceeded, there is a satisfaction of the voluntariness and legality of the terms of the settlement of the court and acceptance of the terms thereof as well as a specific order in terms thereof. Consequently, the amount payable under the settlement, would become an amount payable under an order of the criminal court. So far as the disputes beyond the subject matter of the litigation is concerned, upon the settlement receiving imprimatur of the court, such settlement would remain binding upon the parties and if so ordered, would be subject to the orders of the court. 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. In proceedings where settlement is permitted under Section 320 of the Cr.P.C., it would be an order thereunder. 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. 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, action and consequences under the Contempt of Courts Act could also follow.
Issues Involved:
1. Legality of referring a criminal compoundable case under Section 138 of the NI Act to mediation. 2. Applicability of Mediation and Conciliation Rules, 2004 in criminal cases. 3. Procedure to be followed post-mediation settlement in criminal cases. 4. Consequences of non-compliance with mediation settlement. 5. Execution of mediated settlement agreement as a decree. Detailed Analysis: I. Factual Matrix: The complainant filed a complaint under Section 138 of the NI Act due to dishonoured cheques issued by the respondent. Both parties expressed interest in settling the dispute amicably. The matter was referred to mediation, resulting in a settlement agreement. However, the respondent failed to comply with the settlement terms, leading to the continuation of the trial. II. Alternate Dispute Resolution Mechanisms Statutorily Recognized: The legislature recognizes alternate dispute resolution mechanisms such as lok adalats, arbitration, and conciliation in various statutes, including the Legal Services Authorities Act, 1987, and the Arbitration and Conciliation Act, 1996. Section 320 of the Cr.P.C. provides for the settlement of specified criminal offences. III. Statutory Provisions: Relevant provisions include Section 138 of the NI Act, which deals with cheque dishonouring, and Section 147, which makes offences under the NI Act compoundable. The Legal Services Authorities Act, 1987, and Section 89 of the CPC also provide for alternate dispute resolution mechanisms. IV. Scope of Section 89 of the CPC: Section 89 of the CPC provides for the settlement of disputes outside the court through mechanisms like mediation. The Supreme Court in Afcons Infrastructure Ltd. v. Cherian Varkey Constructions Co. Pvt. Ltd. clarified that mediation settlements need to be placed before the court for recording and disposal. V. Statutory Power to Refer Matters for Dispute Resolution and Effect of a Settlement: While the CPC contains provisions for referring matters to alternate dispute resolution, the Cr.P.C. does not expressly provide for such referrals in criminal cases. However, the Cr.P.C. permits and recognizes settlements, allowing the use of alternate dispute mechanisms for offences under Section 320. VI. Power of Criminal Courts to Refer Cases to Mediation: Despite the absence of express statutory provisions in the Cr.P.C., criminal courts can refer parties to mediation for offences compoundable under Section 320. The Mediation and Conciliation Rules, 2004, apply to both civil and criminal cases in Delhi. VII. Process to be Followed in Reference of Disputes in Criminal Law to Mediation: The Mediation and Conciliation Rules, 2004, guide the process of mediation in criminal cases. The parties are referred to mediation, and the settlement agreement is placed before the court for recording and disposal. VIII. Dispute Resolution Encouraged in Several Cases by the Supreme Court in Non-Compoundable Cases as Well: The Supreme Court has approved the exercise of inherent powers under Section 482 of the Cr.P.C. for quashing criminal cases on account of compromise/settlement, even in non-compoundable offences, if it serves the ends of justice. IX. Nature of Proceedings under Section 138 of the NI Act: Proceedings under Section 138 of the NI Act are quasi-civil in nature, with the primary objective being compensation and restitution rather than punishment. X. Permissibility of Settlement of Offence under Section 138 of the NI Act: Section 147 of the NI Act makes offences under Section 138 compoundable, allowing for settlements. The Supreme Court in Damodar S. Prabhu v. Sayed Babalal H. provided guidelines for encouraging early settlements to ease the burden on the criminal justice system. XI. Mediation and Conciliation Rules, 2004 – Notified by the Delhi High Court: The Mediation and Conciliation Rules, 2004, apply to mediations in both civil and criminal cases in Delhi, providing a framework for the mediation process. XII. Impact of Settlement of Disputes in a Complaint under Section 138 of the NI Act by Virtue of Lok Adalat under the Legal Services Authorities Act, 1987: Settlements reached in Lok Adalats are deemed to be decrees of a civil court and are executable as such. The Supreme Court in K. Govindam Kutty Menon v. C.D. Shaji clarified that Lok Adalat awards in criminal cases under Section 138 are executable as civil decrees. XIII. Procedure to be Followed if a Settlement is Reached in Mediation: The court should record the settlement agreement, ensuring it is voluntary and lawful. The parties' statements affirming the settlement should be recorded, and the court should pass an order accepting the settlement and binding the parties to its terms. XIV. Breach of Such Settlement Accepted by the Court – Consequences: In case of breach of the settlement, the court can recover the agreed amount under Section 431 read with Section 421 of the Cr.P.C. Additionally, action under the Contempt of Courts Act may be taken for violation of the undertaking. XV. Reference Answered: 1. It is legal to refer a criminal compoundable case under Section 138 of the NI Act to mediation. 2. The Mediation and Conciliation Rules, 2004, apply to both civil and criminal cases in Delhi. 3. The procedure involves recording the settlement agreement, ensuring its voluntariness and legality, and binding the parties to its terms. 4. In case of breach, the court can recover the amount under Section 431 read with Section 421 of the Cr.P.C. and take action under the Contempt of Courts Act. 5. A mediated settlement in a criminal case does not tantamount to a civil decree and cannot be executed as such.
|
