2018 (8) TMI 1294 - HC - Indian Laws

Correctness, legality and propriety of similar orders passed by the Metropolitan Magistrate on 21.07.2015 in the context of two different complaint cases - offence u/s 138 of the Negotiable Instruments Act, 1881 - petitioners are aggrieved by the directions of the Metropolitan Magistrate to refund the amount of ₹ 38 lakhs. Held that - The settlement agreement though entered upon through the process of mediation where the parties had been referred by the criminal court had been arrived at by the parties on their own free will and volition. There was no direction from the Metropolitan Magistrate for payment to be made. The amount of ₹ 38 lakhs was, thus, paid to the complainant by the accused persons on their own initiation. The question as to whether this amount (assuming it represents the value of the cheques) was due as liability or not will have to be addressed at the trial of the criminal cases which continue to remain pending. The court of Metropolitan Magistrate not having brought about the said payment cannot be converted, midway the process, into a forum for its restitution, refund or recovery. The impugned orders are set aside - petition allowed.

Summary

Issues Involved:
Petitions filed under Section 482 of Cr.P.C. challenging orders of Metropolitan Magistrate granting refund of amount under Section 138 of Negotiable Instruments Act, 1881 in the context of settlement agreement between parties.

Analysis:

1. Jurisdiction under Section 482 of Cr.P.C. and Article 227 of the Constitution:
The petitions were filed invoking the inherent power of the High Court under Section 482 of Cr.P.C. and Article 227 of the Constitution to challenge the orders of the Metropolitan Magistrate granting refund of ?38 lakhs to the accused under Section 138 of the Negotiable Instruments Act. The court noted that the settlement agreement was voluntarily entered into by the parties without any direction from the Magistrate for payment, and the issue of liability would be addressed during the trial of the pending criminal cases.

2. Settlement Agreement and Refund Application:
The background revealed that the parties were involved in criminal cases under IPC and Negotiable Instruments Act, leading to a settlement agreement in which the accused agreed to pay ?62,50,000 to the complainant. However, the settlement could not be completed, and the accused sought refund of ?38 lakhs paid earlier. The accused's application for refund lacked specific reasons for the settlement failure and misrepresented the filing of a petition for quashing the FIR, which was found to be untrue.

3. Court's Decision and Reasoning:
The High Court set aside the Metropolitan Magistrate's orders directing the refund of ?38 lakhs. It emphasized that the Magistrate did not initiate the payment, and the issue of liability remained unresolved pending trial. The court clarified that the criminal court would determine the due amount and liability during final adjudication, where appropriate directions for restitution could be given if necessary. The court concluded that the Magistrate's court could not be converted into a forum for refund midway through the legal process.

4. Conclusion:
In light of the above analysis, the High Court allowed the petitions, setting aside the impugned orders of the Metropolitan Magistrate and disposing of the applications filed in connection with the refund of ?38 lakhs. The judgment highlighted the importance of resolving the issue of liability during the trial stage and refrained from intervening in the restitution process prematurely.