2024 (7) TMI 180 - HC - Indian Laws

Dishonour of Cheque - continuation of proceedings under the Negotiable Instruments Act, 1881 - disutes of parties settled before the Mediation Centre - HELD THAT - The Mediation Report dated 16.05.2016 categorically indicates that Respondent No. 2 has amicably settled the two matters, that is, the complaints which were filed by Respondent No. 2 under Section 138 of the NI Act. Respondent No. 2 also agreed to withdraw the complaints and to make necessary statement before the learned Trial Court. The proceedings further record that the statement is made on his own free will and without any force, pressure or coercion. Prior to the recording of the statement by the learned Mediator, the parties had entered into a settlement agreement dated 01.04.2016. The agreement is duly signed by Respondent No. 2 as well as the other parties. The terms of the settlement mention that the parties have settled their disputes, which includes the two complaints which are the subject matter of the present proceedings under Section 138 of the NI Act. In terms of the said settlement, Respondent No. 2 had agreed that on payment of a sum of ₹30,00,000/- against the entire outstanding amount, the claims towards Respondent No. 2 would be settled. Once it is an admitted position that an agreement was signed by the parties and the payment in terms of the settlement has already been paid by the petitioner, Respondent No. 2 cannot be allowed to wriggle away by taking such arguments - It is not denied by Respondent No. 2 that he was present before the learned Mediator and his statement was recorded of his own free will and without any force, pressure or coercion. If the settlements are discarded and rejected on such grounds, the parties would be wary of entering into any settlement agreement and make payments thereof. It is apparent that Respondent No. 2 after having pocketed the amount received pursuant to the settlement, is trying to reagitate the dispute. Such tendency ought not to be encouraged. The High Court, while exercising power under Section 482 of the CrPC, can definitely look into the record and pass such orders that may be necessary to prevent the abuse of the process of the Court or otherwise to secure the ends of justice. It is apparent that the petitioner, despite having paid the amount has been made to suffer and litigate for the last more than eight years due to dishonest attitude of the complainant. The Criminal Complaints are quashed - petition allowed.

Summary

Issues Involved:
1. Continuation of proceedings under the Negotiable Instruments Act, 1881, despite a settlement agreement.
2. Authenticity and enforceability of the settlement agreement.
3. Abuse of the process of the court.

Issue-wise Detailed Analysis:

1. Continuation of Proceedings under the Negotiable Instruments Act, 1881:

The petitioner sought to set aside the trial court's order directing the trial to proceed on merits under Sections 138/141/142 of the NI Act. The petitioner contended that the disputes had been settled through mediation, and the agreed amount had been paid to the respondent. Despite this, the trial court decided to continue the proceedings, relying on the Supreme Court's judgment in State of Orissa v. Debendra Nath Pandhi, which emphasizes that trials should proceed if the case is at the initial stage of framing of notice under Section 251 of CrPC.

2. Authenticity and Enforceability of the Settlement Agreement:

The petitioner argued that the trial court erred by not considering the settlement agreement dated 01.04.2016, which was acted upon by both parties. The petitioner had paid Rs. 30,00,000/- in compliance with the settlement, and the respondent had agreed to withdraw the complaints. The mediation report dated 16.05.2016 confirmed the amicable settlement and the respondent's intent to withdraw the complaints. The trial court, however, questioned the authenticity of the settlement agreement, suggesting it should be verified during the trial.

The respondent contended that the settlement agreement was merely a draft and not binding since it was not recorded by the court. The court found this argument to be an afterthought and not bona fide, noting that the settlement was signed by both parties and their counsel, and the petitioner had altered his position based on this agreement.

3. Abuse of the Process of the Court:

The court determined that the continuation of proceedings under the NI Act, despite the settlement and payment, constituted an abuse of the court's process. It highlighted that the respondent, after accepting the settlement amount, was attempting to re-agitate the dispute. This conduct was seen as mala fide and detrimental to the judicial process, keeping the court's docket unnecessarily heavy and causing undue litigation for the petitioner.

The court emphasized its inherent power under Section 482 of the CrPC to prevent abuse of its process and secure the ends of justice. It referenced the Supreme Court's judgment in Krishna Lal Chawla v. State of U.P., which supports quashing criminal proceedings instituted with oblique motives or based on manufactured evidence.

Conclusion:

The petitions were allowed, and the criminal complaints were quashed. The respondent was directed to pay Rs. 50,000/- as costs to the petitioner within four weeks. The court's decision underscores the importance of honoring settlement agreements and preventing the misuse of judicial processes to harass litigants.