Dayawati v. Yogesh Kumar Gosain, 243 (2017) Delhi Law Times 117 (DB)

Introduction

• This case deals with whether the criminal cases can be referred by the Court to do mediation.
• The Alternative Dispute Resolution (ADR) mechanism can also be used for criminal cases.

Facts

• The Appellant Smt. Dayawati ("complainant" hereafter) filed a complaint under Section 138 of the Negotiable Instrument Act, 1881 (NI Act).
• She complained that the respondent Shri Yogesh Kumar Gosain herein ("respondent" hereafter) had a liability of ' 55,99,600/- towards her as on 7th April 2013 as recorded in a regular ledger account for supply of fire-fighting goods and equipment to the respondent on different dates and different quantities.
• In part discharge of this liability, the respondent was stated to have issued two account payee cheques in favour of the complainants of ' 11,00,000/- (Cheque No. 365406/- dated 1st December 2014) and ' 16,00,000/- (Cheque No. 563707 dated 28th November 2014).
• Unfortunately, these two cheques were dishonoured by the respondent's bank on presentation on account of "insufficiency of funds".
• The complainant was compelled to serve a legal notice of demand on the respondent which, when went unheeded, led to the filing of two complaint cases under Section 138 of the Negotiable Instrument Act, 1881 (NI Act) before the Patiala House Courts, New Delhi.
  • In these proceedings, both parties had expressed the intention to amicably settle their disputes.
  • Consequently, by a common order dated 1st April 2015 recorded in both the complaint cases, the matter was referred for mediation to the Delhi High Court Mediation and Conciliation Centre.
• After negotiations at the Delhi High Court Mediation and Conciliation Centre, the parties settled their disputes under a common settlement agreement, but the accused/respondent herein failed to comply with the terms of the settlement.
• Two more opportunities were given by the Metropolitan Magistrate on 14th August 2015 and 21st August 2015 to the accused to comply with the settlement.
• The Negotiable Instruments 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.
• As per the respondent, absence of any statement in the case denuded the settlement agreement of its binding nature and efficacy.

Issues Involved

• What is the legality of referral of a criminal compoundable case (such as one u/s. 138 of the NI Act) to mediation?
• 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 Cr.P.C.)?
• 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?

Observations

• The Court observed that the Code of Civil Procedure, 1908 contains a specific provision in Section 89 of the CPC enabling reference of matters to alternate dispute redressal.
• However, so far as criminal cases are concerned, it is amply clear that the Code of Criminal Procedure, 1973 (Cr.P.C.) does not contain any express statutory provision enabling the criminal court to refer the parties to a forum for alternate dispute resolution including mediation.
  • The same is the position regarding cases under the NI Act.
• The Court relied on the case Afcons Infrastructure Ltd. & Anr. V. CherianVarkey Constructions Co. Pvt. Ltd (2010), wherein the Hon'ble Supreme Court has given a list of those cases which are fit for reference to the ADR, and which are not fit for the same.
  • Cases relating to prosecution for criminal cases are put under the category of non-suitable cases.
  • The Hon'ble Court, however, made it clear that the classification of the cases is not extensive or inflexible, rather it is descriptive.
• It was observed by the court that the Cr.P.C. and NI Act made provisions merely for the compounding of the offences, however, no technique is laid down as to how the settlement agreement is to be placed or considered by the court.
• The provisions of the C.P.C do not apply to litigations guided by Cr.P.C.
• Therefore, there is a legal vacuum, which is required to be filled.
• It was observed by the court that it could not trace any reason for not applying the principles contained in Order XXIII Rule 3 of C.P.C. at the time of consideration of a settlement under Sec. 320 of Cr.P.C. or Sec. 147 of the NI Act, which are usually applied in considering a settlement in civil cases.
• It was further observed that the criminal courts often used the principles contained in C.P.C. in cases falling under Sec. 138 of NI Act for doing complete justice.
• It was, further, observed that there is no legal prohibition against the adoption of such procedure by criminal courts to whom a mediated settlement is reported.

Conclusion

However, after all the observations the court finally held that when the offence is compounded in form of settlement, then the court has to acquit/discharge the accused as the case may be and in case of evasion or non-fulfillment or breach of settlement the amount would be recovered as fine under Sec. 431 of Cr.P.C.

Thus, a defaulter accused can never be tried for the offence he has committed, and he can easily escape from the punishment which he deserved to receive.

The mediation process can be used by the accused as a tool for taking time, delaying the proceedings and even escaping from the punishment provided under the law.

Notes

Section 138 of the Negotiable Instrument Act, 1881, Dishonour of cheque for insufficiency, etc., of funds in the account. — Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for ¹⁹ [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation.— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.