Date of judgement:
10.07.2014
Bench:
JUSTICE K. RAMAKRISHNAN
Parties to the case:
Petitioner: Sreelal
Respondents: Murali Menon, State of Kerala
Overview
- In the petition, it was alleged that the petitioner is the complainant in CC.4202/2009 on the file of Judicial First-Class Magistrate Court-II, Kollam.
- It was filed against the first respondent for committing offences under Section 138 of the Negotiable Instruments Act.
- The respondent is the accused here.
- On 16.01.2014, when it was posted for evidence, the counsel for the accused requested before the court to refer the matter to mediation. Thus, the matter was referred for mediation.
- In the mediation, the matter was settled for an amount of 4,50,000/- and a time limit of six months was given to the accused to pay back the amount. It was also decided that the complainant could proceed with the case if the amount was not paid, or else had to withdraw it.
- On 17.02.2014, both the parties signed the mediation agreement, but then the learned Magistrate kept insisting that the petitioner produced the evidence before period mentioned in the agreement expires.
- Therefore, as a relief, the petitioner sought to direct the learned Judicial First-Class Magistrate II, Kollam to adjourn the case for 6 months and to let the condition mentioned in the mediation proceedings be fulfilled in the interest of justice.
- Although even after five months, no amount was paid, the counsel for the petitioner submitted that he was ready to wait till the time provided in the agreement, if the respondent agrees to pay the amount. After that, he would produce the evidence.
- The counsel for the respondent held that as both the parties had entered into an agreement in the mediation, the petitioner cannot proceed with the case. He exercised his remedy to execute the agreement as if an award was passed under the Legal Services Authorities Act as a civil decree.
- The petitioner had filed a private complaint against the first respondent alleging that the respondent had issued a cheque for 5,00,000/- in discharge of his liability which was presented as dishonour of cheque due to insufficient funds and therefore had not paid the amount, which was a punishable offence under Section 138 of the Negotiable Instruments Act.
- An enquiry under Section 200, 202 of the Code of Criminal Procedure was conducted, the learned Magistrate took cognizance of the case as CC.No.4209/2009 under Section 138 of the Negotiable Instruments Act where the first respondent pleaded not guilty and the case was posted for evidence.
- After the matter was settled between the parties in the mediation, the petitioner alleged that the Magistrate kept on insisting for producing evidence before the expiry of agreement.
Legal Provisions
Section 138 of NI Act: It is a penal provision dealing with the punishment of dishonour of cheque due to insufficiency of funds in account.
Section 200 of CrPC: This Section deals with the examination of complainant. It states that a Magistrate can take cognizance of an offence on complaint and shall examine upon oath the complainant and the witnesses present.
Section 202 of CrPC: This Section talks about the postponement of the process.
Issues
- Whether there is any effect of mediation agreement in a criminal matter?
- Whether the agreement entered into by the parties in mediation proceedings can be treated as evidence in a criminal matter?
- Whether the Court has to wait for the period mentioned in the agreement so as to enable the parties to fulfil the terms of the agreement and if it is not fulfilled, whether it should proceed with the case?
Judgement
The Court addressed all the issues raised by the counsel.
- It held that any matter under this Act has to be dispose, within six months from the date of filing of the complaint as per Section 143(3) of the Act.
- Further, in Indian Banks Association & Others V. Union of Indian & Others [ILR 2014(2) KERALA 469], the Supreme Court provided the guidelines as to how the criminal courts have to proceed with the cases filed under Section 138 of the said Act.
- Therefore, the effort must be made by the Magistrate to dispose of the cases expeditiously.
- Further, in Damodar S. Prabhu V. Sayed Babalal [H 2010(2) KHC 428], the Hon'ble Supreme Court had observed that in cases where the accused in S.138 cases are unnecessarily prolonging the case, even though, it is a compoundable offence.
- If the compounding was not done at the earliest point of time, then the Court can record compounding at the later stages before the Magistrate Court, Sessions Court, or High Court, Supreme Court by imposing 10%, 15% and 20% of the cheque amount as costs respectively to be paid and to be deposited with the Legal Services Authority.
- Further, it was also held that the Courts do have some authority to reduce the amount to be imposed as cost or even dispense with payment of the costs in appropriate cases, in order to prevent unnecessary delay in disposing the case filed under Section 138 of the Negotiable Instruments Act.
- It was held that under the said circumstances, if there are unreasonably longer periods provided in the agreement for payment of the amount, then the court can insist to adduce evidence by the complainant.
- As observed in Damodar S. Prabhu’s (supra) case, the parties were allowed a reasonable time period to fulfil to the terms of the agreement to avoid prolonged litigation. This was done in order to promote mediation as a process for an Alternative Disputes Resolution in the cases of monetary transactions under Section 138 of the Act.
- If the parties agree to the terms of the agreement, the court can wait for the reasonable time and allow the parties to honour the settlement that they had been arrived in the mediation process, with the purpose to restore the relationship between the parties and to give a boost for the process of mediation to be used by the parties to resolve their disputes amicably.
- But the court shall take strict action, if it was found that the accused did not pay the amount and it was referred for mediation at the request of the accused only as a method of delaying the matter.
- If both parties agree, the court can allow the compounding of a case on the basis of the settlement agreement but only with strict accordance with the guidelines provided by the Hon'ble Supreme Court in Damodar. S. Prabhu's case (supra). This shall give a message to the defaulting accused to honour the agreement he made in the settlement, otherwise he will have to pay the penalty for the same.
- Keeping these conditions in mind, the court came to the conclusion that as a six month period was provided, which will be over by 17.08.2014, the learned Magistrate was directed to keep the case till that date without insisting for evidence and to allow the parties to honour the settlement which has been arrived in the mediation process.
- The Magistrate can proceed with the case if the amount was still not paid and the application for compounding was not filed, considering the principles laid down in this decision regarding the mediation agreement, which has not been honoured by the accused and dispose of the case in accordance with law.
- With the above directions and observations, the petition was disposed of.
Conclusion
Following the precedents of Supreme Court, this Court delivered its judgement. Mediation, as a method of amicable settlement, was given importance. The mediation agreement was upheld and the Magistrate was provided with directions to proceed with the case, if the parties do not comply with the agreements made in the mediation. After finally scrutinising, the Court disposed the petition.
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