India: Mediation For Offence Under Section 138 Of Ni Act, 1881 – Analysis Of The Delhi High Court Judgment

Last Updated: 30 November 2017
Article by Akanksha Sisodia, Mahip Singh Sikarwar and Palash Jain

Most Read Contributor in India, December 2018

Introduction

A divisional bench of Hon'ble Delhi High Court headed by Chief Justice Gita Mittal and Justice Anu Mehrotra recently delivered a landmark judgment and held that Compoundable Offences2 can also be resolved through Mediation and thereafter laid the procedure to be adopted in such a case and the implications of legal breach. It implies that offences under Section 138 of Negotiable Instrument's Act, 18813 can be tried under Section 89 of Code of Civil Procedure Code, 19084 which specifies the disputes that can be resolved under Alternate Dispute Resolution ("ADR"). The bench while giving its judgment relied on the three bench judgment of Hon'ble Supreme Court in Damodar S. Prabhu v Syed Babala5 which ruled that "the punishment in cases under NI Act is not a means of seeking retribution, but is more a means to ensure payment of money." As a general principle of law, the Code of Criminal Procedure, 1973 ("CrPC") and the Negotiable Instruments Act, 1881 ("NI Act") do not contain any provision to refer matters to ADR unlike some of the other statutes i.e Hindu Marriage Act (Section 23), the Family Courts Act, 1984 (Section 9) and; the Industrial Disputes Act, 1947 (Section 10) which explicitly provide for settlement by the same.

The rationale on which the bench majorly rested its reasoning for the judgment was that there is no bar or restriction on using the Alternative Dispute Resolution mechanisms in either of the statutes, i.e the NI Act, 1881 or the CrPC, 1973, thereby providing the requisite leverage to refer the disputes under Section 138 to mediation. The bench answered five major questions pertaining to the issue which have been reproduced herein below:

Questions answered:

Question I: Is it legal to refer a criminal compoundable case as of Section 138 of NI Act, to mediation?6 To this question, the Honorable Division bench replied in affirmative and stated that it is legal to refer such disputes to mediation.

It is a settled principle that as far as a civil dispute is concerned, Courts shall adopt the principles as laid down in the case of Afcon Infrastructure Limited.7 Accordingly, Courts first ascertain if it's a fit case for adjudication by means of ADR process and then accordingly decide the kind of ADR (Arbitration, Conciliation, Mediation) as per consent of the parties. In the instant case, the bench opined that even though there is no express statutory provision under the Criminal Code to refer the parties to mediation, such matters can be referred to ADR if they fall under the ambit of Section 320, Cr.P.C8 and such settlement shall be an order of the Court.

Question II: The next question answered by the Honorable Division Bench was that the whether the Mediation and Conciliation Rules, 2004 enacted under the Code of Civil Procedure be and imported and applied in criminal cases or not? Is the formulation of separate rules required in this regard?

The Delhi Court framed "The Mediation and Conciliation Rules,2004" in exercise of the rule making power under Part X of the Code of Civil Procedure, 1908 ("CPC") and Section 89(2)(d) of the CPC. The rules cover all the proceedings which are pending before the Delhi High Court or any other sub-coordinate court. As far as the nature of the proceeding under Section 138 are concerned, they are quasi-civil in nature and the Criminal Courts follow the principle used by civil court's to adjudicate the same.

Question III: Thereafter the Court had to adjudicate on the question that once the dispute has been referred to mediation, then what procedure has to be followed in its furtherance?

In several cases, the Apex Court has held that after considering the legislative ambit of Section 147 of NI Act , the offences under Section 138 can be termed as Compoundable. Therefore, the procedure to be adopted for the settlement would be as per the principles of CPC i.e. Order XXIII Rule 3 which provide for Compromise of Suits. It is to be noted that generally the principles of Civil procedure shall not apply to Criminal matters, but as there is a lacuna in the legislative intent, Order XXIII Rule 3 of the CPC shall squarely apply to the subject matter of consideration by a Court under Section 320 of the Cr.P.C. or Section 147 of the NIA.

Question IV: The other question for the consideration for the Honorable Bench was that in case the settlement reached in the process of mediation is not honored by the parties then, what would be subsequent course of action? Will the court proceed with the case by conducting trial on merits or hold such settlement to be executable as decree?9

In case of breach of the terms of the settlement Agreement, Section 421 of the CrPC10 comes into play which provides the mechanism to recover fines. Also, under Section 431 of CrPC11., in case money is to be collected other than fine under CrPC and the method is not expressly provided, it shall be recoverable in terms of Section 421 CrPC. Also, if a Court accepts an undertaking in the form of an Agreement and there is non-compliance of the same, the parties shall be punished under Section 2(b) Contempt of Courts Act, 1971.12

Question V: If the Mediated Settlement Agreement, by itself, is taken to be tantamount to a decree, then, how the same is to be executed? Is the complainant to be relegated to file an application for execution in a civil court? And if yes, what should be the appropriate orders with respect to the criminal complaint case at hand. What would be the effect of such a mediated settlement vis-à- vis the complaint case?13

As in the case of a civil dispute, the settlement between the parties is in terms of the decree of the Court and is to be executed under the procedure of Order XXIII of the CPC unlike in criminal cases which cannot be executed similarly. Also , a settlement in mediation arising out of referral in a civil court can result in a decree upon compliance with the procedure under Order XXIII of the C.P.C which cannot be done in case of a criminal matter.

Conclusion

By means of in The Arbitration & Conciliation Act (Amendment) Act, 2015, the main objective of the legislature was to expedite the process of ADR mechanism and reduce the burden of Courts by making it more effective and time bound process. Thus, through this order, the Judiciary has given a signal of permitting resorting to mediation and other alternative disputes redressal mechanism in criminal cases by enunciating the procedure to be followed and consequences of the legal breach.

Footnotes

2. Section 147- Offences to be compoundable

3. Section 138- Dishonor of cheque for insufficiency, etc., of funds in the account.

4. Section 89- Settlement of disputes outside the Court

5. 2010 5 SCC 663

6. Dayawati v. Yogesh Kumar Gosain (MANU/DE/3173/2017); Para.1

7. Afcons Infrastructure Ltd. & Anr. v. Cherian Varkey Constructions Co. Pvt. Ltd, (2010) 8 SCC 24

8. Section 320 - Compounding of offences

9. Ibid.

10. Section 421- Warrant for levy of fine

11. Section 431- Money ordered to be paid recoverable as fine

12. Section 2(b) Contempt of Courts Act- (b) "civil contempt" means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court;

13. Supra 3 Pg.2

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions