Delhi District Court
Kunal Malhotra vs Sunil Kumar Khatri on 9 September, 2022
IN THE COURT OF SH. SANJAY SHARMA-II : ADDL. SESSIONS JUDGE-03,
(CENTRAL): TIS HAZARI COURTS, DELHI
Criminal Revision No. 270/2022
CNR No.: DLCT01-007917-2022
Kunal Malhotra
S/o Late Jagdish Malhotra
R/o C-6/74, Sector-5, Rohini
Delhi-110085
..... Petitioner
VERSUS
Sunil Kumar Khatri
S/o Sh. Jaipal Singh
R/o RZE-3/591, Gali No. 24
Sadh Nagar, Part-2, Palam Colony
New Delhi
..... Respondents
Date of Institution : 20.05.2022
Date of Arguments : 02.09.2022
Date of Judgment : 09.09.2022
JUDGMENT
1. The criminal revision petition under Section 397 of 'The Code of Criminal Procedure, 1973' (In short 'Cr.P.C.') is directed against order dated 21.04.2022 (In short 'the impugned order') arising from complaint case under Section 138 of 'The Negotiable Instruments Act, 1881' (In short 'NI Act') vide CC No. 3859/19 titled as 'Kunal Malhotra vs. Sunil Kumar Khatri' whereby Ld. MM (NI Act)-04, Central, Tis Hazari Courts, Delhi (In short 'the trial Court') dismissed applications under Section 431 read with Section 421 Cr.P.C. and contempt petition under Section 2 (b) read with Section 12 of 'The Contempt of Courts Act, 1971' and fixed the case for reply and arguments on application under Section 145 (2) NI Act.
Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 1/17BRIEF FACTS:
2. The petitioner instituted complaint under Section 138 NI Act on averments that on 08.12.2017, he had advanced a loan of Rs. 3,00,000/- to the respondent on interest @ 18% per annum. The respondent made payment of interest @ Rs.
4,500/- per month till March, 2018. The respondent issued a cheque vide Cheque No. 993673 dated 08.02.2019 in the sum of Rs. 3,00,000/- drawn on 'Indian Bank, C-26/27, Community Centre, Janak Puri, New Delhi-110058' (In short 'the said cheque') in favour of the petitioner. On presentation, the said cheque was returned unpaid with remark 'INSUFFICIENT FUNDS' vide memo dated 13.02.2019. The petitioner sent a demand notice dated 06.03.2019 to the respondent through speed post. The respondent was served with the demand notice on 08.03.2019, as per tracking report. The respondent failed to make payment of the cheque amount within stipulated period. The petitioner filed the complaint under Section 138 NI Act.
3. The trial Court, vide order dated 18.04.2019, taken cognizance of offence under Section 138 NI Act and summoned the respondent.
4. On 29.06.2019, a joint application filed by the petitioner and the respondent for preponement of the case.
5. On 11.07.2019, the petitioner with his counsel and the respondent submitted to the trial Court that there were chances of settlement and on their joint request, the trial Court referred the case to National Lok Adalat held on 13.07.2019.
Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 2/176. Before National Lok Adalat held on 13.07.2019, the respondent undertaken to pay Rs. 4,00,000/- to the petitioner as full and final settlement on or before 15.10.2019, as under:
"Statement of Sh. Sunil Kumar Khatri, S/o Sh. Jaipal Singh, On S.A. I undertake to pay Rs. 4,00,000/- to the complainant in full and final settlement of the present case by 15.10.2019. Statement is made voluntarily without any force, fear or coercion.
RO&AC
(PRATHAM MITTAL) (AKRITI MAHENDRU)
Associate Member MM-04 (NI Act) Central
Judge Lok Adalat, THC
Delhi/13.07.2019"
7. National Lok Adalat passed an award, as under:
"Present: Complainant along with counsel.
Accused in person.
Ms. Anita, LAC.
Accused has undertaken to pay Rs. 4,00,000/- to the complainant in full and final settlement of the present case by 15.10.2019. His statement recorded separately.
In view of the same, put up for verification of the payment on the date already fixed i.e. 31.10.2019.
(PRATHAM MITTAL) (AKRITI MAHENDRU)
Associate Member MM-04 (NI Act) Central
Judge Lok Adalat, THC
Delhi/13.07.2019"
Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 3/17
8. On 31.10.2019, the petitioner stated that he has not received any amount. The respondent did not appear and thereafter, the trial Court issued non-bailable warrant (NBW) against him and the respondent appeared before the trial Court on 24.12.2019.
9. On 20.01.2020, the trial Court explained substance of accusation to the respondent, as required under Section 251 Cr.P.C. and listed the case for filing an application under Section 145 (2) NI Act.
10. On 10.03.2021, the petitioner filed an application under Section 431 read with Section 421 Cr.P.C. alongwith another application under Section 12 of 'The Contempt of Courts Act, 1971' on the ground that the respondent breached his undertaking and failed to make payment in terms of award passed by National Lok Adalat. The petitioner sought recovery of award amount of Rs. 4,00,000/- in the manner provided under Section 431 read with Section 421 Cr.P.C. and initiation of proceedings for punishing the respondent for committing civil contempt of the Court, as defined under Section 12 (b) of 'The Contempt of Courts Act, 1971'.
11. On hearing Ld. Counsel for the petitioner and the respondent and considering their written arguments, the trial Court dismissed the said applications, vide impugned order.
12. Feeling aggrieved and dissatisfied with the impugned order, the petitioner preferred the criminal revision petition.Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 4/17
13. I have heard arguments of Mr. Prem V. Joshi, Advocate for the petitioner and Mr. Sarvesh Kumar, Advocate for the respondent and perused written arguments and examined trial Court record.
CONTENTIONS OF LD. COUNSEL FOR THE PETITIONER:
14. Ld. Counsel for the petitioner contended that the case was referred to National Lok Adalat on joint application of the petitioner and the respondent. He contended that the petitioner and the respondent appeared before the trial Court and submitted that there were chances of settlement between them and therefore, the case was referred to National Lok Adalat held on 13.07.2019. He contended that the respondent voluntarily made statement before National Lok Adalat on 13.07.2019 that he will make payment of an amount of Rs. 4,00,000/- to the petitioner as full and final settlement by 15.10.2019. He contended that statement of the respondent was also recorded in this regard. He contended that the respondent stated that he made the statement voluntarily, without any force, fear or coercion. He contended that National Lok Adalat recorded that the respondent has undertaken to pay Rs. 4,00,000/- to the petitioner in full and final settlement of the case by 15.10.2019 and passed an award in this regard. He contended that National Lok Adalat listed the case for verification of payment on 31.10.2019. He contended that the respondent neither appeared nor made payment in terms of the said award.Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 5/17
15. Ld. Counsel for the petitioner contended that the respondent never challenged the award passed by National Lok Adalat. He contended that the respondent never filed any objection to the said award. He contended that the petitioner filed the said two applications under Section 431 read with Section 421 Cr.P.C. and Section 12 of 'The Contempt of Courts Act, 1971'. He contended that Hon'ble High Court of Delhi, in the case of Dayawati vs. Yogesh Kumar Gosain, (2017) 243 DLT 117 : 2017 SCC OnLine Del 11032 held that there is no difference between Mediation and Lok Adalat and both are same thing and on same footing. He contended that the trial Court committed grave error of law in observing that the case was settled in National Lok Adalat and it cannot be treated as a settlement arrived in mediation. He contended that an award passed by a Lok Adalat is final and binding and no appeal shall lie against it. He contended that breach of an undertaking before the Lok Adalat would invite punishment under 'The Contempt of Courts Act, 1971'. He contended that the impugned order be set-aside and the trial Court be directed to recover the award amount by taking recourse to process provided under Section 431 read with Section 421 Cr.P.C. CONTENTIONS OF LD. COUNSEL FOR THE RESPONDENT:
16. Ld. Counsel for the respondent contended that the criminal revision petition is barred by time. He contended that the respondent is a specially abled person. He contended that the respondent is not aware of legal procedures.Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 6/17
17. Ld. Counsel for the respondent contended that the petitioner exercised undue influence upon the respondent and made him to appear before the trial Court on 11.07.2019 and induced him to refer the case to National Lok Adalat. He contended that perusal of order dated 11.07.2019 would reveal that the file was taken up on application for preponement of the case. He contended that there is no mode of payment of the award amount in award dated 13.07.2019. He contended that the trial Court applied its judicial mind and proceeded with the case after explaining substance of accusations to the respondent on 20.01.2020. He contended that the respondent disclosed a legal and valid defence in response to notice under Section 251 Cr.P.C. that he had issued the cheques as security of instalments of committee. He contended that the respondent had not issued any cheque towards repayment of any loan. He contended that the respondent made payment of instalments of committee and the petitioner misused the said cheque. He contended that the petitioner never challenged order dated 20.01.2020. He contended that the petitioner filed the said applications after more than one year on 10.03.2021. He contended that the petitioner also filed a civil suit against the respondent. He contended that settlement arrived before National Lok Adalat was vitiated on account of undue influence. He contended that the case was not disposed in National Lok Adalat and it was merely deferred for verification of payment and as such, there was no final settlement before Lok Adalat.Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 7/17
18. Ld. Counsel for the respondent contended that the trial Court did not record statement of the respondent regarding the settlement. He contended that the trial of the case is in progress and the criminal revision petition deserves to be dismissed.
19. The trial Court passed the impugned order on the following grounds:
(a) As the case was settled in National Lok Adalat, it cannot be treated as a settlement arrived at mediation;
(b) In case of mediation settlement, the Magistrate is required to stipulate in the order, after recording statement of the parties, that in the event of default, the amount will be recoverable, as provided under Section 431 read with Section 421 Cr.P.C. whereas there is no such requirement of recording of separate statement under Section 431 read with Section 421 Cr.P.C. in a case settled before National Lok Adalat;
(c) Where the matter is settled in National Lok Adalat, such award can be enforced as a decree of civil Court;
(d) The case was not disposed before National Lok Adalat and it was listed for verification of payment and it could have been executed a decree of civil Court, if the matter would have disposed;
(e) The respondent failed to make payment of amount in terms of the settlement and notice under Section 251 Cr.P.C. was framed against him which suggest that the settlement had failed and therefore, the case was proceeded on merits;
(f) The petitioner cannot avail both remedies i.e. he is proceeding with the case and simultaneously, he is seeking execution of order dated 13.07.2019; and
(g) The said applications filed on 10.03.2021 had already become infructuous when the case was proceeded on merit and listed for filing an application under Section 145 (2) NI Act.Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 8/17
20. Section 19 (5) of 'The Legal Services Authorities Act, 1987' provides that a Lok Adalat has jurisdiction to determine and to arrive at a compromise and settlement of any case compoundable under law, as under:
"(5) A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of-
(i) any case pending before; or
(ii) any matter which is falling within the jurisdiction of, and is not brought before, any Court for which the Lok Adalat is organized:
Provided that the Lok Adalat shall have no jurisdiction in respect of any case or matter relating to an offence not compoundable under any law."
21. Therefore, a National Lok Adalat has jurisdiction to determine and arrive at a settlement in a criminal compoundable case.
22. Offence under Section 147 NI Act is a compoundable offence, as under:
"147. Offences to be compoundable.- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable."
23. Therefore, a case under Section 138 NI Act can be referred to a Lok Adalat.
24. As regards contention that the respondent is not aware of legal procedures and the petitioner exercised undue influence upon him and got the matter referred to National Lok Adalat, it can be stated that on 29.06.2019, a joint application was filed by the petitioner and the respondent for preponement of case. The said application bears signature of the respondent.
Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 9/1725. It is further seen that on 11.07.2019, the petitioner and the respondent appeared before the trial Court and made joint statement that there were chances of settlement between them and requested for referral of the case to National Lok Adalat to be held on 13.07.2019. The proceedings recorded by the trial Court cannot be challenged in this manner. The respondent never raised any objection before the trial Court that the petitioner exercised undue influence upon him for seeking his consent for reference of the case to National Lok Adalat.
26. On 13.07.2019, the petitioner and the respondent appeared before National Lok Adalat. National Lok Adalat was assisted by a legal aid counsel. National Lok Adalat was presided over by an officer of Delhi Judicial Service and Associate Member. The respondent had undertaken to pay an amount of Rs. 4,00,000/- to the petitioner in full and final settlement of the case by 15.10.2019. National Lok Adalat recorded statement of the respondent. In his statement, the respondent undertaken to pay an amount of Rs. 4,00,000/- to the petitioner in full and final settlement by 15.10.2019. He stated that he made the statement voluntarily without any force, fear or coercion. The respondent never raised any objection that the petitioner exercised any undue influence upon him for making the said statement. Moreover, the respondent did not appear on 31.10.2019. He appeared on 24.12.2019. He did not raise any objection that the petitioner forced him to enter into settlement before National Lok Adalat on 13.07.2019.
Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 10/1727. It is, therefore, evident that the respondent voluntarily made statement before National Lok Adalat and undertaken to pay Rs. 4,00,000/- to the petitioner in full and final settlement by 15.10.2019. In terms of his statement, duly signed by him, National Lok Adalat deferred the case for verification of the payment.
28. Mere fact that National Lok Adalat did not state in clear words that the case was settled and it was deferred for verification of payment only would not lead to an inference that the case was not amicably settled. The case was mutually settled before National Lok Adalat on 13.07.2019 and order dated 13.07.2019 passed by National Lok Adalat is an award of a Lok Adalat.
29. The trial Court committed serious error of law in observing that National Lok Adalat listed the case for verification of payment on 31.10.2019 and therefore, award dated 13.07.2019 is not enforceable as a decree of civil Court.
30. Section 21 of 'The Legal Services Authorities Act, 1987' is as under:
"21. Award of Lok Adalat.-[(1) Every award of the Lok Adalat shall be deemed to be a decree of a civil court or, as the case may be, an order of any other court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of section 20, the court-fee paid in such case shall be refunded in the manner provided under the Court-fees Act, 1870 (7 of 1870).] (2) Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any court against the award."Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 11/17
31. In K.N. Govindan Kutty Menon vs. C.D. Shaji, (2012) 2 SCC 51, Hon'ble Supreme Court of India held, as under:
"26. From the above discussion, the following propositions emerge:
(1) In view of the unambiguous language of Section 21 of the Act, every award of the Lok Adalat shall be deemed to be a decree of a civil court and as such it is executable by that court.
(2) The Act does not make out any such distinction between the reference made by a civil court and a criminal court.
(3) There is no restriction on the power of the Lok Adalat to pass an award based on the compromise arrived at between the parties in respect of cases referred to by various courts (both civil and criminal), tribunals, Family Court, Rent Control Court, Consumer Redressal Forum, Motor Accidents Claims Tribunal and other forums of similar nature. (4) Even if a matter is referred by a criminal court under Section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court."
32. An award passed by a Lok Adalat is final and binding upon the parties. Such an award can only be challenged under Article 226 of 'The Constitution of India, 1950'.
33. In Bhargavi Constructions and Another vs. Kothakapu Muthyam Reddy and Others, (2018) 13 SCC 480, Hon'ble Supreme Court of India held, as under:
"24.....This court, in no uncertain terms, has laid down that challenge to the award of Lok Adalat can be done only be filing a writ petition under Article 226 and / or Article 227 of the Constitution of India in the High Court and that too on very limited grounds....."Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 12/17
34. The trial Court committed serious error of law in observing that settlement had failed and notice under Section 251 Cr.P.C. was framed against the respondent and case proceeded on merits. The trial Court committed serious error of law in proceeding with the case which was amicably settled before Lok Adalat. The trial Court committed serious error of law in observing that the petitioner cannot seek continuance of proceeding as well as enforcement of award. The petitioner never stated that he was intending to proceed with case on merits. It was the trial Court who had framed notice under Section 251 Cr.P.C. and proceeded with the case on merits.
35. Even otherwise, proceeding with the case which is already settled in the Lok Adalat is not legally permissible.
36. In K.N. Govindan Kutty Menon (supra), Hon'ble Supreme Court of India dealt with a similar situation, as under:
"20. The question formulated by the High Court in Valarmathi case is whether the Magistrate can convict the accused petitioners under Section 138 of the NI Act after the award was passed in the Lok Adalat. The learned Single Judge, after adverting to Section 21(1) of the Act and the order of the learned Magistrate, has concluded as under: (Valarmathi case, AIR p. 181, paras 13-14) "13. Had there been no settlement in the Lok Adalat, the learned Magistrate could have proceeded with the trial and delivered his judgment, for which, there is no bar. In the instant case, as admitted by both the learned counsel, there was an award passed in the Lok Adalat, based on the consensus arrived at between the parties. As per the award, the accused petitioners had to pay Rs. 3,75,000/- to the respondent complaint on or before 3-9- Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 13/17 2007. As it is an award made by the Lok Adalat, it is final and binding on the parties to the criminal revision and as contemplated under Section 21(2) of the Act, no appeal shall lie to any court against the award.
14. In such circumstances, the petitioners could have filed the execution petition before the appropriate court, seeking the award amount to be paid with interest and costs. In such circumstances, it is clear that the learned Judicial Magistrate became functus officio, to decide the case after the award passed by the Lok Adalat, to convict the accused under Section 138 of the Negotiable Instruments Act, hence, the impugned order passed by the learned Sessions Judge is also not sustainable in law, however, it is clear that the accused petitioners herein after having given consent for the Lok Adalat award being passed and also agreed to pay the award amount Rs. 3,75,000 on or before 3-9-2007 to the respondent, have not complied with their undertaking made before the Lok Adalat, which cannot be justified. However, the order passed by the learned Judicial Magistrate under Section 138 of the Negotiable Instruments Act has to be set aside, in view of the Lok Adalat award passed under Sections 20(1)(i)(b), 20(1)(ii) of the Legal Services Authorities Act (Act 39 of 1987), as the Judicial Magistrate became functus officio and the award is an executable decree in the eye of the law, as per Section 21 of the Act."
After arriving at such conclusion, the learned Single Judge made it clear that as per the award passed by the Lok Adalat, the respondent complainant is at liberty to file execution petition before the appropriate court to get the award amount of Rs. 3,75,000 reimbursed with subsequent interest and costs, as per procedure known to law."
Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 14/1737. Therefore, the trial Court had no jurisdiction to proceed with the trial of the case. The trial Court had become functus officio on settlement of the case before National Lok Adalat on 13.07.2019.
38. However, there is no merit in the contention of the petitioner that the procedure envisaged for enforcement of mediation settlement, in Dayawati case, would be applicable to an award passed in Lok Adalat. The said procedure is not applicable to an award passed in a Lok Adalat. Award passed in Lok Adalat can only be enforced as a decree of civil Court by filing execution petition before the civil Court for recovery of awarded amount in accordance with the procedure laid down under Order 21 of 'The Code of Civil Procedure, 1908'. CONCLUSION:
39. Accordingly, the criminal revision petition filed by the petitioner is partly allowed, as under:
(a) Award passed by National Lok Adalat on 13.07.2019 is final and binding and is deemed as a decree of civil Court;
(b) The trial Court had become functus officio and it had no jurisdiction to proceed with the trial of the case;
(c) The proceedings of the case since 31.10.2019 are set-aside;
(d) The complaint case under Section 138 NI Act is disposed off as settled in terms of award passed by National Lok Adalat on 13.07.2019; and Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 15/17
(e) The petitioner can enforce the award for recovery of amount of Rs. 4,00,000/- in terms of award dated 13.07.2019 passed by National Lok Adalat by filing an execution petition before the civil Court in accordance with procedure provided under Order 21 of 'The Code of Civil Procedure, 1908'.
40. A copy of judgment alongwith trial Court record be sent back to trial Court. The criminal revision file be consigned to record room. Digitally signed by SANJAY SANJAY SHARMA SHARMA Date:
2022.09.09 19:53:59 +0530 Announced in the open Court SANJAY SHARMA-II on this 09th September, 2022 Addl. Sessions Judge-03 (Central) Tis Hazari Courts, Delhi Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 16/17 Kunal Malhotra vs. Sunil Kumar Khatri CNR No.: DLCT010079172022 Crl. Revision No. 270/2022 09.09.2022 Proceedings convened through Video Conferencing.
Present : Mr. Prem V. Joshi, Advocate for the petitioner.
Mr. Mohan Meakin Indora, Advocate for the respondent.
Vide separate judgment, the criminal revision petition filed by the petitioner is partly allowed. The criminal revision file Digitally signed be consigned to record room. SANJAY by SANJAY SHARMA SHARMA Date:
2022.09.09 19:54:11 +0530 Sanjay SharmaII ASJ03, Central District, Tis Hazari Courts, Delhi 09.09.2022 Crl. Rev. No. 270/2022 Kunal Malhotra vs. Sunil Kumar Khatri Page No. 17/17