Allahabad High Court
Shashwat Agrawal vs State Of U.P. And Another on 27 September, 2024
HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Neutral Citation No. - 2024:AHC:159141 HIGH COURT OF JUDICATURE AT ALLAHABAD (Sl.No.10) Court No. - 79 Case :- APPLICATION U/S 482 No. - 19596 of 2024 Applicant :- Shashwat Agrawal Opposite Party :- State of U.P. and Another Counsel for Applicant :- Anurag Pathak, Harshit Pathak Counsel for Opposite Party :- G.A.,Saurabh Kumar Hon'ble Anish Kumar Gupta,J.
1. Heard Sri Anurag Pathak, learned counsel for the applicant, Sri Anil Srivastava, learned Senior Counsel assisted by Sri Saurabh Kumar, learned counsel for the opposite party no.2 and Sri Raj Bahadur Verma, learned AGA for the State.
2. The instant application under Section 482 Cr.P.C. has been filed seeking quashing of the order dated 22.01.2024 passed by the learned Additional Court, Saharanpur in Complaint Case No. 25882 of 2022, under Section 138 of the Negotiable Instruments Act (in short the 'N.I.Act').
3. The brief facts of the case are that the opposite party no.2 has filed a complaint case under Section 138 of the N.I. Act for dishonour of three cheques bearing cheque no. 418192 dated 28.06.2022, amounting Rs. 5,00,000/-, cheque no. 418193 dated 28.06.2022, amounting Rs. 5,00,000/- and cheque no. 418194 dated 28.06.2022, amounting Rs. 6,72,000/- respectively issued by the applicant herein, which were paid in terms of the sale deed executed by the opposite party no.2 in favour of the applicant herein. The said cheques were presented for encashment and were dishonoured. Thereupon a legal notice dated 19.07.2022 was sent, which was not complied with. Thereafter a complaint case was filed on 24.08.2022 by the opposite party no.2 under Section 138 of N.I.Act. Subsequently during the pendency of the aforesaid complaint case, the applicant herein entered into a settlement with the opposite party no.2 and agreed to make the entire payment of the aforesaid cheque amount. A compromise dated 05.01.2024 has arrived at between the parties and the applicant has admitted his liability with regard to the aforesaid three cheques and has agreed to make the payment by the 5th of February 2024. In terms of the aforesaid settlement, the matter was taken up in the Lok Adalat on 22.01.2024 and the following order was passed:
"Parties are present along with their learned counsel.
The present complaint has been filed by the complainant against the accused in respect of dishonour of dishonour of following three cheques---
1. Cheque No. 418192 dated 28-6-2022 for the sum of Rs. 500,000/-
2. Cheque No. 418193 dated 28-6-2022 for the sum of Rs. 500,000/-
3. Cheque No. 418194 dated 28-6-2022 for the sum of Rs. 672,000/-
Subsequently the parties entered into a compromise and thereafter on 05-01-2074 filed a compromise deed through paper No. 15-B, stating that they have settled their dispute to the effect that the accused has issued following two cheques in favour of the complainant---
1. Cheque No. 947560 for the sum of Rs 150,000/- and
2. Cheque No. 947561 for the sum of Rs. 150,000/-
It has also been agreed that remaining amount shall be paid positively by 05-02-2024 Accordingly it is prayed that the complaint case should be decided in terms of compromise 15-B. The aforesaid compromise was verified by me on 08-01-2024. The present complaint has been filed against the accused under Section 138 NI Act. The offence under Section 138 of NI Act is compoundable. Therefore the complaint case is disposed of in terms of aforesaid compromise as under---
1. That out of the settled amount the accused has already paid a sum of Rs. 300,000/ through aforementioned two cheques. Remaining settled amount shall be paid positively by 05-02-2024.
2. On default of payment of the settled amount as aforesaid the accused will have to undergo three months simple imprisonment.
3. On default of payment of amount in terms of compromise the complainant will be entitled to interest at the rate of 9% on the amount due by then, till realisation of entire amount.
Accordingly the complaint is decided in terms of compromise 13-8. Let the file be consigned to record room with the further direction that on being informed by the complainant about the default in payment, the file will be summoned from the record Room and recovery warrant and NBW will be issued forthwith against the accused."
4. Learned counsel for the applicant submits that the Lok Adalat has erroneously imposed the conditons no.2 and 3, which were not there in the compromise. Therefore, learned counsel for the applicant states that it was not open for the Lok Adalat to impose the conditions no.2 and 3 by admitting the compromise and disposing of the case on the basis of the settlement / compromise. Being aggrieved by the aforesaid order passed by the Lok Adalat, the instant application has been filed initially on 07.08.2024, in which this Court has passed the following order:
"1. Heard Sri Anurag Pathak, learned counsel for the applicant and Sri Rajeev Kumar Singh, learned AGA for the State.
2. Learned counsel for the applicant submits that the applicant is aggrieved by the order dated 22.1.2024, whereby the Complaint Case No.25882 of 2022 under Section 138 of N.I. Act was disposed of in terms of the settlement, which was duly verified by the trial court on 8.1.2024. Learned counsel for the applicant further submits that the trial court has recorded that the parties are present along with their learned counsels and he disputes that neither the applicant nor his counsel was present before the court on that date.
3. Further, learned counsel for the applicant is aggrieved by other two conditions imposed, which was not part of the compromise, namely, on default of payment of the settled amount as aforesaid, the accused will have to undergo three months of imprisonment and on default of payment of amount in terms of the compromise, the complainant will be entitled to interest at the rate of 5% of the amount duped by them till realization of the entire amount.
4. In view thereof, let a report be called from the Presiding Officer, Additional Court, Saharanpur with regard to the material facts specifically the presence of the parties and the conditions imposed beyond the compromise.
5. Put up this matter on 21.8.2024, as fresh."
5. In pursuance to the aforesaid order, a detailed report has been submitted by the Presiding Officer, Additional Court, Saharanpur justifying the imposition of the conditions in view of various judgments of the Apex Court and this Court as well.
6. The report submitted by the learned Magistrate reads as under :
"Please be kind enough to take notice of the letter dated 30-7-2024 whereby I have been directed to submit my explanation about the complaint case No. 25882 of 2022 Kanishka Kund Jain vs. Shaswata Agrawal u/s Section 138 of NI Act in Lok Adalata held on 22-01-2024.
Special Lok Adalata for NI Act cases was held on 22-01-2024, when the aforementioned complainant case was also decided. The accused has filed a petition before Hon'ble the High Court challenging the order on the following grounds---
1. The court has imposed default clause in case of default in payment of the settled amount which was not part of the compromise.
2. That neither the applicant/accused nor his learned counsel was present on the date but both have been shown as present on that date.
So I have been directed to submit my report with regard to presence of parties and conditions imposed beyond the compromise.
In this respect my explanation is as under--
1. Since the impugned order was passed in Special Lok Adalata held on 22-01-2024, therefore according to the Section 21 of "The Legal Services Authorities Act, 1987", the order will be deemed as a decree. Section 21 of "The Legal Services Authorities Act, 1987", reads as under--
"Section 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."
2. Mode and procedure for execution of decree of a Civil Court has been prescribed in Chapter II (Section 36 to 74) and Order 21 of Civil Procedure Code. Relevant provisions are mentioned as under-
A. Order 21 Rule- 30 Decree for payment of money. Every decree for the payment of money, including a decree for the payment of money as the alternative to some other relief, may be executed by the detention in the civil prison of the judgment-debtor, or by the attachment and sale of his property, or by both.
B. Section 51---Powers of Court to enforce execution-Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree-holder, order execution of the decree-
a) by delivery of any property specifically decreed;
b) by attachment and sale or by the sale without attachment of any property;
c) by arrest and detention in prison for such period not exceeding the period specified in section 58, where arrest and detention is permissible under that section
d) by appointing a receiver; or
e) in such other manner as the nature of the relief granted may require:
Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment-debtor an opportunity of showing cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied-
a) that the judgment-debtor, with the object or effect of obstructing or delaying the execution of the decree-
i. is likely to abscond or leave the local limits of the jurisdiction of the Court, or ii. has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property, or
b) that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, or
c) that the decree is for a sum for which the judgment- debtor was bound in a fiduciary capacity to account.
Explanation-In the calculation of the means of the judgment-debtor for the purposes of clause (b), there shall be left out of account any property which, by or under any law or custom having the force of law for the time being in force, is exempt from attachment in execution of the decree.
C. Section 55---Arrest and detention-
1) A judgment-debtor may be arrested in execution of a decree at any hour and on any day, and shall, as soon as practicable, be brought before the Court, and his detention may be in the civil prison of the district in which the Court ordering the detention is situate, or, where such civil prison does not afford suitable accommodation, in any other place which the State Government may appoint for the detention of persons ordered by the Courts of such district to be detained:
Provided firstly- that, for the purpose of making an arrest under this section, no dwelling-house shall be entered after sunset and before sunrise:
Provided, secondly- that no outer door of a dwelling- house shall be broken open unless such dwelling house is in the occupancy of the judgment-debtor and he refuses or in any way prevents access thereto, but when the officer authorized to make the arrest has duly gained access to any dwelling-house, he may break open the door of any room in which he has reason to believe the judgment-debtor is to be found:
Provided, thirdly- that, if the room is in the actual occupancy of a woman who is not the judgment- debtor and who according to the customs of the country does not appear in public, the officer authorized to make the arrest shall give notice to her that she is at liberty to withdraw, and, after allowing a reasonable time for her to withdraw and giving her reasonable facility for withdrawing, may enter the room for the purpose of making the arrest:
Provided, fourthly- that, where the decree in execution of which a judgment-debtor is arrested, is a decree for the payment of money and the judgment- debtor pays the amount of the decree and the costs of the arrest to the officer arresting him, such officer shall at once release him.
2) The State Government may, by notification in the Official Gazette, declare that any person or class of persons whose arrest might be attended with danger or inconvenience to the public shall not be liable to arrest in execution of a decree otherwise than in accordance with such procedure as may be prescribed by the State Government in this behalf.
3) Where a judgment-debtor is arrested in execution of a decree for the payment of money and brought before the Court, the Court shall inform him that he may apply to be declared an insolvent, and that he 1 [may be discharged) if he has not committed any act of bad faith regarding the subject of the application and if he complies with the provisions of the law of insolvency for the time being in force.
4) Where a judgment-debtor expresses his intention to apply to be declared an insolvent and furnishes security, to the satisfaction of the Court, that he will within one month so apply, and that he will appear, when called upon, in any proceeding upon the application or upon the decree in execution of which he was arrested, the Court may release him from arrest, and, if he fails so to apply and to appear, the Court may either direct the security to be realized or commit him to the civil prison in execution of the decree.
D. Section 56---Prohibition of arrest or detention of women in execution of decree for money-Notwithstanding anything in this Part, the Court shall not order the arrest or detention in the civil prison of a woman in execution of a decree for the payment of money.
E. Section 57-Subsistence-allowance-The State Government may fix scales, graduated according to rank, race and nationality, of monthly allowances payable for the subsistence of judgment-debtors.
F. Section 58-Detention and release-
1) Every person detained in the civil prison in execution of a decree shall be so detained-
a) where the decree is for the payment of a sum of money exceeding five thousand rupees for a period not exceeding three months, and,
b) where the decree is for the payment of a sum of money exceeding two thousand rupees, but not exceeding five thousand rupees, for a period not exceeding six weeks.
Provided that he shall be released from such detention before the expiration of said period of detention-
On the amount mentioned in the warrant for his detention being paid to the officer-in- charge of civil prison or On the decree against him being otherwise fully satisfied, or On the request of the person on whose application he has been so detained or Iv. On the omission by the person on whose application he has been so detained to pay subsistence allowance.
Provided also that he shall not be released from such detention under clause II or III, without the order of the court, 1A) For the removal of doubts, it is hereby declared that no order for detention of the judgment-debtor in civil prison in execution of a decree for the payment of money shall be made, where the total amount of the decree does not exceed two thousand rupees.
2) A judgment-debtor released from detention under this section shall not merely by reason of his release be discharged from his debt, but he shall not be liable to be re-arrested under the decree in execution of which he was detained in the civil prison.
3. Thus perusal of the aforesaid scheme and all provisions it becomes clear that the term "decree" is not a like a bubble of water or bed of rose for wrong doers, instead of it, it is more drastic and stringent. In case of money decree exceeding Rs. 5000/, the executing Court on application of the decree holder may adopt any one following mode---
1) The Court may execute the decree by attachment or sale of movable or immovable properties of the judgment debtor or
2) The Court may direct civil imprisonment of the judgment debtor which shall not exceed three months to be commenced only after payment of subsistence allowance in terms of Section 57 of Civil Procedure Code, or
3) In addition to above Section 51 (e) of Civil Procedure Code confers some more powers in the form of inherent powers of the Court when it says that- "In such other manner as the nature of the relief granted may require"
4. In this Court nearly 8000/ complaint cases relating to Section 138 of NI Act are pending. Due to non-cooperation of the police the Court despite striving hard is not able to achieve the desired results. Due to non- execution of decree or other processes NBW, summons or notices, the functioning of the Court has been paralyzed. Parties ceased to take any interest to settle the disputes by way of compromise due to failure of getting the benefit of the decree for want of execution/service of processes by the police or District magistrate. In this respect the court was compelled to write several letters to SSP Saharanpur but in vain. Photocopies of some letters are attached with the report.
5. So in order to combat gargantuan pendency of complaint cases under Section 138 of NI Act and the ever increasing melancholy by expeditious disposal it became the need of hour to motivate the parties for settlement by way of compromise I took recourse to Section 51 (e) of Civil Procedure Code which has recognized the inherent powers of the courts, and while exercising the inherent powers of the Court added default clauses in the form of imprisonment and interest and affixed the sample of proposed order in the notice board of the Court, in the office and Court-room also. In addition to it before taking on record any compromise I always made the parties and their counsels aware of the proposed order. The same practice was followed by me in this case also before verifying the compromise deed and only when the parties assented to the proposed order which was passed on 22-01-2024 the compromise deed was verified by me.
6. This power of the Court to adapt itself and interpret the law according to the changing needs of the society has been recognized by our Hon'ble the Constitutional Courts in the followings cases--
1. The luminous guideline in the interpretation of a constitutional provision is provided by the Supreme Court of United States in Weems v. U. S., (1909) 54 LEd 793 (801)---
"Legislation, both statutory and constitutional, is enacted, it is true, from an experience of evils, but its general language should not, therefore, be necessarily confined to the form that evil had therefore taken. Time works changes, brings into existence new conditions and purposes. Therefore, a principle, to be vital, must be capable of wider application than mischief which gave it birth. This is peculiarly true of Constitutions. They are, to use the words of Chief Justice Marshall, "designed to approach immortality as nearly as human institutions can approach it. "The future is their care, and provisions for events of good and bad tendencies of which no prophecy can be made in the application of a Constitution, therefore, our contemplation cannot be only of what has been, but of what may be. Under any other rule a Constitution would indeed be as easy of application as it would be deficient in efficacy and power. Its general principles would have little value, and be converted by precedent info impotent and lifeless formulas. Rights declared in the words might be lost in reality. And this has been recognized. The meaning and vitality of the Constitution have developed, against narrow and restrictive construction.
This principle of interpretation which requires that a constitutional provisions must be construed, not in a narrow and constricted sense, but in a wide and liberal manner so as to anticipate and take account of changing conditions and purposes so that the constitutional provision does not get atrophied or fossilized but remains flexible enough to meet the newly emerging problems and challenges, applied with greater force in relation to a fundamental right enacted by the Constitution. The fundamental right to life which is the most precious human right and which forms the ark of all other rights must therefore be interpreted in a broad and expansive spirit so as to invest, it with significance and vitality which may endure for years to come and enhance the dignity of the individual and the worth of the human persons." (Francis Corallie Mullin v. Administrator AIR 1981 SC 746)
2. Interpretation of the provisions-The Court is supposed to adapt Itself according to the contemporary needs of the society- Justice M. Katju while criticizing the old licensing policy and its applicability in the then social needs observed as under--
"37. As a matter of fact, the vast expansion of the scope of Articles 14, 19 and 21 by the Supreme Court in the last 20 years or so itself proves that our Supreme Court has adopted the organic (or dynamic) approach. And this is very appropriate, since Courts must apply the law to flesh and blood, and not dry bones. Today our country is facing gigantic problems, social, economic and political, and unless a dynamic and activist approach is adopted the judiciary will be living in an ivory tower unconnected with reality. (Ganesh Chandra Bhatt vs. DM Almora AIR 1993 All 993)
3. Badshah v. Sou. Urmila Badshah Godse, AIR 2014 SC 869. This case related to standard of proof of legal marriage in a case under section 125 of the Code, the Supreme Court made a very emphatic observation regarding the ambit and object of the law provided by section 125 of the Code observed as under--
"Thirdly, in such cases, purposive interpretation needs to be given to the provisions of Section 125,Cr.P.C. While dealing with the application of destitute wife or helpless children or parents under this provision, the Court is dealing with the marginalized sections of the society. The purpose is to achieve "social justice" which is the Constitutional vision, enshrined in the Preamble of the Constitution of India. Preamble to the Constitution of India clearly signals that we have chosen the democratic path under rule of law to achieve the goal of securing for all its citizens, justice, liberty, equality and fraternity. It specifically highlights achieving their social justice. Therefore, it becomes the bounden duty of the Courts to advance the cause of the social justice. While giving interpretation to a particular provision, the Court is supposed to bridge the gap between the law and society."
The Supreme Court further observed-
"Of late, in this very direction, it is emphasized that the Courts have to adopt different approaches in "social justice adjudication", which is also known as "social context adjudication" as mere "adversarial approach" may not be very appropriate. There are number of social justice legislations giving special protection and benefits to vulnerable groups in the society. Prof. Madhava Menon describes it eloquently: "It is, therefore, respectfully submitted that "social context judging" is essentially the application of equality jurisprudence as evolved by Parliament and the Supreme Court in myriad situations presented before courts where unequal parties are pitted in adversarial proceedings and where courts are called upon to dispense equal justice. Apart from the social- economic inequalities accentuating the disabilities of the poor in an unequal fight, the adversarial process itself operates to the disadvantage of the weaker party. In such a situation, the Judge has to be not only sensitive to the inequalities of parties involved but also positively inclined to the weaker party if the imbalance were not to result in miscarriage of justice. This result is achieved by what we call social context judging or social justice adjudication."
It further observed.........
"The law regulates relationships between people. It prescribes patterns of behavior. It reflects the values of society. The role of the Court is to understand the purpose of law in society and to help the law achieve its purpose. But the law of a society is a living organism. It is based on a given factual and social reality that is constantly changing. Sometimes change in law precedes societal change and is even intended to stimulate it. In most cases, however, a change in law is the result of a change in social reality. Indeed, when social reality changes, the law must change too. Just as change in social reality is the law of life, responsiveness to change in social reality is the life of the law. It can be said that the history of law is the history of adapting the law to society's changing needs. In both Constitutional and statutory interpretation, the Court is supposed to exercise direction in determining the proper relationship between the subjective and objective purpose of the law."
Therefore, the Court held---
"Provision of maintenance would definitely fall in this category which aims at empowering the destitute and achieving social justice or equality and dignity of the Individual. While dealing with cases under this provision, drift in the approach from "adversarial" litigation to social context adjudication is the need of the hour."(Badshah v. Sou. Urmila Badshah Godse, AIR 2014 SC 869)
4. Ongoing statute---Power to adapt itself according to the changing needs of the society or public at large with the passage of time--Criminal Procedure Code is an ongoing statute---Supreme Court while explaining the meaning of ongoing statute observed that the Criminal Procedure Code is an ongoing statute, in the following words---
"In case of an ongoing statute, it is presumed that the Parliament intended the Court to apply a construction that continuously updates its wordings to allow for changes and is compatible with the contemporary situation. In paragraph 14 of the said decision, the Court observed thus-
"14. It must also be remembered that the Criminal Procedure Code is an ongoing statute. The principles of interpreting an ongoing statute have been very succinctly set out by the leading jurist Francis Bennion in his commentaries titled Statutory Interpretation, 2nd Edn. p. 617---
"It is presumed Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wordings to allow for changes since the Act was initially framed. While it remains law, it has to be treated as always speaking. This means that in its application on any day, the language of the Act though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as a current law.
In construing an ongoing Act, the interpreter is to presume that Parliament intended the Act to be applied at any future time in such a way as to give effect to the original intention. Accordingly, the interpreter is to make allowances for any relevant changes that have occurred since the Act's passing, in law, in social conditions, technology, the meaning of words and other matters.... That today's construction involves the supposition that Parliament was catering long ago for a state of affairs that did not then exist is no argument against that construction. Parliament, in the wording of an enactment, is expected to anticipate temporal developments. The drafter will foresee the future and allow for the wording.
***An enactment of former days is thus to be read today, in the light of dynamic processing received over the years, with such modification of the current meaning of its language as will now give effect to the original legislative intention. The reality and effect of dynamic processing provides the gradual adjustment. It is constituted by judicial interpretation, year in and year out. It also comprises processing by executive officials." (State of Maha. vs. Dr Praful B. Desai (2003) 4 SCC 601)
7. So in order to overcome the burden of increasing number of cheque bounce cases, when the police is not complying with the orders and the wrongdoers are not willing to pay the cheque amount despite orders of the court, need of the hour is to strengthen the hands of judicial officers and say good-by to traditional approach of interpretation and instead of it to adopt renovative and dynamic approach.
8. Compromise means when both parties are willing to perform certain act in a certain manner in other words generally it is bilateral in nature. But in the following cases our Hon'ble the Apex Court and Hon'ble the High Court after having taken note of the increasing number of cases recognized the inherent powers of the court and thus empowered the court to decide the case even when the adversary was not ready to accept the proposal---
1. M/s Meters and Instruments Private Limited and Another vs. Kanchan Mehta AIR 2017 SC 4594" --In this case Hon'ble the Apex Court while recognizing the inherent powers of the court in para 18 (3) observed as under---
"The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court. Though compounding requires consent of both parties, even in absence of such consent, the Court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused."
2. Shrimati Rani Gaur vs. State of UP (2023)124 ACC 891 (All) ---While following the judgment rendered in M/s Meters and Instruments Private Limited and Another vs. Kanchan Mehta AIR 2017 SC 4594 observed as under..
"8. I studied both the judgments. The Supreme Court did not say that the requirement of consent for compounding may just be done away with. Instead widening the compensatory aspect of cases filed under Section 138 of the Negotiable Instrument Act, the Apex Court has carved out a window in the existing scheme of things saying that the case can be disposed of without obtaining direct consent of the complainant under certain circumstances. The circumstances included offering an amount just fair and acceptable which in the opinion of the court is appropriate for duly compensating the complainant, That is under certain circumstances the court can proceed in absence of direct consent. The court is empowered to apply its discretion in terms of provisions of Section 258 Cr.P.C. It may be made clear that this aspect of the matter is distinct and separate from compounding of the case where both the parties agree. The revisional court has remanded the matter to decide it afresh as per law laid down in M/s Meters and Instruments Private Limited and Another (supra). By the aforesaid judgment the Apex Court has emphasized that where an appropriate amount has been offered/deposited, the trial court may consider to drop the proceeding. Definitely the objections, if any, raised by complainant in this regard shall be taken into consideration before the court concerned decides to act upon on the basis of offer/deposit of appropriate amount as compensation. A pertinent question may arise as to criteria to be adopted for determination of amount of compensation which may be termed as just, fair and acceptable. In my opinion, provisions of section 138 N.I. Act regarding fine may act as the best guide coupled with all the peculiar facts and circumstances of each case to determine the amount of compensation being just, fair and acceptable. The court must record its satisfaction as regard above before it proceeds to finally decide and drop the proceedings under Section 258 Cr.P.C. Definitely the court is expected to apply its mind and judicial discretion when it proceeds to decide the matter in the light of M/s Meters and Instruments Private Limited and Another (supra). The court has not lost its power of discretion in such matters. In view of the above i do not find any cause for interference."
9. Hon'ble the Supreme Court has always impressed upon the disposal of cheque bounce cases by way of amicable settlement. In order to motivate the parties to settle their disputes at the earliest stages it has formulated a graded scheme of imposing costs. In the case of "Damodar S. Prabhu vs. Sayed Babalal (2010) 5 SCC 663" Hon'ble the Supreme Court in para 21 has propounded thus-
21. With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed
a) That directions can be given that the Writ of Summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused.
b) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the Court deems fit.
c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.
d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount."
10. So in the light of law laid down by Hon'ble the Supreme Court in Damodar S. Prabhu case, the accused was required to pay 10% of the cheques' amount as the costs in the District Legal Services Authority. The present complaint case was filed in respect of following three cheques---
1. Cheque No. 418192 dated 28-6-2022 for the sum of Rs. 500,000/
2. Cheque No. 418193 dated 28-6-2022 for the sum of Rs. 500,000/ and
3. Cheque No. 418192 dated 28-6-2022 for the sum of Rs. 672,000/
11. Thus it becomes clear that the complaint case involved huge amount and the compromise was confined only up to the cheques' amount, but in order to encourage the compromise, the accused was exempted from paying 10% costs in the Legal Services Authority. Despite this fact the accused did not pay the settled amount till date. Why should the complainant suffer for the wrongs of accused for infinite time?
12. In this respect for the guidance of the subordinate courts of the Country Hon'ble the Supreme Court in the following cases has held that---
1. Sentencing policy---Uniform exercise of powers---Up to twice the cheque amount and interest at the rate of 9% per annum---The Apex Court in order to bring the uniformity in sentencing policy observed thus-
"As the provisions of Chapter XVII of the Act strongly lean towards grant of reimbursement of the loss by way of compensation, the court should unless there are special circumstances in all cases of conviction uniformly exercise the power to levy fine up to twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic, which would mean not only the payment of the cheque amount but interest thereon at reasonable rate. Uniformity and consistency in deciding similar cases by different courts not only increases the credibility of the cheque as a negotiable instrument, but also the credibility of courts of justice." (R Vijayan vs. Baby (2012)1 SCC (Cri) 520)
2. Section 138 NI Act---Dishonour of cheque---Powers of the court to close proceedings---In view of the above, we hold that where the cheque amount with interest and cost as assessed by the Court is paid by a specified date, the Court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 Cr.P.C. (M/S Meters And Industries Private Ltd vs Kanchan Mehta Criminal Appeal No 1731 of 2017 DOD 5-10-2017).
3. Dishonour of cheque---Compensation with interest at the rate of 9% per annum---Object of the Chapter XVII of NI Act---Punitive, compensatory and restitutive as well---Providing single window for all claims---As regard to the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of the NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for dishonour of cheque as well as civil liability for realization of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the Courts should uniformly levy fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. (M/S Kalamani Tex vs. P. Balasubramanian Criminal Appeal 123 of 2021 (DOD 10 February, 2021) SC) (Three Judge Bench)
13. So in order to avoid further loss of the bona-fide cheque holders due to delaying tactics adopted by the drawers of the cheque, in payment of the settled amount, payment as interest at the rate of 9% has been recognized by Hon'ble the Supreme Court. Therefore keeping in mind the general tactics of the dishonest drawers, the Court while passing the impugned order and in exercise of its inherent powers also added the condition of payment of interest at the rate of 9% in the order. The purpose of this addition is two folded one is to compensate the future/further loss to the bona-fide cheque holders and another is to make the wrongdoers aware that if the order is not obeyed they will not be able to take any advantage of delay and thus as a deterrence in the minds of wrong doers.
14. So, while passing the impugned order, the Court has not gone beyond the provisions or procedure prescribed by law. To the contrary what is implicit in the word "decree" has been made explicit by disclosing each and every consequence to be followed in case of non- compliance as deterrence in the mind of wrong doers. Had he obeyed the order he would not have faced the enumerated consequences.
15. As far as the question of presence of the parties is concerned on 22-01- 2024 the impugned order was passed in Special Lok Adalata. On that day in total 169 cases were fixed and 57 cases were disposed of. The impugned order was passed by me on my lap-top. On my direction case was called out by the court peon/orderly and then order was typed by me on my lap top. As impugned order was passed more than 7 months earlier, so I have no personal knowledge about the presence of the parties. The orderly had told the parties present in the court. However, mistake in hearing cannot be ruled out due to heavy rush in court. It may be possible that the accused might be present but he deliberately might have avoided his signature on the order and in view of his conduct the later possibility appears more possible.
16. Thus order was passed with bona-fide intention simply to revive the faith of the general public which had been lost due to non-compliance by the police and the wrong-doers as well. However whatever directions are issued will be honoured and complied with utmost respectfully and sincerely.
17. Accordingly report is submitted for kind perusal."
7. From the aforesaid report, it appears that the learned Magistrate while exercising the jurisdiction sitting as a Presiding Officer of the Lok Adalat has confused himself that he is still exercising the powers of a Magistrate, who can pass the appropriate orders on the basis of a compromise compounding the offences under Section 138 of the N.I.Act. The moment, the same officer, who was holding the post of Magistrate takes up the matter as a Presiding Officer of the Lok Adalat seizes the power of the Magistrate and in Lok Adalat, the Presiding Officer's role is only that of a conciliator, who can facilitate the parties to arrive at a compromise and if the parties disagreed and did not settle their dispute, then the Lok Adalat is deprived of any powers of a Magistrate to adjudicate the dispute between the parties.
8. It is settled view that even if a criminal proceeding has been referred to the Lok Adalat, the award passed by the Lok Adalat shall be treated as a decree of a civil court and a decree of civil court cannot impose any penalty. In the instant case, the learned Magistrate is said to have been confused, while holding the Lok Adalat that is still having the power of a Magistrate to pass the appropriate orders in the in the interest of justice, which is reflected from the aforesaid report submitted by the learned Magistrate.
9. In the State of Punjab and another vs. Jalour Singh and others, AIR 2008 (2) SCC 660, three Judges Bench of the Apex Court has held as under:
"8. It is evident from the said provisions that Lok Adalats have no adjudicatory or judicial functions. Their functions relate purely to conciliation. A Lok Adalat determines a reference on the basis of a compromise or settlement between the parties at its instance, and put its seal of confirmation by making an award in terms of the compromise or settlement. When the Lok Adalat is not able to arrive at a settlement or compromise, no award is made and the case record is returned to the court from which the reference was received, for disposal in accordance with law. No Lok Adalat has the power to "hear" parties to adjudicate cases as a court does. It discusses the subject matter with the parties and persuades them to arrive at a just settlement. In their conciliatory role, the Lok Adalats are guided by principles of justice, equity, fair play.When the LSA Act refers to 'determination' by the Lok Adalat and 'award' by the Lok Adalat, the said Act does not contemplate nor require an adjudicatory judicial determination, but a non-adjudicatory determination based on a compromise or settlement, arrived at by the parties, with guidance and assistance from the Lok Adalat. The 'award' of the Lok Adalat does not mean any independent verdict or opinion arrived at by any decision making process. The making of the award is merely an administrative act of incorporating the terms of settlement or compromise agreed by parties in the presence of the Lok Adalat, in the form of an executable order under the signature and seal of the Lok Adalat.
9. But we find that many sitting or retired Judges, while participating in Lok Adalats as members, tend to conduct Lok Adalats like courts, by hearing parties, and imposing their views as to what is just and equitable, on the parties. Sometimes they get carried away and proceed to pass orders on merits, as in this case, even though there is no consensus or settlement. Such acts, instead of fostering alternative dispute resolution through Lok Adalats, will drive the litigants away from Lok Adalats. Lok Adalats should resist their temptation to play the part of Judges and constantly strive to function as conciliators. The endeavour and effort of the Lok Adalats should be to guide and persuade the parties, with reference to principles of justice, equity and fair play to compromise and settle the dispute by explaining the pros and cons, strength and weaknesses, advantages and disadvantages of their respective claims.
12. It is true that where an award is made by Lok Adalat in terms of a settlement arrived at between the parties, (which is duly signed by parties and annexed to the award of the Lok Adalat), it becomes final and binding on the parties to the settlement and becomes executable as if it is a decree of a civil court, and no appeal lies against it to any court. If any party wants to challenge such an award based on settlement, it can be done only by filing a petition under Article 226 and/or Article 227 of the Constitution, that too on very limited grounds. But where no compromise or settlement is signed by the parties and the order of the Lok Adalat does not refer to any settlement, but directs the respondent to either make payment if it agrees to the order, or approach the High Court for disposal of appeal on merits, if it does not agree, is not an award of the Lok Adalat. The question of challenging such an order in a petition under Article 227 does not arise. As already noticed, in such a situation, the High Court ought to have heard and disposed of the appeal on merits."
10. The aforesaid view has been further affirmed by the Apex Court in Bharvagi Construction vs. Kothakapu Muthyam Reddy and others, AIR 2017 SC 4428, wherein the Apex Court has held as under :
"27. In our considered view, the aforesaid law laid down by this Court is binding on all the Courts in the country by virtue of mandate of Article 141 of the Constitution. This Court, in no uncertain terms, has laid down that challenge to the award of Lok Adalat can be done only by 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.
28. In the light of clear pronouncement of the law by this Court, we are of the opinion that the only remedy available to the aggrieved person(respondents herein/plaintiffs) was to file a writ petition under Article 226 and/or 227 of the Constitution of India in the High Court for challenging the award dated 22.08.2007 passed by the Lok Adalat. It was then for the writ Court to decide as to whether any ground was made out by the writ petitioners for quashing the award and, if so, whether those grounds are sufficient for its quashing."
11. Thus, in the considered opinion of this Court, the report submitted by the Magistrate is not the correct understanding the powers of the Lok Adalat and the Magistrate is confused while sitting as a Presiding Officer of a Lok Adalat, he still have a power of the Magistrate. Therefore, in view of the aforesaid settled view as has been laid down by the Apex Court in the aforesaid judgments, the Presiding Officer of a Lok Adalat is not empowered to include any condition beyond the compromise/settlement between the parties. Thus, the conditions of punishment in case of default of the payment of settlement amount and payment of interest at the rate of 9% could not have been imposed by the learned Magistrate as the same were not the part of the compromise arrived at between the parties. Had the Magistrate concerned passed the similar orders while passing the orders under Section 147 of the N.I. Act, while compounding the offences under Section 138 of the N.I.Act, it would be open for him to impose just the appropriate conditions in the interest of justice but while exercising the jurisdiction and powers of a Lok Adalat, the Magistrate concerned was debarred from exercising the power of Magistrate and it was not open for him to impose such conditions.
12. However, Sri Anil Kumar Srivastava, learned Senior Advocate appearing for the opposite party no.2 placing reliance upon the aforesaid two judgments submits that an award passed by the Lok Adalat is a decree passed by a civil court, which can be challenged only by way of the writ petition under Article 226 and 227 of the Constitution of India. The powers of the High Court under Section 482 Cr.P.C. against an award passed by the Lok Adalat cannot be invoked.
13. Per contra, learned counsel for the applicant submits that since the punishment of imprisonment in case of default has been imposed in the award passed by the Lok Adalat in a proceeding arising out of a criminal complaint case, the powers of Section 482 Cr.P.C. are amenable to a party aggrieved by such an award passed by Lok Adalat.
14. As has been held by the Apex Court in Jalour Singh (supra) against an award passed by the Lok Adalat. The same can be challenged only by way of a petition under Section 226 or 227 of the Constitution of India and not otherwise and the aforesaid views have already been affirmed in Bharvagi Construction (supra) by the Apex Court. In view thereof, the instant application under Section 482 Cr.P.C. against the award of Lok Adalat is not maintainable. Therefore, this Court while exercising the jurisdiction under Section 482 Cr.P.C. cannot interfere with the Award passed by the Lok Adalat, which is a decree passed by civil court, and is not amenbale to the criminal jurisdiction under Section 482 Cr.P.C.
15. With the aforesaid observations, the instant application is disposed of.
16. The Registrar (Compliance) is directed to communicate this order to the State Legal Services Authority as well as all the District Legal Services Authorities, who shall communicate this order to all the Presiding Officers holding the Lok Adalat.
Order Date :- 27.9.2024 Ashish Pd.
(Anish Kumar Gupta,J.)