MEDIATION IN NEGOTIABLE INSTRUMENTS ACT

MEDIATION IN NEGOTIABLE INSTRUMENTS ACT

 

A cheque bounce case is pending before the court. The cheque amount is one crore, and at the request of the accused, the case was referred to mediation. During mediation, the matter was amicably settled for Rs 40,00,000/- as one-time settlement, and a mediation

agreement has been vetted to that effect, and the case was sent back to the court, to close the complaint as matter settled before mediation. However, When the matter was taken in the open court, the complainant was not amenable and wanted to repudiate the mediation

agreement. Is there any remedy for the accused?

The Hon’ble Delhi High Court in the case of Dayawati vs Yogesh

Kumar Gosain Crl.Ref.No.1/2016 [2017 SCC ONLINE DEL 11032] has extensively dealt with the legal permissibility of referring a complaint cases under Section 138 of the NI Act for amicable settlement through mediation; procedure to be followed upon settlement and the legal implications of breach of the mediation settlement is the subject matter of this judgment

ISSUES INVOLVED

(1) Whether it is lawful to make a reference to mediation for

resolution of a criminal case which is compoundable?

(2) Whether the Mediation and Conciliation Rules, 2004

framed by the High Court by exercising the powers under

Code of Civil Procedure, 1908 be applied to a criminal

case? If not, how the legal vacuum can be filled?

(3) What procedure is to be followed after making a

reference of dispute to Mediation?

(4) In case of nom-compliance if the settlement arrived at in

mediation, then what procedure is to be followed by the

court?

(5) Whether it is obligatory for the court to continue with

the case and decide it on merits or to treat such a settlement

agreement equal to decree capable of being executed?

(6) If the mediation settlement agreement is treated as

equivalent to decree, then what procedure is to be followed

for its execution After analzaing the various nuanance of the Law, the Hon’ble High court answered the reference made by the ld. Metropolitan Magistrate which are breifly enumerated here under:

 It is legal to refer a criminal compoundable case as

one under Section 138 of the NI Act to mediation. In the

event that the parties seek reference to mediation, the court

should list the matter before the concerned mediation

centre/mediator on a fixed date directing the presence of the

parties/authorized representatives before the mediator on the

said date.The mediator should forward a carefully executed

settlement agreement duly signed by both parties along with

his report to the court on the date fixed, when the parties or

their authorized representatives would appear before the

court.

 The magistrate would adopt a procedure akin to that

followed by the civil court under Order XXIII of the C.P.C.

 The magistrate should record a statement on oath of

the parties affirming the terms of the settlement; that it was

entered into voluntarily, of the free will of the parties, after

fully understanding the contents and implications thereof,

affirming the contents of the agreement placed before the

court; confirming their signatures thereon. A clear

undertaking to abide by the terms of the settlement should

also be recorded as a matter of abundant caution.

 A statement to the above effect may be obtained on

affidavit. However, the magistrate must record a statement

of the parties proving the affidavit and the settlement

agreement on court record.

 The magistrate should independently apply his

judicial mind and satisfy himself that the settlement

agreement is genuine, equitable, lawful, not opposed to

public policy, voluntary and that there is no legal

impediment in accepting the same.

 Pursuant to recording of the statement of the parties,

the magistrate should specifically accept the statement of

the parties as well as their undertakings and hold them

bound by the terms of the settlement terms entered into by

and between them. This order should clearly stipulate that in

the event of default by either party, the amount agreed to be

paid in the settlement agreement will be recoverable in

terms of Section 431 read with Section 421 of the Cr.P.C.

 Upon receiving a request from the complainant, that

on account of the compromise vide the settlement

agreement, it is withdrawing himself from prosecution, the

matter has to be compounded. Such prayer of the

complainant has to be accepted in keeping with the scheme

of Section 147 of the NI Act.

 In the event of default or non-compliance or breach

of the settlement agreement by the accused person, the

magistrate would pass an order under Section 431 read with

Section 421 of the Cr.P.C. to recover the amount agreed to

be paid by the accused in the same manner as a fine would

be recovered.

 The settlement reached in mediation arising out of a

criminal case does not tantamount to a decree by a civil

court and cannot be executed in a civil court. However, a

settlement in mediation arising out of referral in a civil case

by a civil court, can result in a decree upon compliance with

the procedure under Order XXIII of the C.P.C. This can

never be so in a mediation settlement arising out of a

criminal case.

Thus, the court must very cautious when the accused seeks the case to be forwarded to mediation. It is for the simple reason that a defaulter accused can never be again tried for the offence he has committed and he can easily escape from the punishment which he deserved to receive. The mediation process can be used by the accused as a tool for delaying the proceeding and even escaping from the punishment