Table of content:-

• Background of the case
• Issues Raised
• Statutory Provision Involved 
• Submissions of the Parties
• Judgment Analysis
• Conclusion
• Case Laws:
• Afcons Infrastructure Limited and another V Cherian Varkey Constructions Company Private Limited) [2010 KHC 4498
• Govindankutty Menon vs Shaji [2011 (4) KLT 857]
• Indian Banks Association & Others V. Union of Indian & Others [ILR 2014(2) KERALA 469]
• Damodar S.Prabhu V. Sayed Babalal.H [2010(2) KHC 428]

Sreelal vs State of Kerala & ors [Crl. MC. No. 1864/ 2014]

Background of the case

The complainant filed a complaint before the Judicial Magistrate of First Class, Kollam. The complaint was filed against Respondent No. 1, that is, Murali Menon under section 138 of the Negotiable Instrument Act, 1881 as the respondent- accused had paid an amount of Rs. 5, 00, 00/- by cheques, and the same was dishonored. After being issued a due notice accused didn’t pay the said amount and therefore the complaint was filed before the magistrate. The Magistrate after conducting an inquiry under sections 200 and 202 Crpc and take cognizance of the complainant. On 16th January 2014, respondent No. 1 counsel requested the matter for mediation, and the same was granted and the matter was referred to the mediation.

In the mediation proceeding, the matter was settled between the parties for the sum of amount Rs. 4, 50, 000/- and the time for six months has been granted for the payment. Further, in the case the complainant was allowed to proceed with the case, and if the Respondent-accused pay the amount the complainant needs to withdraw the case.

On 17th February 2014, the parties signed the mediation agreement but the learned magistrate is insisted the complainant- petitioner adduce the evidence before the expiration of the period specified under the mediation agreement. The complainant- petitioner had left with no other remedy and therefore approached this court.

Issues raised

1. Does the Mediation Agreement bound on criminal matters also?
2. Whether such agreement can be admissible as an evidence in criminal matters?
3. Whether the court has to wait for the period mention in such an agreement?
4. If the terms of the agreement are not fulfilled whether it should proceed with the case?

Statutory Provisions Involved

• Section 138 of the Negotiable Instrument Act, 1881

“Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation. — For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]”

• Section 200 of the Code of Criminal Procedure, 1973

“A Magistrate taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate: Provided that, when the complaint is made in writing, the Magistrate need not examine the complainant and the witnesses:

(a) if a public servant acting or- purporting to act in the discharge of his official duties or a Court has made the complaint; or

(b)  if the Magistrate makes over the case for inquiry or trial to another Magistrate under section 192: Provided further that if the Magistrate makes over the case to another Magistrate under section 192 after examining the complainant and the witnesses, the latter Magistrate need not re- examine them”.

• Section 202 of the Code of Criminal procedure, 1973

“Postponement of issue of process.

(1) Any Magistrate, on receipt of a complaint of an offence of which he is authorised to take cognizance or which has been made over to him under section 192, may, if he thinks fit, postpone the issue of process against the accused, and either inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding: Provided that no such direction for investigation shall be made,–

(a) Where it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session; or

(b) Where the complaint has not been made by a Court, unless the complainant and the witnesses present (if any) have been examined on oath under section 200.

(2) In an inquiry under sub- section (1), the Magistrate may, if he thinks fit, take evidence of witnesses on oath: Provided that if it appears to the Magistrate that the offence complained of is triable exclusively by the Court of Session, he shall call upon the complainant to produce all his witnesses and examine them on oath.

(3) If an investigation under sub- section (1) is made by a person not being a police officer, he shall have for that investigation all the powers conferred by this Code on an officer- in- charge of a police station except the power to arrest without warrant.”

Submissions of the Parties

The Contention of the Complainant- Petitioner

1. It was submitted that the petitioner is ready to wait for the period of six months if the accused- respondent ready to pay the amount, but five months have already been passed and nothing had been paid by the accused- respondent.
2. It was urged that the petitioner is ready to wait for the remaining period and thereafter adduce the evidence before the court.

The contention of the Respondent- Accused

1. Since both, parties have been entered into an agreement and the mediation agreement has an effect of an award and therefore petitioner cannot be allowed to carry forward the case.
2. His remedy is to execute the agreement as an award passed by the Legal Services Authorities Act and therefore treated as a civil decree.
3. Reliance had been put on Govindankutty Menon vs Shaji [2011 (4) KLT 857] and argued that as the matter was referred to the mediation then its agreement is treated as a civil decree and the complainant cannot opt for criminal proceedings and he can only execute the civil decree.  

Judgment Analysis

The court observed that as per section 80 of the CPC mediation is treated as one of the alternative dispute resolutions for settling the dispute, in this regard court referred to the decision of the Afcons Infrastructure Limited and another V Cherian Varkey Constructions Company Private Limited) [2010 KHC 4498] in which the Hon’ble Supreme Court held that

“The following categories of cases are normally considered to be not suitable for ADR process having regard to their nature:

(i) Representative suits under O.1 R.8 CPC which involve public interest or interest of numerous persons who are not parties before the court. (In fact, even a compromise in such a suit is a difficult process requiring notice to the persons interested in the suit, before its acceptance)

(ii) Disputes relating to election to public officers (as contrasted from disputes between two groups trying to get control over the management of societies, clubs, associations etc.)

(iii) Cases involving grant of authority by the court after inquiry, as for example, suits for grant of probate or letters of administration.

(iv) Cases involving serious and specific allegations of fraud, fab*rication of documents, forgery, impersonation, coercion etc.

(v) Cases requiring protection of courts, as for example, claims against minors, deities and mentally challenged and suits for declaration of title against government.

(vi) Cases involving prosecution for criminal offences.”

From the above judgment, it is clear that generally criminal matters aren’t fit for the ADR process, but under Legal Services Authority Act criminal matters are of compoundable nature. Therefore, the offence under section 138 of the Negotiable Instrument Act, 1881 is a criminal offence that is of compoundable nature and thus cannot be referred to the mediation. But if the parties want to go for mediation then they can be referred to for a limited purpose. 

If the matter is referred to the mediation then the mediator would not be allowed to act either as adaalth or arbitrator or conciliator. Even under CPC also the mediator cannot pass any judgment but his role is to facilitate the parties to reach the settlement the after the settlement the court which referred the matter to the mediation pass a civil decree accordingly. 

With respect to the question of whether the agreement entered into between the parties in mediation can be admitted as evidence in a criminal matter, the court replied that it is the cardinal principle of the mediation that what transpired in the mediation cannot be disclosed even before the court and that cannot be called as evidence and it also affects the confidentiality of the things discussed in the mediation.

With regard to the question that the court need to wait for the period mentioned in the agreement so as to enable the parties to fulfill the conditions and if not fulfill of then the case can proceed the court observed that it is hard to answer under section 138 of the Negotiable Instrument Act. Further, the court relied upon the ruling of Indian Banks Association & Others V. Union of Indian & Others [ILR 2014(2) KERALA 469] and provide the guidelines as to how the criminal courts have to proceed with the case had to field under section 138 of the Negotiable Instrument Act. Therefore, if an unreasonable longer period were provided for the payment to the accused under section 138 of the Negotiable Instrument Act, 1881 then in such a case court is free to adduce the parties to produce the evidence.

The court further relied upon the decision of Damodar S.Prabhu V. Sayed Babalal.H [2010(2) KHC 428] and held that on the other to give importance to mediation proceedings as the form of ADR I monetary transactions under section 138 of the NI Act it was really a civil dispute which has been converted into criminal proceedings so that if the drawer of the cheque is not honoring the cheque then he/ she must send to prison and the same was held in this case.

Conclusion

By following the decision of the Supreme Court in Damodar S.Prabhu V. Sayed Babalal.H [2010(2) KHC 428] the court held mediation as a form of ADR must give the importance and the agreement made between the parties the mediation proceedings would be upheld by the Kerala High Court and magistrate can proceed with the case if parties do not fulfill the terms of the agreement.