Having regard thereto, we are of the opinion that even when a
case is decided in Lok Adalat, the requirement of following the
guidelines contained in Damodar S. Prabhu (supra) should
normally not be dispensed with.
However, if there is a
special/specific reason to deviate therefrom, the Court is not
remediless as Damodar S. Prabhu (supra) itself has given
discretion to the concerned Court to reduce the costs with regard
to specific facts and circumstances of the case, while recording
reasons in writing about such variance.
Therefore, in those
matters where the case has to be decided/settled in the Lok
Adalat, if the Court finds that it is a result of positive attitude of the
parties, in such appropriate cases, the Court can always reduce
the costs by imposing minimal costs or even waive the same. For
that, it would be for the parties, particularly the accused person, to
make out a plausible case for the waiver/reduction of costs and to
convince the concerned Court about the same. This course of
action, according to us, would strike a balance between the two
competing but equally important interests, namely, achieving the
objectives delineated in Damodar S. Prabhu (supra) on the one
hand and the public interest which is sought to be achieved by
encouraging settlements/resolution of case through Lok Adalats.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8614 OF 2014
(arising out of Special Leave Petition (Civil) No. 38519 of 2012)
MADHYA PRADESH STATE LEGAL
SERVICES AUTHORITY V PRATEEK JAIN & ANR.
Dated;SEPTEMBER 10, 2014.
A.K. SIKRI, J.
Leave granted.
2)
Madhya Pradesh State Legal Services Authority, the appellant
herein, has filed the instant appeal challenging the propriety of
orders dated February 27, 2012 passed by the High Court of
Madhya Pradesh in Writ Petition No. 1519 of 2012, which was
filed by one Rakesh Kumar Jain (respondent No.2 herein)
impleading Prateek Jain (respondent No.1 herein) as the sole
respondent. Essentially the lis was between respondent Nos. 1
and 2. Respondent No.1 had filed a complaint under Section 138
of the Negotiable Instruments Act, 1881 (hereinafter referred to as
the 'Act') against respondent No.2.
Matter reached before the
Additional Sessions Judge in the form of criminal appeal. During
the pendency of the said appeal, the matter was settled between
the parties. On their application, the matter was referred to Mega
Lok Adalat. However, the concerned Presiding Officer in the Lok
Adalat did not give his imprimatur to the said settlement in the
absence of deposit made as per the direction given in the
judgment of this Court in Damodar S. Prabhu v. Sayed Babalal
H., (2010) 5 SCC 663. Against the order of Additional Sessions
Judge, a writ petition was filed by respondent No.2 but the same
is also dismissed by the High Court, accepting the view taken by
the Additional Sessions Judge.
3)
From the aforesaid, it would be clear that the matter in issue was
between respondent Nos. 1 and 2.
The appellant comes in
picture only because the parties had approached the Mega Lok
Adalat organised by the appellant.
The reason for filing the
present appeal is the apprehension of the appellant that if the
settlement arrived at in the Lok Adalats are not accepted by the
Courts, one of the essential function and duty of Legal Services
Authority cast upon by the Legal Services Authorities Act, 1987
(hereinafter referred to as the '1987 Act') would be greatly
prejudiced and, therefore, it is necessary to straighten the law on
the subject matter. Acknowledging the significance of the issue
involved, permission was granted to the appellant to file the
special leave petition and notice was issued in the special leave
petition on December 06, 2012. Operation of the impugned order
of the High Court was also stayed in the following words:
“In the meantime, having regard to the objects to
be achieved by the provisions of the Legal Services
Authorities Act, 1987, the operation of the order
passed by the Lok Adalat-I, Gwalior, Madhya
Pradesh, on 30th July, 2011, and that of the High
Court impugned in this petition, shall remain
stayed.”
4)
Notice has been duly served upon both the respondents, but
neither of them have put in appearance. Be that as it may, since
we are concerned with the larger question raised in this appeal,
we hard the learned counsel for the appellant in the absence of
any representation on the part of the respondents.
5)
With the aforesaid gist of the controversy involved, we now
proceed to take note of the relevant facts in some detail.
6)
As pointed out above, there was some dispute between
respondent Nos. 1 and 2. Nature of the dispute is not reflected
from the papers filed by the appellant. However, since it pertains
to a complaint filed under Section 138 of the Act, one can safely
infer that the complaint was filed because of dishonour of the
cheque. It also appears from the record that this complaint was
filed by respondent No.1 against respondent No.2 and had
resulted in some conviction/adverse order against respondent
No.2, though exact nature of the orders passed by the learned
Magistrate is not on record. Be that as it may, respondent No.2
had filed the appeal against the order of the Magistrate in the
Court of Additional Sessions Judge.
7)
During the pendency of this appeal, a joint application was filed by
both the parties stating that a compromise had taken place
between them with mutual consent and they have reestablished
their relationship and wanted to maintain the same cordial relation
in future as well. On that basis it was stated in the application that
respondent No.1 herein did not want to proceed against
respondent No.2 and wanted the appeal to be disposed of on the
basis of compromise by filing a compromise deed in the appeal.
This application was filed under Section 147 of the Act which
permits compounding of such offences. We would like to point
out at this stage that on what terms the parties had settled the
matter is not on record as compromise deed has not been filed.
8)
When this application came up for hearing on July 30, 2011
before the learned appellate Court, counsel for both the parties
requested that the matter be forwarded to the Mega Lok Adalat
which was being organized on the same date.
On this
application, following order was passed by the learned Additional
Sessions Judge:
“30.07.2011
An application under section 147 Negotiation (sic)
Instrument Act filed on behalf of both sides for
compromise and request is made to direct the
matter be taken up before the Lok Adalat organized
today's date.
In view of the facts mentioned in the application, for
abrogation of the compromise application, the
matter be taken up today before the concerned
bench of Lok-Adalat.”
9)
When the matter was placed before the Lok Adalat, the Presiding
Officer refused to act upon the settlement recorded between the
parties on the ground that the accused person had not deposited
15% amount of the cheque for compounding of matter at the
appeal stage as per “The Guidelines” contained in the judgment
of this Court in the case of Damodar S. Prabhu (supra). The
exact order passed is reproduced below:
“30.07.2011
The matter produced before the bench of Lok
Adalat No.1.
Appellant along with Shri N.S. Yadav, Advocate.
Non-Applicant along with Shri Mohan Babu Mangal
Advocate.
The instant matter is related to the appeal filed
against the conviction order passed under Section
138 of Negotiation (sic) of Instrument Act, wherein,
both parties, being appeared along with their
counsels, while filing application for compromise,
have requested to mitigate the matter. But, the
defendant/accused has not deposited 15 percent
amount of cheque for mitigation of matter at the
appeal stage according to the guide lines of
judgment dated 3.5.2010 passed in Criminal
Appeal No. 963/2010 in the matter of Damodar M.
Prabhu Vs. Sayyad Baba Lal passed by the
Hon'ble Supreme Court, in the District Legal
Services Authority, due to said reason, it is not
lawful to grant permission of mitigation of the
matter to both sides. Hence, the compromise
application is hereby dismissed.
The matter be returned back to the Regular Court
for abrogation in accordance with law.”
10)
It is this order which was challenged by respondent No.2 by filing
a writ petition under Article 227 of the Constitution of India. The
High Court has dismissed the said writ petition stating that the
judgment of this Court in Damodar S. Prabhu (supra) is binding
on the subordinate Courts under Article 141 of the Constitution
and, therefore, the subordinate Court had not committed any legal
error.
11)
“The Guidelines” in the form of directions given in the aforesaid
judgment read as under:
“THE GUIDELINES
(I) In the circumstances, it is proposed as follows:
(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
the 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."
12)
The question of consideration in the aforesaid backdrop is as to
whether directions/guidelines given by this Court in the aforesaid
judgment are inapplicable in cases which are resolved/settled in
Lok Adalats.
13)
What was argued before us by the learned counsel for the
appellant was that these guidelines containing the schedule of
costs should not be made applicable to the settlements which are
arrived at in the Lok Adalats inasmuch as provision for imposition
of such costs would run contrary to the very purpose of Lok
Adalats constituted under Section 19 of the 1987 Act.
It was
emphasized that Lok Adalats were constituted to promote the
resolution of disputes pending before Court by amicable
settlement between the parties and in order to reduce the
pendency of cases before the Courts, including appellate Courts.
Learned counsel also referred to the judgment of this Court in
K.N. Govindan Kutty Menon v. C.D. Shaji, (2012) 2 SCC 51,
wherein it is held that a compromise or settlement arrived at
before the Lok Adalat and award passed pursuant thereto is to be
treated as decree of civil Court by virtue of deeming provision
contained in Section 21 and Section 2(aaa) and (c) of the 1987
Act.
The Court held that even a settlement of a case under
Setion 138 of the Act and Lok Adalat award passed pursuant
thereto would be a decree executable under the Code of Civil
Procedure, 1908. The position in this behalf is summed up in
para 26 of the said judgment, which reads 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.”
14)
Taking sustenance from the aforesaid dicta, the submission of
learned counsel for the appellant was that even the proceedings
under Section 138 of the Act were governed by the Code of
Criminal Procedure, 1973, such an award was executable as a
decree of the civil Court under the Code of Civil Procedure, 1908.
The submission, therefore, was that once award of the Lok Adalat
is given the effect of the decree and attaches this kind of sanctity
behind it, it should be carved out as an exception to 'The
Guidelines' framed by this Court in Damodar S. Prabhu's case
(supra).
15)
We have considered the aforesaid submission of the learned
counsel with utmost intensity of thought.
It appears to be of
substance in the first blush when this submission is to be
considered in the context of the purpose and objective with which
Lok Adalats have been constituted under Section 19 of the 1987
Act. No doubt, the manifest objective is to have speedy resolution
of the disputes through these Lok Adalats, with added advantage
of cutting the cost of litigation and avoiding further appeals. The
advent of the 1987 Act gave a statutory status to Lok Adalats,
pursuant to the constitutional mandate in Article 39-A of the
Constitution of India, contains various provisions of settlement of
disputes through Lok Adalat.
It is an Act to constitute legal
services authorities to provide free and competent legal services
to the weaker sections of the society to ensure that opportunities
for securing justice are not denied to any citizen by reason of
economic or other disabilities, and to organize Lok Adalats to
secure that the operation of the legal system promotes justice on
a basis of equal opportunity. In fact, the concept of Lok Adalat is
an innovative Indian contribution to the world jurisprudence. It is
a new form of the justice dispensation system and has largely
succeeded in providing a supplementary forum to the victims for
settlement of their disputes. This system is based on Gandhian
principles.
It is one of the components of Alternate Dispute
Resolution systems specifically provided in Section 89 of the
Code of Civil Procedure, 1908 as well. It has proved to be a very
effective alternative to litigation. Lok Adalats have been created
to restore access to remedies and protections and alleviate the
institutional burden of the millions of petty cases clogging the
regular courts. It offers the aggrieved claimant whose case would
otherwise sit in the regular courts for decades, at least some
compensation now. The Presiding Judge of a Lok Adalat is an
experienced adjudicator with a documented record of public
service and has legal acumen. Experience has shown that not
only huge number of cases are settled through Lok Adalats, this
system has definite advantages, some of which are listed below:
(a) speedy justice and saving from the lengthy court procedures;
(b) justice at no cost;
(c) solving problems of backlog cases; and
(d) maintenance of cordial relations.
Thus, it cannot be doubted that Lok Adalats are serving an
important public purpose.
16)
Having said so, it needs to be examined as to whether in the
given case it becomes derogatory to the movement of the Lok
Adalats if the costs amounting to 15% of the cheque amount, as
per the guidelines contained in Damodar S. Prabhu (supra), is
insisted? However, before discussing this central issue, we would
like to analyse the events of the present case, as that would be of
help to answer the pivotal issue raised before us.
17)
As pointed out above while taking note of the factual details of the
case, it was not a situation where the Court persuaded the parties
to use the medium of Lok Adalat for the settlement of their
dispute.
On the contrary, the parties had already settled the
matter between themselves before hand and filed the application
in this behalf before the learned Additional Sessions Judge on
July 30, 2011 with a request which the matter be taken up before
the Lok Adalat that was being organized on the same date. It is
clear from the order passed by the learned Additional Sessions
Judge on July 30, 2011, which is already extracted above.
18)
In the first instance, we do not understand as to why the matter
was sent to Lok Adalat when the parties had settled the matter
between themselves and application to this effect was filed in the
Court. In such a situation, the Court could have passed the order
itself, instead of relegating the matter to the Lok Adalat. We have
ourselves highlighted the importance and significance of the
Institution of Lok Adalat. We would be failing in our duty if we do
not mention that, of late, there is some criticism as well which,
inter alia, relates to the manner in which cases are posted before
the Lok Adalats. We have to devise the methods to ensure that
faith in the system is maintained as in the holistic terms access to
justice is achieved through this system. We, therefore, deprecate
this tendency of referring even those matters to the Lok Adalat
which have already been settled.
This tendency of sending
settled matters to the Lok Adalats just to inflate the figures of
decision/settlement therein for statistical purposes is not a healthy
practice.
We are also not oblivious of the criticism from the
lawyers, intelligentsia and general public in adopting this kind of
methodology for window dressing and showing lucrative outcome
of particular Lok Adalats.
19)
Be that as it may, reverting to the facts of the present case, we
find that when the case had been settled between the parties and
application in this behalf was made before the Court, it cannot be
denied that had the Court passed the compouding order on this
application under Section 147 of the Act, as per the rigours of
Damodar S. Prabhu (supra), 15% f the cheque amount had to be
necessarily deposited by the accused person (respondent No.2).
If we hold that such a cost is not to be paid when the matter is
sent to the Lok Adalat, this route would be generally resorted to,
to bypass the applicability of the directions contained in Damodar
S. Prabhu (supra). Such a situation cannot be countenanced.
20)
The purpose of laying down the guidelines in Damodar S.
Prabhu (supra) is explained in the said judgment itself.
The
Court in that case was concerned with the stage of the case when
compounding of offence under Section 147 of the Act is to be
permitted. To put it otherwise, the question was as to whether
such a compounding can be only at the trial Court stage or it is
permissible even at the appellate stage. It was noted that even
before the insertion of Section 147 of the Act, by way of
amendment in the year 2002, some High Courts had permitted
the compounding of offence contemplated by Section 138 of the
Act during the later stages of litigation. This was so done by this
Court also in O.P. Dholakia v. State of Haryana, (2000) 1 SCC
672 and in some other cases which were noticed by the Bench.
From these judgments the Court concluded that the compounding
of offence at later stages of litigation in cheque bounding cases
was held to be permissible.
21)
While holding so, the Court also took note of the phenomena
which was widely prevalent in the manner in which cases under
Section 138 of the Act proceed in this country. It noticed that
there was a tendency on the part of the accused persons to drag
on these proceedings and resort to settlement process only at a
stage when the accused persons were driven to wall. It is for this
reason that most of the complaints filed result in compromise or
settlement before the final judgment on the one side and even in
those cases where judgment is pronounced and conviction is
recorded, such cases are settled at appellate stage. This was so
noted in para 13 of the judgment, which reads as under:
“13. It is quite obvious that with respect to the
offence of dishonour of cheques, it is the
compensatory aspect of the remedy which should
be given priority over the punitive aspect. There is
also some support for the apprehensions raised by
the learned Attorney General that a majority of
cheque bounce cases are indeed being
compromised or settled by way of compounding,
albeit during the later stages of litigation thereby
contributing to undue delay in justice-delivery. The
problem herein is with the tendency of litigants to
belatedly choose compounding as a means to
resolve their dispute. Further more, the writen
submissions filed on behalf of the learned Attorney
General have stressed on the fact that unlike
Section 320 of the CrPC, Section 147 of the
Negotiable Instruments Act provides no explicit
guidance as to what stage compounding can or
cannot be done and whether compounding can be
done at the instance of the complainant or with the
leave of the court. As mentioned earlier, the
learned Attorney General's submission is that in the
absence of statutory guidance, parties are
choosing compounding as a method of last resort
instead of opting for it as soon as the Magistrates
take cognizance of the complaints.
One
explanation for such behaviour could be that the
accused persons are willing to take the chance of
progressing through the various stages of litigation
and then choose the route of settlement only when
no other route remains. While such behaviour may
be viewed as rational from the viewpoint of litigants,
the hard facts are that the undue delay in opting for
compounding contributes to the arrears pending
before the courts at various levels. If the accused
is willing to settle or compromise by way of
compounding of the offence at a later stage of
litigation, it is generally indicative of some merit in
the complainant's case. In such cases it would be
desirable if parties choose compounding during the
earlier stages of litigation. If however, the accused
has a valid defence such as a mistake, forgery or
coercion among other grounds, then the matter can
be litigated through the specified forums.”
22)
This particular tendency had prompted the Court to accept the
submission of the Attorney General to frame guidelines for a
graded scheme of imposing costs on parties who unduly delay
compounding of the offence inasmuch as such a requirement of
deposit of the costs will act as a deterrent for delayed
composition since free and easy compounding of offences at any
stage, however belated, was given incentive to the drawer of the
cheque to delay settling of cases for years. For this reason, the
Court framed the guidelines permitting compounding with the
imposition of varying costs depending upon the stage at which
the settlement took place in a particular case.
23)
After formulating “The Guidelines”, which are already extracted
above, the Court made very pertinent observations in para 17 of
the said judgment which would have bearing in the present case.
Thus, we reproduce the same below:
“17. We are also conscious of the view that the
judicial endorsement of the above quoted
guidelines could be seen as an act of judicial law-
making and therefore an intrusion into the
legislative domain. It must be kept in mind that
Section 147 of the Act does not carry any guidance
on how to proceed with the compounding of
offences under the Act. We have already explained
that the scheme contemplated under Section 320
of the CrPC cannot be followed in the strict sense.
In view of the legislative vacuum, we see no hurdle
to the endorsement of some suggestions which
have been designed to discourage litigants from
unduly delaying the composition of the offence in
cases involving Section 138 of the Act. The graded
scheme for imposing costs is a means to
encourage compounding at an early stage of
litigation. In the status quo, valuable time of the
Court is spent on the trial of these cases and the
parties are not liable to pay any Court fee since the
proceedings are governed by the Code of Criminal
Procedure, even though the impact of the offence
is largely confined to the private parties. Even
though the imposition of costs by the competent
court is a matter of discretion, the scale of costs
has been suggested in the interest of uniformity.
The competent Court can of course reduce the
costs with regard to the specific facts and
circumstances of a case, while recording reasons
in writing for such variance. Bona fide litigants
should of course contest the proceedings to their
logical end. Even in the past, this Court has used
its power to do complete justice under Article 142
of the Constitution to frame guidelines in relation to
subject-matter where there was a legislative
vacuum.”
24) It is clear from the reading of the aforesaid para that the Court
made it clear that framing of the said guidelines did not amount to
judicial legislation. In the opinion of the Court, since Section 147
of the Act did not carry any guidance on how to proceed with
compounding of the offences under the Act and Section 320 of
the Code of Criminal Procedure, 1973 could not be followed in
strict sense in respect of offences pertaining to Section 138 of the
Act, there was a legislative vacuum which prompted the Court to
frame those guidelines to achieve the following objectives:
(i)
to discourage litigants from unduly delaying the composition
of offences in cases involving Section 138 of the Act;
(ii)
it would result in encouraging compounding at an early
stage of litigation saving valuable time of the Court which is
spent on the trial of such cases; and
(iii)
even though imposition of costs by the competent Court is a
matter of discretion, the scale of cost had been suggested
to attain uniformity.
At the same time, the Court also made it abundantly clear
that the concerned Court would be at liberty to reduce the costs
with regard to specific facts and circumstances of a case, while
recording reasons in writing for such variance.
25)
What follows from the above is that normally costs as specified in
the guidelines laid down in the said judgment has to be imposed
on the accused persons while permitting compounding. There
can be departure therefrom in a particular case, for good reasons
to be recorded in writing by the concerned Court. It is for this
reason that the Court mentioned three objectives which were
sought to be achieved by framing those guidelines, as taken note
of above. It is thus manifestly the framing of “Guidelines” in this
judgment was also to achieve a particular public purpose. Here
comes the issue for consideration as to whether these guidelines
are to be given a go by when a case is decided/settled in the Lok
Adalat? Our answer is that it may not be necessarily so and a
proper balance can be struck taking care of both the situations.
26)
Having regard thereto, we are of the opinion that even when a
case is decided in Lok Adalat, the requirement of following the
guidelines contained in Damodar S. Prabhu (supra) should
normally not be dispensed with.
However, if there is a
special/specific reason to deviate therefrom, the Court is not
remediless as Damodar S. Prabhu (supra) itself has given
discretion to the concerned Court to reduce the costs with regard
to specific facts and circumstances of the case, while recording
reasons in writing about such variance.
Therefore, in those
matters where the case has to be decided/settled in the Lok
Adalat, if the Court finds that it is a result of positive attitude of the
parties, in such appropriate cases, the Court can always reduce
the costs by imposing minimal costs or even waive the same. For
that, it would be for the parties, particularly the accused person, to
make out a plausible case for the waiver/reduction of costs and to
convince the concerned Court about the same. This course of
action, according to us, would strike a balance between the two
competing but equally important interests, namely, achieving the
objectives delineated in Damodar S. Prabhu (supra) on the one
hand and the public interest which is sought to be achieved by
encouraging settlements/resolution of case through Lok Adalats.
27)
Having straightened the position in the manner above, insofar as
the present case is concerned, as we find that the parties had
already settled the matter and the purpose of going to the Lok
Adalat was only to have a rubber stamp of the Lok Adalat in the
form of its imprimatur thereto, we do not find any error in the
impugned judgment, though we are giving our own reasons in
support of the conclusion arrived at by the High Court in
dismissing the writ petition filed by respondent No.2, while
straightening the approach that should be followed henceforth in
such matters coming before the Lok Adalats.
28)
The appeal stands disposed of in the aforesaid terms.
.............................................J.
(J. CHELAMESWAR)
.............................................J.
(A.K. SIKRI)
NEW DELHI;
SEPTEMBER 10, 2014.
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