Full Judgement
Delhi High Court
Sushila Badola vs Tushar Patni & Anr on 8 May, 2019
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 8th May, 2019
+ CS(OS) 113/2016 & IA No.587/2018 (u/O X R-2 CPC)
SUSHILA BADOLA ..... Plaintiff
Through: Ms. Tara V. Ganju. Adv.
Versus
TUSHAR PATNI & ANR ..... Defendants
Through: Mr. Naveen R. Nath, Mr. Alok
Kumar Pandey and Mr. Siddharth
Agarwal, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The plaintiff, as per amended plaint dated 16 th April, 2018, has
instituted this suit against the two defendants namely Tushar Patni and
Prashant Mamgain, for (i) declaration as null and void of the Compromise
Deed dated 15th November, 2008 obtained dishonestly and fraudulently
from the plaintiff; and, (ii) cancellation of the Compromise Deed dated 15th
November, 2008.
2. It is the case of the plaintiff in the amended plaint, (a) that the
plaintiff on 12th March, 2010 first learnt that a Non-Bailable Warrant
(NBW) had been issued against her for 18th March, 2010 in a Criminal
Complaint No.21/1/10 filed by defendant no.2 Prashant Mamgain on behalf
of defendant no.1 Tushar Patni, of offence under Section 138 of the
Negotiable Instruments (NI) Act, 1881 by the Court of Sh. N.K. Laka,
Metropolitan Magistrate, Dwarka Courts, New Delhi, for dishonour of a
cheque dated 1st December, 2009 for an amount of Rs.75 lacs against the
alleged liability of Rs.3 crores; (b) that the plaintiff appeared before the
Court on 18th March, 2010 and the NBW was cancelled and the plaintiff
CS(OS) 113/2016 Page 1 of 25
granted bail; (c) that from a perusal of the complaint filed by defendant
No.2 Prashant Mamgain on behalf of the defendant No.1 Tushar Patni
against the plaintiff, the plaintiff came to know that previously also a
complaint of offence under Section 138 of the NI Act was filed before the
same Court by defendant No.2 as authorised representative of defendant
No.1; (d) that in the previous complaint it was claimed that the defendant
No.1, on 10th May, 2006 had given a friendly loan of Rs.2 crores in cash to
the plaintiff for a period of six months and the plaintiff had issued a cheque
dated 4th October, 2007 for a sum of Rs.2 crores in discharge of the said
debt; the said cheque was returned dishonoured leading to the filing of that
complaint; (e) that the plaintiff further learnt that the said previous
complaint was withdrawn on 15th October, 2009 by defendant No.2 on
behalf of the defendant No.1 as the matter has been compromised between
the parties vide a Compromise Deed dated 15th November, 2008 and in
terms of which compromise, the plaintiff had issued cheques dated 1 st
December, 2009, 1st March, 2010, 1st June, 2010 and 1st September, 2010 in
the sum of Rs.75 lacs each in favour of the defendant No.1; (f) that the
plaintiff also found out that one Mr. Vijay Nath, Advocate had appeared as
an advocate on her behalf in the previous complaint; (g) that the plaintiff
never engaged any such lawyer to represent her in the previous complaint
and had never authorised any lawyer to make a statement on her behalf of
any compromise having been reached with the defendant No.1; (h) that the
plaintiff, on learning as aforesaid, made a written complaint dated 24 th
March, 2010 regarding the missing eight cheques and misuse thereof by the
defendant No.1; (i) that the plaintiff also issued instructions for stopping
payment of the remaining cheques; (j) that the plaintiff, on 9th October,
CS(OS) 113/2016 Page 2 of 25
2007 also had informed her Bank regarding the misplaced cheques/leaves
from her cheque book and on which the dishonoured cheque for Rs.2
crores, subject matter of the previous complaint had been fabricated; (k)
that the plaintiff does not know defendant No.1 and has had no transaction
with the defendant No.1; (l) however the signature and thumb impression
of the plaintiff was taken on some blank paper by one Mr. Alok Pandey,
Advocate, sometime in the month of November, 2008 and the plaintiff now
realizes that the said papers have been used for making an application for
exemption for appearance of the plaintiff in the previous complaint case
and for use as a Vakalatnama; (m) that a perusal of the file of the previous
complaint case shows that the application for withdrawal of that complaint
case was filed with great urgency on 15th October, 2009; (n) that fraud is
evident from the fact that the application for withdrawal of the complaint
case was filed on 15th October, 2009 on the basis of an alleged compromise
of 15th November, 2008; (o) that no mention was made of the compromise
on any of the earlier dates in the previous complaint case; (p) that the stamp
paper for the Compromise Deed dated 15th November, 2008 was purchased
in the name of the plaintiff on 31st October, 2008 but the plaintiff never
instructed anyone to purchase any stamp paper; (q) that it is quite evident
that the signatures of the witnesses on the Compromise Deed dated 15th
November, 2008 have been obtained subsequently; (r) that the daughter of
the plaintiff has also confirmed that her signatures were taken on some
papers by the defendant No.2 in a very clandestine manner, as the
defendant No.2 "is harassing plaintiff‟s daughters and also blackmailing
them"; (s) that the defendants are similarly extorting monies from one Mr.
R.S. Chauhan using similar modus operandi; (t) that in the complaint case
CS(OS) 113/2016 Page 3 of 25
filed by the defendants against the said Mr. R.S. Chauhan, approximately
40 hearings in a year were held in the Court of Metropolitan Magistrate Sh.
N.K. Laka; (u) that the plaintiff has also filed a complaint before the Bar
Council of India under Section 35 of the Advocates Act, 1961 of
professional misconduct against Mr. Alok Kumar Pandey, Mr. Vijay Nath
and Mr. R.K. Thakur, Advocates, and it was confessed by Mr. Alok Kumar
Pandey, Advocate that he obtained signatures on alleged agreement deed
and Vakalatnama and asked Mr. Vijay Nath, Advocate to appear on behalf
of the plaintiff; (v) that the defendant No.1 is not financially competent to
give Rs.2 crores in cash to the plaintiff as loan; (w) that the said amount of
Rs.2 crores is not even being reflected in the Income Tax Returns of the
corresponding year of the defendant No.1 as loan to the plaintiff; and, (x)
that even otherwise, in Indian Law, no loan over Rs.20,000/- can be given
in cash.
3. The suit came up before this Court first on 8 th March, 2016, when
summons thereof were ordered to be issued.
4. The plaintiff applied for amendment of the plaint, even before the
defendants filed their written statement and the said amendment was
allowed vide order dated 6th April, 2018 and the amended plaint taken on
record.
5. A joint written statement has been filed by the two defendants.
6. The suit was listed before this Court on 30th November, 2018 for
framing of issues, when the counsel for the plaintiff, on enquiry stated (i)
"that the signatures and thumb impression on the compromise deed, copy
of which has been filed before this Court by the plaintiff, are of the plaintiff
CS(OS) 113/2016 Page 4 of 25
but the plaintiff in the plaint has explained the circumstances in which the
same were obtained"; and, (ii) that the cheque for Rs.2 crores, subject
matter of the previous complaint and the four cheques for Rs.75 lacs each
and one of which was the subject matter of the complaint case in which
NBW was issued and on learning whereof the plaintiff claims to have
unearthed the story as set out hereinabove, are all issued from the account
of the plaintiff.
7. Finding that the Compromise Deed dated 15th November, 2008,
cancellation whereof was sought in this suit, was admittedly placed before
the Court seized of the complaint of offence under Section 138 of the NI
Act, it was enquired from the counsel for the plaintiff on 30th November,
2018, whether the civil suit under Section 31 of the Specific Relief Act,
1963 is maintainable with respect to a compromise deed forming part of
judicial proceedings, or the challenge to the said compromise has to be
made in that judicial proceeding only. On request, the hearing on the said
aspect was adjourned.
8. On the next date of hearing i.e. 26th February, 2019, the counsel for
the plaintiff stated that the file in which the Compromise Deed dated 15th
November, 2008 had been filed was not found inspite of best efforts. On
request of the counsels, the hearing on the legal question enquired on 30 th
November, 2018 was adjourned to today.
9. Before proceedings to record the contentions of the counsels, it is
deemed appropriate to record the reasons for which it was felt on 30 th
November, 2018 that the suit for cancellation of a compromise forming
part of a judicial proceeding does not lie.
CS(OS) 113/2016 Page 5 of 25
10. Order XXIII Rule 3 of the Code of Civil Procedure, 1908 (CPC)
provides for compromise of a suit and empowers the Court to record an
agreement, compromise or satisfaction of the suit claim or part thereof and
to pass a decree in accordance therewith and the Proviso thereto clarifies
that where it is alleged by one party and denied by the other party that an
adjustment or satisfaction has been arrived at, the Court shall decide the
question. Order XXIII Rule 3A of the CPC bars a suit to set aside a decree
on the ground that the compromise on which the decree is passed was not
lawful. It was felt that (i) the proceedings in a complaint case under
Section 138 of the NI Act, though not a suit, are quasi civil in nature and
the principles as laid down in Order XXIII Rules 3 and 3A of the CPC
would apply; (ii) if it were held that the question of validity of a
compromise arrived at in one proceeding were permitted to be gone into in
another proceeding, the same would not be conducive to good judicial
administration and would result in incongruities; and, (iii) the Court in
which the proceeding is pending and is compromised and disposed of,
whether it be a Civil Court or a Criminal Court, is best suited and equipped
to expeditiously deal with the subsequent challenges to the said
compromise, and another Court, even if higher in hierarchy, in a parallel
proceeding, is not competent to adjudicate the validity of a compromise
arrived at in another Court and the same, if permitted, would open the gates
for unscrupulous litigants, after taking advantage and having a proceeding
in one Court culminated on the basis of a compromise, not abide by the
compromise and make the compromise a subject matter of another
proceeding.
CS(OS) 113/2016 Page 6 of 25
11. The counsel for the plaintiff, while arguing on this legal question has
argued and in her written submissions submitted, (i) that the purported
Compromise Deed dated 15th November, 2008 is a sham document which
was allegedly executed between the parties outside the Court and was only
filed by the defendants before the Metropolitan Magistrate eleven months
later; (ii) that the learned Magistrate before whom the Compromise Deed
was produced has neither scrutinized the terms of the purported
Compromise Deed nor has recorded satisfaction in regards to the same; (iii)
that neither the plaintiff nor the defendants were present in the Court; (iv)
that a perusal of the Compromise Deed dated 15 th November, 2008 shows
that none of the terms thereof have been followed / adhered to by the
defendants; (v) that the defendants have not revived the original complaint
of dishonour of the cheque of Rs.2 crores, as was provided in the
Compromise Deed; instead the defendants have filed three fresh criminal
complaints on the basis of the cheques issued for Rs.75 lacs each in
payment of total outstanding of Rs.3 crores; (vi) that though the plaintiff
filed a petition in this Court for quashing of one of the said complaint case
and this Court vide judgment dated 22nd January, 2015 has quashed the said
criminal complaint and the said order has attained finality; however, two
other complaints are pending; (vii) that Order XXIII Rule 3 of the CPC
requires an application in terms thereof to be filed and whereupon only a
decree in terms thereof is passed and if any of the party wants to challenge
the decree or the compromise deed, has to do so before the same Court; the
reason therefor is that the party praying to have the compromise deed set
aside will have to satisfy the same Court before whom the compromise was
arrived at and filed and which accepted the compromise; (viii) reliance is
CS(OS) 113/2016 Page 7 of 25
placed on Banwari Lal Vs. Chando Devi (1993) 1 SCC 581 and Rajwanti
Vs. Kishan Chand Shehrawat 2009 (113) DRJ 166; (ix) that no
withdrawal/compromise or decree under the provisions of Order XXIII of
the CPC has taken place in the present case; (x) that a Criminal Court
cannot pass a decree and only a Civil Court can pass a decree; reliance is
placed on Section 2(2) of the CPC defining a „decree‟; (xi) that a criminal
complaint filed under the provisions of Section 138 of the NI Act is a
cognizable punishable offence and tried as per the procedure prescribed
under the Criminal Procedure Code, 1973 (CrPC); (xii) that settlements
under NI Act matters before the Criminal Courts can be either by allowing
withdrawal of complaint under Section 257 of the CrPC or by allowing
compounding of offence under Section 147 of the NI Act; (xiii) that there is
no decree to the satisfaction of the Criminal Court, while disposing of a
complaint as settled; (xiv) that an order under Section 257 of the CrPC
and/or under Section 147 of the NI Act cannot be considered as a decree;
(xv) that in the present case, a simple withdrawal was made by the
defendants; (xvi) that the only remedy of the plaintiff is by way of a civil
suit; (xvii) that it is only a Lok Adalat award which makes a compromise
under Section 138 of the NI Act proceeding, a decree; reliance in this
regard is placed on Section 21 and Section 2(aaa) and (c) of the Legal
Services Authorities Act, 1987 and K.N. Govindan Kutty Menon Vs. C.D.
Shaji (2012) 2 SCC 51; (xviii) that only a Civil Court has a power to grant
a declaratory relief such as cancellation of documents; and, (xix) that
neither the plaintiff nor the defendants were present before the Court of the
Metropolitan Magistrate when the compromise deed was filed and no
settlement under Order XXIII Rule 3 of the CPC recorded.
CS(OS) 113/2016 Page 8 of 25
12. Per contra, the counsel for the defendants has referred to R. Rajanna
Vs. S.R. Venkataswamy (2014) 15 SCC 471, concerned with the question
"can the validity of a decree passed on a compromise be challenged in a
separate suit?" and holding that Order XXIII Rule 3A of the CPC clearly
bars a suit to set aside a decree on the ground that the compromise on
which the decree is based was not lawful and that this implies that no
sooner a question relating to lawfulness of the agreement or compromise is
raised before the Court that passed the decree on the basis of any such
agreement or compromise, it is that Court and that Court alone who can
examine and determine that question and the Court cannot direct the parties
to file a separate suit.
13. The counsel for the defendants has also referred to the dicta of the
Division Bench of this Court in Dayawati Vs. Yogesh Kumar Gosain 243
(2017) DLT 117. The Division Bench was concerned with the legal
permissibility of referring a complaint case under Section 138 of the NI Act
for amicable settlement through mediation, the procedure to be followed
upon settlement and the legal implications of breach of the mediation
settlement. It was held (a) that proceedings under Section 138 of the NI
Act stand categorized as quasi civil; (b) that in order to provide meaningful
interpretation and to do complete justice in such proceedings, Criminal
Courts are known to have often utilized the principles of CPC in such
cases; Supreme Court also has encouraged early settlement in such
proceedings; (c) that proceedings under Section 138 of the NI Act have
been considered as quasi civil by all the Courts, therefore, in principle, the
procedure which applies to recording a settlement in civil cases could guide
the procedure to be followed and be applied for recording a settlement
CS(OS) 113/2016 Page 9 of 25
between the parties to a complaint under Section 138 of the NI Act;
guidance on this aspect is provided by the provisions of Order XXIII Rule
of the CPC and the practice followed by the Civil Courts, upon a
compromise arrived at between the parties to a suit; (d) that CrPC as well
as NI Act have provided only for compounding of offences; no procedure
regarding the manner in which a settlement agreement is required to be
placed or considered by the Court has been provided; (e) that though the
CPC would have no application to the proceedings which are guided by the
CrPC but given the legislative vacuum there appears no reason as to why
the principles which apply to consideration of a settlement under Order
XXIII Rule 3 of the CPC cannot be applied for consideration of a
settlement which is the subject matter of consideration by a Court under
Section 320 of the CrPC or Section 147 of the NI Act; (f) that binding the
parties to a settlement agreement entered into through a formal mediation
process and being held accountable for honouring the same is really
enforcing the legislative mandate in enacting Sections 138 and 147 of the
NI Act i.e. to ensure an expeditious time bound remedy for recovery of the
cheque amounts; (g) that breach of a lawfully entered agreement would not
only frustrate the parties to the mediation, but would be opposed to the
spirit, intendment and purpose of Section 138 of the NI Act and would
defeat the ends of justice; (h) that there is no legal prohibition upon a
Criminal Court seized of such complaint, to whom a mediated settlement is
reported, from adopting the above procedure; (i) therefore, the Court would
record the statement on oath of the parties or their authorized agents
affirming the settlement, its voluntariness and their undertaking to abide by
it in the manner followed by the Civil Court when considering a settlement
CS(OS) 113/2016 Page 10 of 25
placed before it under Order XXIII Rule 3 of the CPC- the Court would
thereafter pass an appropriate order accepting the agreement, incorporating
the terms of the settlement regarding payment under Section 147 of the NI
Act and the undertakings of the parties; (j) that the Court taking on record
the settlement stands empowered to make the consequential and further
direction to the respondent to pay the money in terms of the mediated
settlement and also direct that the parties would remain bound by the terms thereof; (k) that so far as the disputes beyond the subject matter of the litigation is concerned, upon the settlement receiving imprimatur of the Court, such settlement would remain binding upon the parties and if so ordered, would be subject to the orders of the Court; (l) that there can be no manner of doubt that once a settlement is reported to the Court and made the basis of seeking the Court‟s indulgence, the parties ought not to be able to resile from such a position; and, (m) that in the event of either party resiling from the agreed upon settlement which has received the imprimatur of the Court, the party attempting to breach the settlement and undertaking cannot be permitted to avoid making the payment and to violate the undertaking given to the Court.
14. The counsel for the defendants lastly relies on Dunia Lal Datta Vs. Nagendra Nath Datta AIR 1982 Cal 163 concerned with a suit for declaration that a decree in another suit was void, inoperative and not binding upon the plaintiff. It was held that Section 31 of the Specific Relief Act empowers the Court to cancel a written instrument and that an award and judgment of a Court is not a written instrument.
CS(OS) 113/2016 Page 11 of 25
15. The counsel for the plaintiff has responded to the dicta of the Division Bench of this Court in Dayawati supra by contending that the same is in the context of mediated settlement and it is not so here.
16. Though the counsel for the plaintiff in her arguments has repeatedly gone into the merits of the challenge also but the question seized at the moment being only of maintainability of the suit and for which reason the written statement of the defendants also has not been noted hereinabove, I have steered clear from the arguments on merits which are to be considered only in the event of the suit being found to be maintainable in this Court and in the event of the suit being not found to be maintainable, before the appropriate forum.
17. Though the counsels earlier had not filed the documents pertaining to the previous complaint case but have since filed documents and which show (I) that the complaint case came up before the Court of the concerned Magistrate on 24th November, 2007; (II) that the summons were ordered to be issued on 19th March, 2008 for 24th November, 2008; (III) that the accused i.e. the plaintiff was not served for 24 th November, 2008 and fresh summons ordered to be issued for 11th December, 2008; (IV) that the file was taken up on 15th October, 2009 on an application for withdrawal of case on being compromised and after recording statements of defendant No.2 herein as authorised representative of the complainant therein i.e. the defendant No.1 herein and of Mr. Vijay Nath, counsel for the accused i.e. the plaintiff as under:
"Tushar Patni Vs. Sushila Badola
CS(OS) 113/2016 Page 12 of 25 15.10.2009 Statement of Shri Prashant Mamgain, AR of complainant On SA I have settled the present case with the accused persons. In this respect, a compromise deed bearing signatures and thumb impression of the parties have also been recorded. True copies of the same is filed on record. In respect of compromise, I have received four cheques no.200452, 200453, 200451 and 200454 dated 01.03.2010, 01.06.2010, 01.12.2009 and 01.09.2010 all for Rs.75.00 lacs each drawn on Nainital Bank Limited, Patparganj, Delhi in favour of complainant respectively towards full and final satisfaction of the present complaint. The complaint may be allowed to be withdrawn as compromised.
RO&AC (Naresh Kumar Laka) st 1 LMM/Dwarka Courts Delhi/15.10.2009 Statement of Shri Vijay Nath, Counsel for accused WO I have filed an application on behalf of accused for personal exemption along with Vakalatnama. The matter has been settled between the parties as per compromise deed bearing signatures of both the parties. In view of the compromise, the case may be disposed of. RO&AC (Naresh Kumar Laka) 1st LMM/Dwarka Courts Delhi/15.10.2009", the following order was passed:
CS(OS) 113/2016 Page 13 of 25
"Tushar Patni Vs. Sushila Badola 15.10.2009 File taken up today on an application for withdrawal of the case being compromised.
Present: AR of complainant with counsel Shri Alok Kumar Pandey Shri Vijay Nath counsel for accused Ld. P.O. has gone to conduct TIP in Tihar Jail. A compromise deed filed.
Statement of of parties recorded.
In view of the statement, the complaint is dismissed as withdrawn as compromised.
File be consigned to record room.
(Naresh Kumar Laka) 1st LMM/Dwarka Courts Delhi/15.10.2009"
and, (V) that the Compromise Deed placed on record was as under:
"COMPROMISE DEED THIS DEED OF COMPROMISE IS MADE AT NEW DELHI ON THIS THE 15th day of November, 2008 between Mr. Tushar Patni, S/o Shri M.J. Patni, P.O. Box No.880, Abu Dhabi, UAE through his authorized Attorney Shri Prashant Mamgain, S/o Shri Prithvi Dhar Mamgain, C-2/26, Mangal Apartments, Vasundhara Enclave, Delhi - 110096 hereinafter called the First Party.
AND Mrs. Sushila Badola, W/o Shri Vishwa Mohan Badola, R/o A- 212, Samachar Apartment, Mayur Vihar Phase-I, Delhi hereinafter called the Second Party. WHEREAS the Second Party took a friendly loan of Rs.2,00,00,000 (Rupees Two Crores Only) from the First Party
CS(OS) 113/2016 Page 14 of 25 on 10.05.2006 on the promise of returning of the same within a period of 6 months. The Second party did not return the aforesaid amount within the stipulated period of 6 months. WHEREAS the Second Party in order to discharge her liability of the aforesaid amount issued a Cheque in favour of the First Party for a sum of Rs.2,00,00,000/- (Rupees Two Crores Only) bearing No.773308 dated 04.10.2007 drawn on the Nainital Bank Ltd., P-37, Pandav Nagar, Patparganj, Delhi-110092. WHEREAS the aforesaid Cheque was dishonored by the banker of the Second Party on its presentation for encashment by the First Party. The First Party was constrained to issue a Legal Notice dated 23.10.2007, which was not replied by the Second Party. Subsequently the First Party filed a Complaint Case against the Second Party under Section 138 of the NI Act being Complaint Case No. 2675/01/07 and the same is pending adjudication before the Court of ____________Ld. MM, New Delhi and is fixed for hearing on 24.11.2008. WHEREAS both the parties have old family and friendly terms, have decided to settle the issue amicably outside the Court on the following terms and conditions:- NOW THIS COMPROMISE DEED WITNESSETH AS FOLLOWS
1. That the Second Party has agreed to pay an amount of Rs.3 Crores to the First Party as full and final settlement of the aforesaid Cheque amount within one year on the condition that the First Party will withdraw the Complaint Case in respect of the aforesaid Cheque Amount.
2. That the First Party undertakes to withdraw the Complaint Case No.2675/01/07 in respect of the aforesaid Cheque Amount on receipt of the entire Amount of Rs.3 Crores within the period of one year.
3. That both the parties undertake not to file/institute any proceedings [civil as well as criminal] against each other pertaining to the present Cheque Amount.
CS(OS) 113/2016 Page 15 of 25
4. That both the parties further undertake not to defame or propagate anything derogatory against each other in respect of dispute of present Cheque amount.
5. That in case the Second Party fails to pay the agreed amount i.e. Rs.3 Crores within the stipulated period as mentioned above, the First Party shall be at liberty to pursue the pending Complaint Case No.2675/01/07 against the Second Party. The First Party shall be at liberty to file/institute civil as well as criminal including registration of FIR against the Second Party in respect of the aforesaid Cheque amount before the competent Court of law.
6. That the present compromise has been made without using any undue influence, coercion, force, threat, allurement etc. against each other. IN WITNESS THEREOF the parties to this Deed of Compromise have singed and executed the same at New Delhi in the presence of the following witness on the day, month and year mentioned hereinabove:
WITNESSES: Sd.
TUSHAR PATNI THROUGH
HIS AUTHORIZED ATTORNEY
Sd.
(PRASHANT MAMGAIN)
FIRST PARTY
Sd.
(SUSHILA BADOLA)
SECOND PARTY"
18. The doubts expressed by me on 30th November, 2018 and as recorded in the order of that date, as to the very maintainability of this suit
CS(OS) 113/2016 Page 16 of 25 stand reinforced and the arguments aforesaid of the counsel for the plaintiff have failed to remove the said doubts. My reasons therefor are as under:-
A. Though the complaint case filed by the defendants against the plaintiff was dismissed as withdrawn but recording the statement of the defendant no.2 as attorney of the defendant no.1 and of the counsel for the plaintiff. As per the said statement, the defendants did not simpliciter withdraw the complaint but withdrew the complaint (i) for the reason of the settlement arrived at with the plaintiff; (ii) placing on record the Compromise Deed entered into with the plaintiff; (iii) stating on oath that the said Compromise Deed was bearing the signatures / thumb impression of the parties; (iv) placing on record of the complaint case, a copy of the said Compromise Deed; (v) by affirming before the Court receipt by the defendants of four cheques from the plaintiff in terms of the Compromise Deed towards full and final satisfaction of the complaint; and, (vi) by the advocate for the plaintiff also stating before the Complaint Court that the matter had been settled as per the Compromise Deed bearing the signatures of both the parties and in view of the compromise, the complaint case may be disposed of. The Complaint Court also did not dismiss the complaint as withdrawn simpliciter but recorded that the Compromise Deed had been placed on record and the statements of the parties in support thereof had been recorded and "in view of the statements".
CS(OS) 113/2016 Page 17 of 25
B. I have wondered the effect in law, if instead of the complaint case the aforesaid proceedings had been a civil suit i.e. if a civil suit was disposed of as withdrawn in view of a compromise placed before the Court.
C. It has been held in Kerala State Coir Corporation Ltd. Vs. Delhi Intercontinental (Hotels) Pvt. Ltd. (1993) 51 DLT 676, Hardit Singh Obra Vs. Daljit Singh (1975) 11 DLT 289 (DB), Vishwa Mitter Vs. Jit Singh MANU/PH/1199/1992 and Gopinathan Nair Vs. Sankaran Madhavan MANU/KE/0183/1983 that though the final order is of dismissal of the suit as withdrawn but owing to the said dismissal being in lieu of the compromise, the compromise remains enforceable by execution and the plaintiff is not required to seek his remedies by a fresh suit or otherwise. Further, it has been held in V.N. Sreedharan Vs. Bhaskaran AIR 1986 Ker 49, Parvathiyammal Vs. Sivathani Pillai AIR 1974 Mad 147 and M.L. Lakshmi Bai Vs. Kendaganna Swamy MANU/KE/0239/1993 that a compromise decree is passed by a Court upon the exercise of its adjudicatory powers and the resultant decree would be an expression of such adjudication and fall within the ambit of Section 2(2) of the CPC and is thus capable of execution.
D. A perusal of the Compromise Deed as reproduced hereinabove, placed on record of the complaint case and acting whereon the Complaint Court dismissed the complaint as
CS(OS) 113/2016 Page 18 of 25 withdrawn, also shows the parties to have agreed that in the event of the plaintiff failing to pay the agreed amount of Rs.3 crores as provided therein, the remedy agreed upon by the parties and on which Complaint Court puts its imprimatur was inter alia of pursuing the complaint case and which could be pursued only after revival of the same. Thus, it is not as if the compromise divested the Complaint Court of the jurisdiction.
E. Irrespective of whether the defendants were entitled to file fresh complaints of offence of dishonour of the cheques given under the Compromise Deed or not and irrespective of whether the defendants exercised the option of pursuing the complaint case in which the compromise was filed by seeking revival thereof, the challenge if any to the Compromise Deed filed in a Court even if exercising jurisdiction under the NI Act and CrPC in my opinion, applying the principle of Order XXIII Rule 3 of CPC, would lie in that Court only proceedings wherein culminated accepting the compromise and not before any other Court. Reference can be made to Pushpa Devi Bhagat Vs. Rajinder Singh (2006) 5 SCC 566, Horil Vs. Keshav (2012) 5 SCC 525, Y. Sleebachen Vs. State of Tamil Nadu (2015) 5 SCC 747, Morium Bibi Vs. Musst. Showkatara Begum 1994 SCC OnLine Cal 44, Gopal Lal Vs. Babu Lal AIR 2004 Raj 264 (DB), Bhai Sarabjit Singh Vs. Indu Sabharwal 2015 SCC OnLine Del 14462 and Lakshmamma Vs. T.H. Ramegowda AIR 2015 Kar 204.
CS(OS) 113/2016 Page 19 of 25
F. It is that Court alone which is competent in law to go into the challenges as are made by the plaintiff in this suit to the Compromise Deed i.e. of (i) of the Court which accepted the compromise, being the Court of the Link Magistrate being not competent to record the compromise; (ii) the defendants having chosen the day when the Link Court was seized of the matter to have the compromise recorded and having avoided having the compromise recorded before the Magistrate which was seized of the complaint case; and, (iii) the advocate who appeared for the plaintiff having not been authorized by the plaintiff.
G. It would be unfair of another Court to, in exercise of parallel jurisdiction, sit over judgment in a proceeding in another Court. Thus the jurisdiction to enter into the legality of the proceedings before it would be of the same Court in which the compromise under challenge was filed and only, if any remedy is preferred against the order of that Court would this Court as an Appellate/Revisional or Writ Court have jurisdiction to go into the merits of the judgment or findings of that Court.
H. The reasoning and logic which prevailed with the legislature in inserting Rule 3A in Order XXIII by an amendment of the year 1976 equally applies to a compromise arrived at in a proceeding under Section 138 of the NI Act. It has been held in Kaushalya Devi Massand Vs. Roopkishore Khore (2011) 4 SCC 593, R. Vijayan Vs. Baby (2012) 1 SCC 260, G.N. Raju
CS(OS) 113/2016 Page 20 of 25 Vs. B.S. Jaiprakash 2005 SCC OnLine Kar 728 and Sunny Vs. State of Kerala ILR 2018 (1) Ker 554 that an offence under Section 138 of the NI Act is in the nature of a civil wrong with criminal overtones.
I. Even otherwise, compromises as envisaged under Order XXIII Rule 3 are also permitted in criminal proceedings. Reference in this regard may be made to Madan Mohan Abbot Vs. State of Punjab AIR 2008 SC 1969, Sarvesh Kumar Shukla Vs. State of U.P. MANU/UP/1305/2007 and Gulab Vs. Board of Revenue Rajasthan AIR 2012 Raj 131. The Supreme Court, in Afcons Infrastructure Ltd. Vs. Cherian Varkey Construction Company Pvt. Ltd. (2010) 8 SCC 24 has held that principles underlying Order XXIII Rule 3 can be applied to mediated settlements as well.
J. I am unable to find any difference between a mediated settlement and a settlement as recorded above in the complaint case. Thus, from what has been held by the Division Bench of this Court in Dayawati supra also, it follows that the challenge to the compromise permitted by law in Section 138 proceedings has to be before the same Court and not by way of a separate suit.
K. I also concur with the view of the Calcutta High Court. A Compromise Deed aforesaid though a written instrument within the meaning of Section 31 of the Specific Relief Act, once filed in the Court in which disputes to be settled
CS(OS) 113/2016 Page 21 of 25 thereunder are pending and the Court passes orders in terms thereof ceases to have the character of a written instrument within the meaning of Section 31 of the Specific Relief Act and merges with the judicial order. Reference in this regard can also be made to Salkia Businessmen's Association Vs. Howrah Municipal Corporation (2001) 6 SCC 688, Pulavarthi Venkata Subba Rao Vs. Valluri Jagannadha Rao AIR 1967 SC 591, Anand Deep Singh Vs. Ranjit Kaur (2000) SCC OnLine Del 393, Pratabmull Rameswar Vs. K.C. Sethia (1944) Ltd. AIR 1960 Cal 702 (DB) and Banwari Lal supra. It was well-nigh possible for the parties in their respective statements made before the Complaint Court to have detailed the terms agreed between them instead of filing a written Compromise Deed. If in such a eventuality the statements, essentially an agreement between the parties would have qualified as a judgment or decree of the Court, there is no reason why where the parties instead of having detailed terms of settlement recorded in the Court and which may not only waste the time of the Court but may also result in errors, draw up a settlement and place the same before the Court and make statements in terms thereof before the Court, should be treated differently.
L. Per Section 257 of the CrPC, a complainant is entitled to withdraw the complaint only if satisfies the Magistrate that there are sufficient grounds for permitting him to withdraw his complaint against the accused and such an order permitting CS(OS) 113/2016 Page 22 of 25 withdrawal of complaint is not an order of withdrawal of complaints simpliciter but also an order of acquittal of the accused against whom the complaint is so withdrawn. Reference in this regard may be made to Sheonandan Paswan Vs. State of Bihar (1987) 1 SCC 288, Satish Dayal Mathur Vs. M/s Mackinnan Mackenzie & Company 1986 SCC OnLine Del 128 and Provident Fund Inspector, Tirupati Vs. Madhusudana Chaudhary (2009) 9 SCC 506. Thus, the order of withdrawal of the complaint is not an order of withdrawal simpliciter but also an order of acquittal. The remedy available against the order of acquittal would be under Section 378 of the Cr.P.C. Reference in this regard may be had to Ramrao Bhikaji Bodhke Vs. Mohammed Ashfaq 2011 SCC OnLine Bom 1281, Omana Jose Vs. State of Kerala 2014 SCC OnLine Ker 6347 (DB), M.K. Products Vs. Blue Ocean Exports (P) Ltd. 2016 SCC OnLine Cal 4496, Subhash Chand Vs. State (Delhi Administration) (2013) 2 SCC 17, Satya Pal Singh Vs. State of Madhya Pradesh (2015) 15 SCC 613 and Mallikarjun Kodagali Vs. State of Karnataka (2019) 2 SCC 752.
M. Such an interpretation is also conducive to keeping the stream of justice clean and orderly and to prevent multiplicity of proceedings and abuse of jurisdictions.
N. A Civil Court per se is not empowered to comment on the proceedings in a Court governed by the CrPC. What the
CS(OS) 113/2016 Page 23 of 25 plaintiff is wanting this Court to enquire into, hold and declare is that the Complaint Court was defrauded into recording a compromise and/or committed an illegality of procedure in recording the compromise and disposing of the complaint and/or that the plaintiff is not bound by the said compromise and for which in my humble opinion the Civil Courts have no jurisdiction. While the High Court is permitted to, under Section 482 of the Cr.P.C., pass any orders to prevent abuse of the process of the Court or to otherwise secure the ends of justice, but the inherent powers can be exercised only when no other remedy is available to the litigant. Reference in this regard may be made to State of Haryana Vs. Bhajan Lal 1992 SCC (Cri) 426, Madhu Limaye Vs. State of Maharashtra (1997) 4 SCC 551, S.A. Nanjundeswara Vs. Varlak Agrotech (P) Ltd. (2002) 10 SCC 249, Monica Kumar Vs. State of U.P. (2008) 8 SCC 781 and Narinder Singh Vs. State of Punjab (2014) 6 SCC 466.
O. Placing of a compromise before a Complaint Court cannot be an act of empty formality especially when the Court has acted upon the same and permitted the complaint to be withdrawn and acquitted the plaintiff.
P. The judicial as well as the legislative policy in relation to complaint cases is also of encouraging settlements. Reference in this regard may be made to Section 147 of the NI Act and to the dicta of the Supreme Court in Damodhar S. Prabhu Vs.
CS(OS) 113/2016 Page 24 of 25 Sayed Babalal H. (2010) 5 SCC 663 laying down the guidelines in this respect. Holding that such compromises entered into in such a complaint cases are ineffective and/or unactionable and the only remedy of the party aggrieved from default of the other in abiding by the compromise is to start a fresh litigation would be contrary to the said settled judicial and legislative practices.
Q. I am unable to agree with the contention of the counsel for the plaintiff that the Complaint Court is unable to pass a decree of declaration. The plaintiff is not interested in a decree but in setting aside of the compromise and in the event of the plaintiff approaching the Complaint Court and the Complaint Court finding merit in the challenge of the plaintiff, the Complaint Court in my opinion would be well entitled to set aside the compromise and pass further orders as may be deemed fit and which would have the same effect as the plaintiff is seeking in this Court.
19. Thus, I find the suit on the basis of averments in the plaint to be not disclosing a cause of action and being barred by law and dismiss the suit.
However, in the facts, no costs.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW, J.
MAY 08, 2019 bs/„pp‟..
(Corrected & released on 6th June, 2019) CS(OS) 113/2016 Page 25 of 25
