2014 Supreme(SC) 658

SUPREME COURT OF INDIA
J. CHELAMESWAR and A.K. SIKRI, JJ.
MADHYA PRADESH STATE LEGAL SERVICES AUTHORITY - APPELLANT(S)
VERSUS
PRATEEK JAIN & ANR. - RESPONDENT(S)
CIVIL APPEAL NO. 8614 OF 2014 (arising out of Special Leave Petition (Civil) No. 38519 of 2012)
Decided on: SEPTEMBER 10, 2014

IMPORTANT POINTS
When compromise arrived at and submitted to court, there will not be any justification for sending the matter to Lok Adalat.
Guidelines in Damodar S. Prabhu requiring payment of varying cost depending upon stage of litigation for compounding offence u/s 138, NI Act can be deviated from in special cases giving reasons.
Costs given in the guidelines may be reduced for good reasons.

Headnote:(a) Negotiable Instruments Act, 1881 – Section 147 – Parties settling their dispute – Compromise arrived at and submitted to court – Matter sent to Lok Adalat – No justification – Court could have passed order based on compromise – Tendency of referring even those matters to the Lok Adalat which have already been settled just to inflate the figures – Deprecated. (Para 18)

       (b) Negotiable Instruments Act, 1881 – Section 147 – Court allowing compounding on compromise between parties – Payment of 15% of cheque amount as per guidelines in Damodar S. Prabhu – Sending the case to Lok Adalat to avoid this rigour – Not permissible. (Para 19)

       (2010) 5 SCC 663 – Relied upon

       (2012) 2 SCC 51 – Referred

       (c) Negotiable Instruments Act, 1881 – Section 147 – Compounding at trial stage – Even at appellate stage – Held permissible in (2000) 1 SCC 672 – Parties needed to be restrained from unduly delaying settlement – Guidelines framed for imposing varying costs depending upon stage of litigation, on parties unduly delaying compounding. (Para 20, 22)

       (2000) 1 SCC 672 – Relied upon

       (d) Negotiable Instruments Act, 1881 – Section 147 – No guidelines for compounding of offences u/s 138 – Impracticability of applying Section 320 Cr PC for offences u/s 138 – Court framing guidelines to fill-in vacuum – Not a judicial legislation – Can be departed from for good reasons. (Para 24)

       (e) Negotiable Instruments Act, 1881 – Section 147 – Compounding of offence u/s 138 – By court – By Lok Adalat – Even if compounding id done by Lok Adalat, guidelines vide Damodar S. Prabhu should be followed – Deviation, however, can be made – Costs may be reduced in special cases giving reasons. (Para 26)

       Facts of the case:

       There was some dispute between respondent Nos. 1 and 2. Since it pertains to a complaint filed under Section 138 of the NI Act, one can safely infer that the complaint was filed because of dishonour of the cheque. This complaint was filed by respondent No.1 against respondent No.2 and had resulted in some conviction/adverse order against respondent No.2. Respondent No.2 had filed the appeal against the order of the Magistrate in the Court of Additional Sessions Judge.

       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.

       Before the 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.

       The Presiding Officer of the Lok Adalat, however, 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.

       This order was challenged by respondent No.2 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 is binding on the subordinate Courts under Article 141 of the Constitution and, therefore, the subordinate Court had not committed any legal error.

       Thus 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 appellant apprehends 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 would be greatly prejudiced and, therefore, it is necessary to straighten the law on the subject matter.

       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.

       Finding of the Court:

       There is no error in the impugned judgment.