Mediated settlements in criminal cases must receive judicial endorsement to be enforceable; otherwise, they remain private agreements with no legal effect. Breaches do not invalidate the original agreements.

JUDGMENT :

SANJEEV NARULA, J.

CRL. M.A. 34565/2024 (on behalf of Petitioner seeking permission to file amended petition)

1. For the grounds and reasons stated in the application, the same is allowed and the amended petition is taken on record.

2. Disposed of.

CRL. M.C. 1105/2019

3. The Petitioner, who is the Complainant in CIS Case No.4991781/2016, under Section 138 of the Negotiable Instruments Act, 1881 [“the NI Act”] has invoked the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure, 1973 [“Cr.P.C”] (now Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023) and Article 227 of the Constitution of India, 1950 assailing order dated 3^rd November, 2017 [“the impugned order”] passed by the Metropolitan Magistrate [“the Magistrate”] NI Act-02, South West, Dwarka. The impugned order observed that the Settlement Agreement dated 29^th September, 2016 [“the Settlement Agreement”/“the Agreement”]executed between the parties, was null and void.

4. The genesis of the dispute arises from a cheque bearing No. 264730 dated 25^th June, 2015, for an amount of INR 22,43,400/- allegedly issued by the Respondents towards discharge of their liability for supply of material by the Petitioner. Upon presentation, the cheque was dishonoured with the endorsement “insufficient funds.” Consequently, the Petitioner instituted a complaint under Section 138 of the NI Act in December, 2015 against the Respondents. Following preliminary inquiry, Respondents No. 1 to 3 were summoned to face trial.

5. At the request of the parties, the Magistrate referred them to the Mediation Centre at Dwarka Courts, where they purportedly resolved their disputes and executed a Settlement Agreement dated 29^th September, 2016. Under its terms, the Respondents undertook to pay INR 22,43,400/- towards full and final settlement of the Petitioner’s claims. Of this, a sum of INR 2,43,500/- was to be deposited directly in the Petitioner’s bank account and the balance was to be discharged in instalments through six post-dated cheques [“PDCs”] as per the agreed schedule. The Agreement expressly provided that dishonour of any PDC would render the settlement null and void. It was further agreed that the Petitioner would withdraw the complaint, along with other related proceedings concerning the same transaction, within one week of receiving the first two instalments.

6. In partial performance of the Agreement, a sum of INR 2,43,500/- was paid to the Petitioner by way of demand draft on 20^th December, 2016 during proceedings before the Magistrate. However, the parties did not adhere to the remaining terms. The record of proceedings indicates that on 4^th January, 2017, the Respondents undertook to pay the PDCs as per the Agreement, however, they failed to do so. Thereafter, on 7^th January, 2017 and again on 18^th February, 2017, it was jointly submitted by the parties that the settlement had failed, a statement duly noted in the proceedings.

7. In the wake of the above development, the Magistrate proceeded to serve notice on the Respondents under Section 251 of Cr.P.C thereby commencing trial on the underlying complaint.

8. Subsequently, by the impugned order dated 3^rd November, 2017, the Magistrate observed that the proceedings recorded on 18^th February, 2017 reflected that the settlement had failed and consequently, rendered “null and void” owing to non-compliance by the Respondents. On this reasoning, the Magistrate directed the Petitioner to return the sum of INR 2,43,500/- received under the Agreement and ordered that the complaint be adjudicated on its merits.

ARGUMENTS ADVANCED

9. Counsel for the Petitione