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Resolving Disputes of Section 138 of Negotiable Instruments Act, 1881 through Mediation: Existent Possibility?

Unlike other forms of crime, the punishment under 138 of NI is not meant for seeking retribution but is more for insuring payment of money. The proceedings under s.138 have a unique character. They arise from a civil dispute relating to dishonouring of a cheque but may result in criminal consequences. Even though the statute is punitive, its spirit, intent, and object provide compensation that should prioritise punishment. Therefore, the proceedings under 138 are distinctive from any other criminal case, and it is legal to refer such cases to mediation or any other resolution. 


 Procedure For Settlement of an S. 138 Offence Through Mediation

  1. When the parties first enter in a criminal suit under s.138, if the court is satisfied initially or at any stage of the hearing that there is an element of settlement, then the magistrate shall inquire from the parties if they are open to exploring the possibilities of an amicable resolution of the dispute. 
  2. If the parties are inclined towards such a settlement, they should inform the court about the various mechanisms available to them by which they can arrive at such a settlement. 
  3. Once the parties have chosen the appropriate mechanism, the court should refer such parties to the forum and prescribe the time limit within which the matter should be negotiated. Ideally, a period not exceeding more than six weeks would be given for such negotiation. The parties shall be directed to appear before the mediator in a time-bound manner, keeping in due the time fixed by the magistrate.
  4. Suppose all the parties seek an extension of time beyond the initial 6-week period. In that case, the magistrate may, after considering the progress of the mediation proceedings, grant an extension of time to the parties in the interest of justice. 


The mediators shall forward the settlement agreement duly signed by both parties and his report on a fixed date when the party appears before the court. The magistrate should independently apply his judicial mind and satisfy if the settlement agreement is genuine, equitable, lawful and voluntary. The settlement reached in mediation arising out of a criminal case can’t be considered a decree and can’t be executed in a criminal case civil court. The magistrate may compound the matter on account of the compromise in the settlement agreement and accept such prayers under s.147 of the NI Act. 



This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise. 

  • Background Information
  • Procedure For Settlement of a s.138 Offence Through Mediation
  • Pending Formalities

BY : Saloni Shukla

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