SCOPE OF MEDIATION IN CHEQUE BOUNCE CASES
Mediation is one of the most preferred modes of Alternative Dispute Resolution(ADR). In mediation, there is a neutral third party, which helps the parties at dispute to come to the settlement.
Though mediation has been traditionally followed in India. But later through section 89 of the CPC 1908, it got the legal recognition.
Whereas section 138 of the Negotiable Instrument Act states the dishonor of cheque for insufficient also includes the punishment of imprisonment for a term which may extend to one year or fine which may extend to twice the amount of the cheque or with both.
Facts of the case
Dayawati, the appellant in 2014, supplied fire fighting equipment to the respondent, Yogesh. In return to that, Yogesh issued two cheques of Rs 11 lakhs and Rs 16 lakhs each in favor of Dayawati. But both the cheques were dishonored due to insufficient funds. The appellant demanded money from the respondent but was ignored. Consequently, the appellant filed the two complaints under section 138 of the NI Act.
The court referred the cases to Delhi High Court Mediation and Conciliation Centre. Through it, the parties came up with a mutual decision. And the respondent agreed to give Rs 55,54,600 in installments. But the respondent failed to follow the mediation agreement and the Patiala Court referred the case to Delhi High Court.
- Whether criminal cases under section 138 can be referred for mediation?
- What would be the result of a breach of such a settlement received by the court?
The court allowed the criminal offenses of compoundable nature to be resolved via mediation.
ANALYSIS OF JUDGMENT
The judgment delivered by the Delhi High Court is a remarkable one as it promotes resolving criminal cases though having civil nature by the most convenient and cheap method of Alternate Dispute Resolution that is Mediation. As the number of cheque bounce cases in India is increasing day by day and hence courts cannot look up at them due to other more serious offenses. In the above case, Delhi High Court judicially took up into consideration the judgment of the Supreme Court in R.Vijayan V. Kaushalya Devi where it was held that all the offenses that come under section 138 are civil unlike other cruel offenses covered in Indian Penal Code. They involve disputes between private parties and not the public at large. The most important point which the court stated which brings such offenses under the ambit of Mediation is that they are compoundable in nature.
But there are some faults too, like the judgment relied a lot on the provisions of CPC and process of civil courts in criminal matters, ironically. This is contrary to the distinction between the civil and criminal domain of law. The court relied on the power of Lok Adalat to establish the power of the criminal court to refer a criminal case to a civil process that is mediation even though there is no such statute regarding such provision. Court also highlighted the power of High Court under section-482 CRPC and also cited the case of Gyan Singh in order to bring in notice that the criminal cases which have civil nature can be transferred to mediation, but the court forgot that such power is inherited only to High courts and not the lower courts.
Provisions under section-431 CRPC provides the remedy of claiming compensation of merely of RS2000 and imprisonment of 6 months. Both of them are easy to escape and insufficient. Seeing such provisions an offender can easily abuse the legal process.
The court should have provided for a better safeguarding mechanism. Like the case should be transferred to the same court from the starting stage in order to continue the trial in court if the mediation process is abused.