Dismissed

Nishith P.M v. State of Kerala Rep. by the Public Prosecutor

Kerala HC19 Oct 2022Crl.MC/2627/2022

Case brief

AI extract

What is this about?

Petitioner sought quashal of proceedings for cheque dishonour arising from a settlement agreement reached via mediation. The Court held that Section 21 awards are deemed decrees but only for execution; they do not exempt the drawer from prosecution if the agreement explicitly reserves the right to initiate legal action upon non-payment, as per Sections 138 and 142 of the N.I. Act.

What did the court decide?

Petitions to quash proceedings were dismissed; Sessions Judge directed to dispose of pending appeals within one month.

Nishith P.M Vs State of Kerala Rep. by the Public Prosecutor — Cheque Dishonour | Kerala HC (2022)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE A. BADHARUDEEN

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WEDNESDAY, THE 19^TH DAY OF OCTOBER 2022 / 27TH ASWINA, 1944

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CRL.MC NO. 2626 OF 2022

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ST NO.5/2019 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-II,

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THALASSERY

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CRL.APPEAL NO.87/2021 OF SESSIONS COURT, THALASSERY

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PETITIONER/ACCUSED :

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NISHITH P.M., S/O.KUNHANANDAN, AGED 34 YEARS, METHAL MAVILA VEEDU, P.O.VARAM, ELAYAVOOR, KANNUR DISTRICT. BY ADV K.K.MOHAMED RAVUF

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RESPONDENTS :

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1 STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682031

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2 VIKAS M., S/O.SUBHASH, AGED 40 YEARS, SUBHASHITHAM, P.O.MUNDAYAD, KANNUR - 670597 BY ADVS. ABDUL RAOOF PALLIPATH K.R.AVINASH (KUNNATH)(K/1364/2003) PRAJIT RATNAKARAN(K/497/1995) RAJ CAROLIN V.(K/001117/2018)

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THIS CRIMINAL MISC.CASE HAVING BEEN FINALLY HEARD ON

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11.10.2022, ALONG WITH CRL.MC.NOS.2627/2022 AND 2640/2022,

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THE COURT ON 19.10.2022 PASSED THE FOLLOWING:

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE A. BADHARUDEEN

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WEDNESDAY, THE 19^TH DAY OF OCTOBER 2022 / 27TH ASWINA, 1944 CRL.MC NO. 2627 OF 2022

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ST NO.1/2019 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-II,

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THALASSERY

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CRL.APPEAL NO.86/2021 OF SESSIONS COURT, THALASSERY PETITIONER/ACCUSED :

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NISHITH P.M., S/O.KUNHANANDAN, AGED 34 YEARS, METHAL MAVILA VEEDU, P.O.VARAM, ELAYAVOOR, KANNUR DISTRICT. BY ADV K.K.MOHAMED RAVUF

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RESPONDENTS:

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1 STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, PIN - 682031 2 VIKAS M, S/O.SUBHASH, AGED 40 YEARS, SUBHASHITHAM, P.O.MUNDAYAD, KANNUR - 670597 BY ADVS. ABDUL RAOOF PALLIPATH K.R.AVINASH (KUNNATH)(K/1364/2003) PRAJIT RATNAKARAN(K/497/1995) RAJ CAROLIN V.(K/001117/2018)

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THIS CRIMINAL MISC.CASE HAVING BEEN FINALLY HEARD ON 11.10.2022, ALONG WITH CRL.MC.NOS.2626/2022 AND 2640/2022, THE COURT ON 19.10.2022 PASSED THE FOLLOWING:

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE A. BADHARUDEEN

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WEDNESDAY, THE 19^TH DAY OF OCTOBER 2022 / 27TH ASWINA, 1944

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CRL.MC NO. 2640 OF 2022

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ST NO.6/2019 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-II,

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THALASSERY

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CRL.APPEAL NO.88/2021 OF SESSIONS COURT, THALASSERY PETITIONER/ACCUSED :

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NISHITH P.M. S/O.KUNHANANDAN, AGED 34 YEARS, METHAL MAVILA VEEDU, P.O.VARAM, ELAYAVOOR, KANNUR DISTRICT. BY ADV K.K.MOHAMED RAVUF

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RESPONDENTS/STATE/COMPLAINANT :

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1 STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR HIGH COURT OF KERALA, ERNAKULAM - 682031 2 VIKAS M., S/O.SUBHASH, 40 YEARS, SUBHASHITHAM, P.O.MUNDAYAD, KANNUR - 670597 BY ADVS. ABDUL RAOOF PALLIPATH K.R.AVINASH (KUNNATH)(K/1364/2003) PRAJIT RATNAKARAN(K/497/1995) RAJ CAROLIN V.(K/001117/2018)

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THIS CRIMINAL MISC.CASE HAVING BEEN FINALLY HEARD ON 11.10.2022, ALONG WITH CRL.MC.NOS.2626/2022 AND 2627/2022, THE COURT ON 19.10.2022 PASSED THE FOLLOWING:

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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“C.R”

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A. BADHARUDEEN, J.

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================================ Crl.M.C.Nos.2626/2022, 2627/2022 and Crl.M.C.No.2640/2022

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================================

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Dated this the 19^th day of October, 2022

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COMMON ORDER

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Nishith P.M, who is the appellant in Crl.Appeal Nos.87/2021, 86/2021 and 88/2021 pending before the Sessions Court, Thalassery, has filed these petitions under Section 482 of the Code of Criminal Procedure Code (hereinafter referred to as the `Cr.P.C’ for convenience). The prayer in Crl.M.C.No.2626/2022 is to quash all further proceedings in S.T.No.5/2019 on the file of the Judicial First Class Magistrate Court-II, Thalassery and in Crl.Appeal No.87/2021 on the file of the Sessions Court, Thalassery arising out of the same.

¶52

The prayer in Crl.M.C.No.2627/2022 is to quash all further proceedings in S.T.No.1/2019 on the file of the Judicial First Class Magistrate Court-II, Thalassery and in Crl.Appeal No.86/2021

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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on the file of the Sessions Court, Thalassery arising out of the same.

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The prayer in Crl.M.C.No.2640/2022 is to quash all

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further proceedings in S.T.No.6/2019 on the file of the Judicial First Class Magistrate Court-II, Thalassery and in Crl.Appeal No.88/2021 on the file of the Sessions Court, Thalassery arising out of the same.

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The respondents herein are State of Kerala as well as the original complainant and the 1^st respondent in the above Crl.Appeals.

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Heard the learned counsel for the petitioner as well as the learned counsel appearing for the 2^nd respondent in detail.

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It is argued by the learned counsel for the petitioner that in terms of Annexure-A1 mediation agreement entered into between the petitioner as well as the 2^nd respondent, who were accused and complainant in C.C.No.918/2014 on the file of Judicial First Class Magistrate Court-I, Kannur, the above case was settled at the mediation Sub Centre, Kannur and a mediation agreement was entered into between the petitioner and the 2^nd respondent. Since the mediation agreement entered into is under Section 89 of Code of Civil Procedure r/w Rules 24 and 25 of the Civil Procedure Alternate Dispute Resolution and Mediation Rules, 2006, the mediation

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022 6

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agreement is an award passed under Section 21 of the Legal Services Authority Act having the trappings of a civil court decree, being deemed decree, and hence the remedy of the 2^nd respondent herein is to execute the award by resorting to Order 21 of the Code of Civil Procedure Code. He also submitted that since the dispute reached finality in view of Annexure-A1 settlement, the cheques issued as part of the said settlement cannot be the basis for prosecuting the petitioner, when the said cheques were dishonoured. In order to buttress this contention, the learned counsel placed a decision of the Apex Court reported in [(2012) 2 SCC 51], K.N.Govindan Kutty Menon v. C.D.Shaji . In the said decision, the judgment rendered by this Court in W.P(C).No.33013/2009 dated 24.11.2009 reported in [2010 1 KHC 8] was challenged before the Apex Court. This Court while dealing with Section 21 of the Legal Services Authority Act, 1987 held that an award passed by the Adalat in a criminal case involving offence under Section 138 of the Negotiable Instruments Act can be treated as an order of the criminal court and it cannot be executed as a decree of a civil court. But the Apex Court after considering the impact of Section 21 of the Legal Services Authority

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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Act, settled the following propositions :

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“26. (1) In view of the unambiguous language of Section 21 of the Act, every award of the Lok Adalat shall be deemed to be a decree of a civil court and as such it is executable by that court.

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(2) The Act does not make out any such distinction between the reference made by a civil court and a criminal court.

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(3) There is no restriction on the power of the Lok Adalat to pass an award based on the compromise arrived at between the parties in respect of cases referred to by various courts (both civil and criminal), tribunals, Family Court, Rent Control Court, Consumer Redressal Forum, Motor Accidents Claims Tribunal and other forums of similar nature.

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(4) Even if a matter is referred by a criminal court under Section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court.”

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Another decision of this Court reported in [2011 (2) KLT

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23], N.D.Nair v. George Martin is highlighted by the learned counsel for the petitioner to assert the point that when an award is passed under Section 21 of the Legal Services Authority Act, 1987, in case of default, no further proceedings can be entertained before Magistrate and the remedy is to execute the award before a civil court.

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A decision of a Division Bench of this Court reported in

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[2015 (1) KLT 596], Ummer v. Abdul Azeez also is placed to foresee

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the said legal position. In fact, the Division Bench considered a

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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compromise entered into between a landlord and a tenant in a Rent Control Petition and the execution of the said compromise.

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Controverting these contentions, the learned counsel for the 2^nd respondent argued that as per Annexure-A1 settlement arrived at, as a result of mediation in C.C.No.918/2014, it was agreed that Rs.19 lakh would be paid by the petitioner herein to the 2^nd respondent. Accordingly, cheque for Rs.1 lakh dated 30.08.2017 was issued on the assurance of encashment of the said cheque on 30.08.2017. Further, 2 cheques for Rs.9 lakh each, dated 25.11.2017 and 25.2.2018 were also issued on the assurance of encashment on the respective dates. He submitted further that the above cheques were returned unpaid and accordingly the 2^nd respondent initiated prosecution.

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It has been specifically provided in the award that, as per the agreed terms, it was decided to withdraw the complaint in C.C.No.918/2014 and also to withdraw another prosecution launched alleging commission of offence punishable under Section 138 of the N.I Act before another court. It has been specifically provided further that if the above cheques were dishonoured for any reason for

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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want of funds, the 2^nd respondent could very well initiate legal proceedings.

¶82

It is true that Annexure-A1 is a mediation agreement. Indubitably the legal proposition is well settled as argued by the learned counsel for the petitioner that when award is passed under Section 21 of the Legal Services Authority Act, the same can be executed by resorting to Order 21 of C.P.C, since the same is a deemed decree. But such course of action would be available only when the terms of the agreement should reflect an executable decree. In this matter, 2 prosecutions earlier launched by the 2^nd respondent in the year 2014 were withdrawn as part of settlement entered into as per Annexure-A1 and the settlement terms would suggest that 3 cheques were issued for Rs.1 lakh, Rs.9 lakh and Rs.9 lakh respectively with assurance of encashment on 30.08.2017, 25.11.2017 and 25.2.2018. The specific term in the settlement is that if the cheques happen to be dishonoured, the 2^nd respondent could very well initiate legal proceedings.

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It is the settled law that in order to execute a decree, the decree must be one capable of execution and the terms thereof shall

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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be sufficient to get the same executed. It is unexceptionable that a court executing a decree cannot go behind the decree; it must take the decree according to its tenor; has no jurisdiction to widen its scope and is required to execute the decree as made. The decision reported in [(2009) 5 SCC 634 : 2009 KHC 4617], M/s.Century Textiles Industries Ltd. V. Deepak Jain & anr. , is on this point.

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In this matter, when the prosecution was launched, the petitioner did not raise any objection before the trial court, now raised and he conceded the jurisdiction of the trial court and he was found guilty for the commission of offence punishable under Section 138 of the N.I Act. Thereafter he filed separate appeals challenging the common judgment and during pendency of the said appeals, he filed the present petitions to quash the entire proceedings.

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In the case on hand, C.C.No.918/2014 on the file of the Judicial First Class Magistrate Court, Thalassery and another similar case were withdrawn by the complainant since the accused issued cheques for Rs.19 lakh as part of settlement. The legal position is no more res integra on the point that when an award is passed by way of settlement in Lok Adalath or on mediation, the same is a deemed

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022 11

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decree executable under Section 21 of the Legal Services Authority Act, as I have already pointed out. However, the terms of the compromise as discussed herein above would suggest that the parties settled the earlier cases by issuance of these cheques. In the illustrated facts of the case, a seminal question emerges for consideration is; whether a party is precluded from initiating prosecution under Section 142 of the N.I Act, when a cheque issued to discharge the liability by settlement in the Adalath in terms of an award under Section 21 of Legal Services Authority Act, if returned unpaid?

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In this context, it is relevant to refer Section 138 and 142 of

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the N.I Act. Section 138 of the N.I Act provides as under:

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“138: Dishonour of cheque for insufficiency, etc., of dunds in the account:-- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

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Provided that nothing contained in this section shall apply unless--

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(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity,

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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whichever is earlier;

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(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by

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giving a notice in writing to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

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Explanation:-- For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.”

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Section 142 of the N.I Act provides as under:

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“142. Cognizance of offences:-- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), –

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(a) no Court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;

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(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138:

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[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;]

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(Section (1) (c) to (2)(b) and explanation omitted)

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Going by the statutory wordings of Section 138, it is

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crystal clear that when any cheque drawn by a person on an account

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maintained by him with a banker for payment of any amount of money to another person to discharge, in whole or in part, or any

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debt or liability, is returned by the bank unpaid, such person shall be

¶113

Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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deemed to have committed an offence. Section 142 of the N.I Act deals with cognizance of the said offence.

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On reading the penal provision, it has to be held that

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offence under Section 138 of the N.I Act would attract consequent dishonour of any cheques. If cheque or cheques issued in terms of an award passed under Section 21 of the Legal Services Authority Act, for payment of the sum specified, the drawer of the said cheque has no exemption from the penal consequences, if the said cheque or cheques returned unpaid. To put differently, in case of dishonour of any cheque, the legal action is inevitable if the payee or holder in due course opts to do so. In such a case, it cannot be held that on dishonour of the three cheques issued by the petitioner herein to the 2^nd respondent in terms of Annexure-A1 mediation agreement cannot be the basis of launching prosecution alleging commission of offence punishable under Section 138 of the N.I Act. Therefore, I am of the view that these petitions filed by the petitioner to quash the proceedings lack merits and the same are liable to be dismissed.

¶118

The Crl.M.Cs are accordingly dismissed.

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Taking note of the fact that the financial liability

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022 14

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acknowledged by the petitioner herein starting from 2014 led to filing of the present cases pending as Crl.Appeal Nos.86, 87 and 88 of 2021 before the Sessions Court, Thalassery, the learned Sessions Judge, Thalassery, is directed to expedite the hearing and disposal of the above appeals within one month from the date of receipt or production of a copy of this order.

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Registry is directed to forward a copy of this order to the Sessions Judge, Thalassery, for information and compliance.

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Sd/- (A. BADHARUDEEN, JUDGE)

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rtr/

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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APPENDIX OF CRL.MC 2626/2022

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PETITIONER ANNEXURES

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ANNEXURE 1 COPY OF THE SETTLEMENT ARRIVED IN C.C. NO.918/2014 DATED 24-8-2017 ON REFERENCE U/S.89 OF THE C.P.C. BY THE JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KANNUR. ANNEXURE 2 COPY OF THE ORDER DATED 17-10-2017 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KANNUR. ANNEXURE 3 COPY OF THE COMMON JUDGMENT DATED 22.4.2021 PASSED BY THE JFCM COURT-II, THALASSERY. ANNEXURE 4 COPY OF THE MEMORANDUM OF CRL.APPEAL NO.87/21 DATED 17-6-2021 FILED BEFORE THE COURT OF SESSIONS, THALASSERY. ANNEXURE 5 COPY OF THE ORDER DATED 9-8-2021 IN CRL.M.P. NO.1151/2021 IN CRL.APPEAL NO.87/2021 OF THE COURT OF SESSIONS, THALASSERY

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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APPENDIX OF CRL.MC 2627/2022

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PETITIONER ANNEXURES

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ANNEXURE 1	COPY OF THE SETTLEMENT ARRIVED IN C.C. NO.918/2014 DATED 24-8-2017 ON REFERENCE U/S.89 OF THE C.P.C. BY THE JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KANNUR.
ANNEXURE 2	COPY OF THE ORDER DATED 17-10-2017 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KANNUR.
ANNEXURE 3	COPY OF THE COMMON JUDGMENT DATED 22.4.2021 PASSED BY THE JFCM COURT-II, THALASSERY.
ANNEXURE 4	COPY OF THE MEMORANDUM OF CRL.APPEAL NO.86/21 DATED 17-6-2021 FILED BEFORE THE COURT OF SESSIONS, THALASSERY.
ANNEXURE 5	COPY OF THE ORDER DATED 9-8-2021 IN CRL.M.P. NO.1149/2021 IN CRL.APPEAL NO.86/2021 OF THE COURT OF SESSIONS, THALASSERY

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Crl.M.C.Nos.2626/2022, 2627/2022 & 2640/2022

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APPENDIX OF CRL.MC 2640/2022

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PETITIONER ANNEXURES

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ANNEXURE 1	COPY OF THE SETTLEMENT ARRIVED IN C.C. NO.918/2014 DATED 24-8-2017 ON REFERENCE U/S.89 OF THE C.P.C. BY THE JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KANNUR
ANNEXURE 2	COPY OF THE ORDER DATED 17-10-2017 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KANNUR.
ANNEXURE 3	COPY OF THE COMMON JUDGMENT DATED 22.4.2021 PASSED BY THE JFCM COURT-II, THALASSERY.
ANNEXURE 4	COPY OF THE MEMORANDUM OF CRL.APPEAL NO.88/21 DATED 17-6-2021 FILED BEFORE THE COURT OF SESSIONS, THALASSERY
ANNEXURE 5	COPY OF THE ORDER DATED 9-8-2021 IN CRL.M.P. NO.1153/2021 IN CRL.APPEAL NO.88/2021 OF THE COURT OF SESSIONS, THALASSERY

Nishith P.M v. State of Kerala Rep. by the Public Prosecutor

Case brief

What is this about?

What did the court decide?

Nishith P.M v. State of Kerala Rep. by the Public Prosecutor

Case brief

What is this about?

What did the court decide?

What the court decided

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