Negotiable Instruments Act. Compromise before Lok Adalat. Award can be enforced under Section 431 of Criminal Procedure Code. Complainant need not approach Civil Court. Karnataka High Court

Somashekara Reddy vs G.S.Geetha. Writ Petition 23519 of 2018. Decided on 7 February 2020

HELD: (1) Award can be enforced under Section 431 of Criminal Procedure Code. Complainant need not approach Civil Court. (2) In case of default and on application, Magistrate can set aside Compromise and restore complaint

Judgment Link: http://judgmenthck.kar.nic.in/.../WP23519-18-07-02-2020.pdf

Para 22. Unlike the facts of the case in M/s. Yash Investment Consultants vs Mr. Kartik Ravidhandar (2017 5 KLJ 409, in the present case, liberty is reserved to proceed under Section 431 Cr.P.C.

23. The very object and purpose of Legal Services Authority Act and creation of Lok-Adalat is to facilitate easy and fast settlement of disputes. Resolving of disputes does not only mean an agreement to settle the dispute but a complete finality as regards the dispute being achieved.

24. During criminal proceedings under Section 138 of N.I. Act, if the accused were to dishonestly state that he was agreeable for reference to Lok-Adalat, in furtherance of which the matter is referred to Lok-Adalat and a compromise being arrived at on certain terms in a dishonest manner in that the accused even at the time knowing fully well that he would not adhere to the terms of the compromise and thereafter the accused not performing his obligation would take up the contention that only methodology available to the complaint is execution of compromise as a civil decree, thereby the accused would have successfully avoided a criminal prosecution, frustrated the complaint and left the complainant with no possibility or lesser possibility of recovering the monies due to him as he would had under Section 138 of N.I. Act.

25. While encouraging settlement through Lok-Adalat, it is also required that the interest of the parties are protected and no one misuses or abuses the process Lok-Adalat to harass the other or take undue advantage over the other. The integrity and efficacy of the proceedings before the Lok-Adalat are therefore to be maintained.

28. Merely because the settlement was at before the Lok-Adalat, it cannot be contended that the criminal proceedings have been converted into civil proceedings revoking the right of the complainant to enforce his rights in terms of the applicable criminal law.

31. Answers to questions:

1. Depending on the terms of a compromise arrived at before the Lok-Adalat it can be enforced as a Civil decree or in terms of the applicable provisions of Cr.P.C, including that under Section 431 of Cr.P.C. if so provided in the compromise.

2. In the event of a default of a compromise arrived at before the Lok-Adalat High Court or the trial court can on application made by the complainant set aside the compromise arrived at before the Lok-Adalat, restore the complaint on its file and proceed with complaint or enforce the compromise as per the terms of compromise including by issue of FLW under Section 431 of the Cr.P.C.