Dayawati Vs.

Yogesh Kumar Gosain

Crl.Ref. No.1/2016
FACTS
In part discharge of his liability, the drawer issued 2 account payee cheques in favour of the
complainant which were dishonored by the drawer’s bank on presentation on account of
insufficiency of funds. The demand notice of the complainant went unheeded and hence an
action was initiated for the dishonor of cheque (under Section 138 of the Negotiable Instrument
Act, 1881). Both parties expressed the intention to amicably settle their disputes and the matter
was referred for mediation. After negotiations the parties settled their disputes under a common
settlement agreement whereby they agreed to comply with terms of the settlement.
The accused drawer failed to comply with the terms of the settlement. Thus, the Metropolitan
Magistrate held that the Mediation had failed. Thereafter, the Complainant filed an application
for enforcement of settlement to which the accused argued that the settlement agreement was not
binding contending it to be unfair and arbitrary.
In view of the question of law that has arose, and the requirement of proper adjudication, a
reference was been made for consideration and guidance of the Hon’ble High Court of Delhi
(under Section 395 of The Code of Criminal Procedure, 1973).

ISSUES
1. According to Section 357 of The Code of Criminal Procedure, 1973 how Magistrate
compensate the Victim from Offender.
2. If offender not compensate to Victim then how Magistrate recovered Compensation from
Offender.

JUDGMENT
The Court held that even though an express statutory provision enabling the criminal curt to refer
the complainant and accused persons to alternate dispute redressal mechanisms has not been
specifically provided by the Legislature, the Code of Criminal Procedure does permit and
recognize settlement without stipulating or restricting the process by which it may be reached.
It was concluded that there is n bar to utilizing the alternate dispute mechanisms including
arbitration, mediation, conciliation for the purposes of settling disputes which are the subject
matter of offences covered under Section 320 of the Code of Criminal Procedure.
CONCLUSION

In arriving at the aforesaid decision the Court has taken into account the factor that the Supreme
Court of India vide a catena of cases has encouraged the settlement of disputes through
dispute resolution mechanism. It was held that there is no legal prohibition upon a Court,
seized of a complaint under N.I. Act, to encourage dispute resolution by recourse to the alternate
dispute resolution methods including mediation.

It has been observed that even criminal cases involving offences which arise from commercial,
financial, mercantile, partnership or similar transactions with an essentially civil flavor may in
appropriate situations, fall for quashing where parties have settled the dispute. The Court also
held that the proceedings under Section 138 of the N.I. Act are in the nature of a civil wrong
which has been given criminal overtones.

The Court seems to have adopted a positive approach by promoting the settlement through
efficient, effective, speedy, convenient and inexpensive process to resolve disputes with dignity,
mutuality, respect and civility where parties participate in arriving at a negotiated settlement
rather than being confronted with a third party adjudication of their disputes.

Section 395 of The Code of Criminal Procedure, 1973 talks about the Reference to High Court
(1) Where any Court is satisfied that a case pending before it involves a question as to the
validity of any Act, Ordinance or Regulation or of any provision contained in an Act, Ordinance
or Regulation, the determination of which is necessary for the disposal of the case, and is of
opinion that such Act, Ordinance, Regulation or provision is invalid or inoperative, but has not
been so declared by the High Court to which that Court is subordinate or by the Supreme Court,
the Court shall state a case setting out its opinion and the reasons therefor, and refer the same for
the decision of the High Court. Explanation.- In this section," Regulation" means any Regulation
as defined in the General Clauses Act, 1897 (10 of 1897 ), or in the General Clauses Act of a
State.

(2) A Court of Session or a Metropolitan Magistrate may, if it or he thinks fit in any case pending
before it or him to which the provisions of sub- section (1) do not apply, refer for the decision of
the High Court any question of law arising in the hearing of such case.

(3) Any Court making a reference to the High Court under sub- section (1) or sub- section (2)
may, pending the decision of the High Court thereon, either commit the accused, to jail or release
him on bail to appear when called upon.