* THE HONOURABLE SRI JUSTICE A.GOPAL REDDY + Crl.P.Nos.621 & 8550 of 2008 % Date of Order :06-08-2010 Between: # V.Naga Lakshmi ..Petitioner and $ M/s.Chitiwide Financial Services Ltd. and another ..Respondents ! Counsel for the petitioner in both the petitions: Mr.G.Narender Raj ^ Counsel for the 1st respondent in both the petitions : Mr.S.Srinivas Counsel for the 2nd respondent in both the petitions: Public Prosecutor < GIST > HEAD NOTE ? Cases Referred: 1 (1997) 8 SCC 476 2 2004 AIR SCW 2748 3 2007 (5) SCJ 551 4 (2005) 6 SCC 478 THE HONOURABLE SRI JUSTICE A.GOPAL REDDY Crl.P.Nos.621 & 8550 of 2008 Date of Order: 06 -08-2010 CT in Crl.P.No.621 of 2008 Between: Mrs.V.Naga Lakshmi ..Petitioner and M/s.Citiwide Financial Services Ltd. and another. ..Respondents The Court made the following Common Order: THE HONOURABLE SRI JUSTICE A.GOPAL REDDY Crl.P.Nos.621 & 8550 of 2008 Common order: These two petitions filed under Section 482 Cr.P.C. to quash the proceedings in Crl.M.P.No.6987 of 2007 in L.A.C.No.895 of 2006 and in Enforcement Petition bearing M.P.No.4253 of 2008 in C.C.No.858 of 2007 pending on the file of XI Additional Chief Metropolitan Magistrate, Secunderabad were heard and disposed of by this common order. The petitioners are accused in L.A.C.No.895 of 2006 and C.C.No.858 of 2007 for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short “N.I.Act”). The said cases were referred to Lok Adalat as per Section 20 (1)(ii) of the Legal Services Authorities Act, 1987 (for short “the Act”). Before the Lok Adalat the complainant—1st the respondent in both the petitions and the petitioners herein appeared and they were persuaded to settle the matter amicably and after elaborate discussions, the complainant voluntarily accepted to compound the cases against the petitioners, which are punishable under Section 138 of N.I.Act, to see that the compromise is recorded and if necessary to compound the cases and acquit the accused of the said offence under Section 147 of N.I.Act. Pursuant to signing the petitions to compound the case, an order has been passed under Section 21 of the Act. Admittedly, the complainant and the accused appeared before the Lok Adalat through a separate petition, the complainant has accepted to compound the case under Section 147 of N.I.Act against the accused and the Lok Adalat having considered the matter permitted the complainant to compound the matter and accordingly such composition is recorded separately and the accused are acquitted of the above said offences under Section 147 of the N.I. Act and the bail bonds of the accused stands cancelled. Along with the petition under Section 147 of the N.I.Act, the terms of compromise also signed by the parties with the following effect: “ At the request of the accused, the complainant has agreed to compromise and settle the issue in L.A.C.No.895 of 2005 pending before the Honourable XI Additional Chief Metropolitan Magistrate, Secunderabad on the following terms and conditions. 1. That the Accused shall pay an amount of Rs.55,000/- (Rupees fifty five thousand only) within 45 days from this day i.e. on or before 8th June,2007 in three instalments as stipulated below to the complainant as follows: (i) Rs.20,000/- on or before 10th May, 2007 (ii) Rs.20.000/- on or before 25th May, 2007 (iii) Rs.15,000/- on or before 8th June, 2007 2. In case the accused failed to pay any of the above instalment amount she shall be liable to pay double the settlement amount to the complainant as compensation and shall be liable for imprisonment for a minimum of one year besides any other punishment imposed by this Hon’ble Court. As the amount has not been paid, the complainant filed Crl.M.P.No.6987 of 2007 for execution of the award passed by the Lok Adalat in terms of compromise. The learned Magistrate issued N.B.W., as there is no representation of the accused. Questioning the same, Crl.P.No.621 of 2008 is filed to quash the proceedings in Crl.M.P.No.6987 of 2007 in LAC.No.895 of 2006 contending that the complaint was directly taken cognizance by the Lok Adalat and the Magistrate did not record sworn statement of the complainant. Hence, the criminal court has not taken cognizance of the offence. Therefore, it would only be treaded as ‘pre-litigation case’. If the award of the Lok Adalat is to be executed, the complainant has to approach the Chief Judge, City Civil Court for execution in accordance with Rule 18 of the Rules; therefore, the proceedings before the Magistrate are clear abuse of process of law and issuance of Non-Bailable Warrant is in clear violation of Article 21 r/w 14 of the Constitution. Whereas Crl.P.No.8550 of 2008 is filed questioning the orders of the Magistrate dated 02-02-2008 passed in Crl.M.P.No.813 of 2008 in C.C.No.858 of 2007 with same set of facts where the complaint filed by the 1st respondent—complainant against the petitioner for the offence under Section 138 of the N.I. Act was referred to the Lok Adalat where a petition— Crl.M.P.No.813 of 2008 to compound the case was filed under Section 147 of N.I. Act along with terms of compromise, where the accused agreed to pay a sum of Rs.55,000/- to the complainant on or before 29-02-2008; in default of payment of settlement amount, the accused shall be liable for an imprisonment for a minimum period of one year and double the settlement amount as compensation to the complainant besides any other punishment as imposed by the Court. Basing on the said petition the Lok Adalat passed the following order: “ Complainant filed a petition under Section 147 of N.I.Act to compound the case against the accused stating that the matter was settled before Lok Adalat on the intervention of Lok Adalat members. Petition filed under Section 147 of N.I.Act by the complainant to compound on the ground that the matter was settled with the intervention of Lok Adalat. Petition is allowed and the accused is acquitted under Section 147 of N.I. Act.” To enforce the said order M.P.No.4253 of 2008 is filed, which is now sought to be quashed. Sri Narender Raj, leaned counsel for the petitioners in both the petitions contends that in the absence of sworn statement of the complainant the Magistrate simply forwarded the complaint to the Lok Adalat; therefore, it could be treated as “pre-litigation case” and execution of which is only as per Rule 18 of the Rules and the Magistrate cannot enforce the same like entertaining Crl.M.P.No.813 of 2008. For the said proposition he placed reliance on the judgment of the Supreme Court in MADHU BALA v. SURESH KUMAR[1]. He further contends that in the absence of recording the terms of compromise awarded by the Lok Adalat and if the party aggrieved that terms of compromise are erroneously recorded or not recorded, he should move the Lok Adalat for rectification of the award. For which strong reliance is placed on the judgment of the Supreme Court in RAM BALI v. SATE OF UTTAR PRADESH[2]. He further contends that executing court cannot go beyond the award passed by the Lok Adalat. For the said proposition he relied on the judgment of the Apex Court in DARSHAN SINGH v. STATE OF PUNJAB[3]. On the other hand, learned counsel for the 1st respondent in both the petitions would contend that when the award is passed as per the terms of compromise, the same is binding effect on the parties. For the said proposition he relied upon the judgment of the Supreme Court in P.T.THOMAS v. THOMS JOB[4]. He further contends that as per Rule 18 of the Rules, the execution of the awards passed by the Lok Adalats in respect of pending cases shall be executable by the Courts in which those matters were pending prior to the passing by the Lok Adalat. Since it is not a pre- litigation case and referred by the Court, pending before it, the same Court can execute the decree as per the said Rule. When the cases are registered with XI Additional Chief Metropolitan Magistrate, Secunderabad in S.R. Nos.8124 of 2006 and 9280 of 2007, as the complaint being compoundable, the learned Magistrate referred the same to the Lok Adalat, who in turn registered the same as LAC No.895 of 2006 and C.C.No.858 of 2007 and issued notice to the petitioners/accused directing them to appear before it; when they failed to appear, NBWs were issued; and in execution of the warrants when they appeared and pleaded to settle the issue in Lok Adalat, they were enlarged on bail. In the light of the above submissions, the point that arises for consideration in these petitions is: “Whether LAC.No.895 of 2006 and C.C.No.858 of 2007 are pre-litigation cases and the Magistrate can enforce the awards passed by the Lok Adalat.” Before dealing with the rival submissions, it would be appropriate to notice the relevant statutory provisions to understand the scheme of the Act. In Chapter VI, Section 19 deals with organization of Lok Adalats and Section 20 deals with cognizance of cases by Lok Adalats. Sub-Section (1) of Section 20 stipulates where in any case referred to in clause (i) of sub-Section (5) of Section 19, namely, any case pending before; (i)(a) the parties thereof agree; or (b) one of the parties thereof makes an application to the Court for referring the case to the Lok Adalat for settlement and if such Court is prima facie satisfied that there are chances of such settlement; or (ii) the Court is satisfied that the matter is an appropriate one to be taken cognizance of by the Lok Adalat, the Court shall refer the case to the Lok Adalat. Provided that no case shall be referred to the Lok Adalat under sub-clause (b) of clause (i) or clause (ii) by such Court except after giving a reasonable opportunity of being heard to the parties. Section 21 deals with Award of Lok Adalat and every award of the Lok Adalat shall be deemed to be a decree of a Civil Court, or, as the case may be, an order of any other Court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of Section 20, the Court-fee paid in such case shall be refunded in the manner provided under the Court-fees Act, 1870. Under sub-section (2) every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any Court against the award. Whereas Chapter VI-A deals with pre-litigation conciliation and settlement. Section 22C deals cognizance of cases by Permanent Lok Adalat, where any party to a dispute may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat for the settlement of dispute. Sub-section (2) of Section 22C prohibits invocation of jurisdiction of any court in the same dispute after application is made under sub-section (1) of Section 22C to the Permanent Lok Adalat by the party to the said application. Sub-section (7) deals with conciliation and possibility of permanent settlement in reaching an agreement between the parties and sub-section (8) deals with where the parties fail to reach at an agreement under sub- section (7), the Permanent Lok Adalat shall decide the dispute. For due implementation of the Act, Rules were framed. Rule 18 of the Rules deals with execution of the awards passed by the Lok Adalat in respect of pending cases and pre-litigation cases. The award passed by the Lok Adalat in respect of pending cases shall be executable by the Courts in which those matters are pending prior to the passing of award by the Lok Adalats. In respect of matters at prelitigative stage shall be executable through the Court of District Judges of the District in which the Lok Adalats is held. The scheme of the Act, as referred to above, clearly distinguishes passing of awards in two types of cases, namely, post litigation case and pre-litigation cases in Chapter VI-A. Indisputably, in the present case, complainant filed a private complaint for the offence under Section 138 of N.I.Act before the Magistrate. What is prohibited under Section 22C is, if a party may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat, he is prohibited from invoking the jurisdiction of any court either civil or criminal in the same dispute. Once the party has already invoked the jurisdiction of the Magistrate to decide the offence and when the Magistrate thought it fit that it is a case to be settled by the Lok Adalat organized for the said purpose and issued notice to the parties why it should not be referred to the Lok Adalat, it is a judicial Act. The Lok Adalat by registering the same as L.A.C.No.895 of 2006 and C.C.No.858 of 2007, directed both the parties to appear before the Lok Adalat. On accused failure to appear, NBWs were issued and in execution of the same, they appeared and agreed for settlement with the intervention of Lok Adalat conducted and settlement has been drawn by both the parties and pursuant to the settlement applications —M.A.No.4488 of 2007 in LAC No.895 of 2006 and M.P.No.813 of 2008 in C.C.No.858 of 2007 have been filed under Section 147 of N.I. Act to compound the case enclosing the settlement. On allowing the applications, impugned awards, permitting the complainant to compound the cases, were passed recording the compromise separately, which also forms part of the award. No doubt, there is some technical lacuna in the award that compromise entered between the parties was not made as part of the award, but it is recorded that composition is recorded separately, which can always be executable. Learned counsel for the petitioners strenuously contends that since the sworn statement of the complainant has not been recorded by the Magistrate before issuing process, the court has not taken cognizance of the complaint and it can be treated only as “pre-litigation case” but not otherwise. This Court do not find any merit in the contention of the learned counsel, for the reason, cognizance is judicial hearing of a matter and taking cognizance of an offence is not the same thing as issuance of process as held by the Apex Court in STATE OF KARNATAKA VS. PASTOR P. RAJU[5]. The judgment on which reliance is placed by the learned counsel for the petitioner is decided on different context and do not apply to the facts of the present case. Therefore, it is not necessary to analyse the ratio laid down therein. On filing a complaint, judicial hearing has taken place before referring the matter to the Lok Adalat and in exercise of judicial discretion, the Magistrate referred the matter to the Lok Adalat; therefore, it is deemed that the Magistrate has taken cognizance before referring the matter to the Lok Adalat. The petitioners having submitted to the jurisdiction of the Lok Adalat in execution of N.B.Ws., have not raised any objection for such reference nor that the Magistrate has not taken cognizance by examining the complainant. Examination of the complainant is a procedure to be followed before issuing the process, which can be waived by the parties. Therefore, it is not open for them to contend that without taking cognizance compounding the case is illegal. The object behind enacting the Act is, disposal of cases in a summary manner through arbitration and settlement between the parties expeditiously with a lesser cost and to give a statutory support for voluntary settlement, which will reduce burden of arrears and workload in regular courts, and also to take justice to doorsteps. Chapter VI-A deals with set up of Permanent Lok Adalats for providing compulsory prelitigative mechanism for conciliation and settlement of cases relating to public utility services, whereas Chapter VI deals with settlement of disputed cases, which are pending before the Court. Admittedly, the Magistrate has referred the cases to the Lok Adalat as settled, and the parties have filed M.A.No.4488 of 2007 and Crl.M.P.No.813 of 2008 under Section 147 of N.I. Act to close the cases, as settled between the parties. Therefore, the Magistrate will have jurisdiction to enforce the settlement. In view of the same, I see no merit in both the Criminal Petitions and they are accordingly dismissed. ________________ A.GOPAL REDDY, J. 06-08-2010 Note: L.R. Copy to be marked (bo) Murthy [1] (1997) 8 SCC 476 [2] 2004 AIR SCW 2748 [3] 2007 (5) SCJ 551 [4] (2005) 6 SCC 478 [5] AIR 2006 SC 2825 = (2006) 6 SCC 728