Case Closed Via Lok Adalat Amounts To Decree/ Award; Courts Can't Recall The Said Order, Bar Under S. 362 CrPC Will Apply: Karnataka High Court

A single-judge bench of Justice K. Natarajan said, "Once the case is closed, it amounts to decree or award in Lok Adalat. Therefore, once the amount has not been paid by the accused in terms of the compromise, then the petitioner is required to approach the same court for recovery of amount in accordance with law and it need not reopen the case, which was already closed by the Court and Magistrate does not have power to recall the said order in view of the bar as per the provisions of Section 362 of the Cr.P.C."

Petitioner Shally M. Peter had approached the high court for quashing the order dated 25-2-2020 passed by the XXXIV Additional Chief Metropolitan Magistrate, Bengaluru, whereby it rejected the memo filed by the petitioner for reopening the case filed by him against the respondent (M/S. Banyan Projects India Pvt. Ltd.) under Section 138 of Negotiable Instruments Act.

Case Background:

During the pendency of the case, the petitioner and the respondent have filed a joint memo for compromise for settling the dispute for Rs.33.00 lakhs. Accordingly, the respondent issued eight cheques. The compromise memo between the parties also mentioned that the respondent agreed to pay the amount as mentioned above and to pay the interest at the rate of 2.5% per month until the realisation of the said amount. Condition No.6 of the joint memo for compromise says that if the cheque is not honoured, then the petitioner is at liberty to take legal action against the respondent and the petitioner is reserved all the rights and liberties to reopen the case for the purpose of recovery of the amount. Following which the trial court closed the case on the terms of the compromise.

However, when the petitioner presented the cheques given by the respondent, all eight cheques were dishonoured for 'funds insufficient'. Therefore, the petitioner filed a memo to reopen the case and also filed a memo of calculation and prayed for recovery of amount of Rs.33.00 lakh with interest at the rate of 2.5%.

The respondent opposed the petition firstly stating that once the case has ended up in compromise either in the Court or in the Lok Adalat, the only option available to the petitioner is to file a case for recovery. He cannot seek for reopening of the criminal case which is already closed by the Magistrate.

Further, the petition is not maintainable under Section 482 of the Cr.P.C. as the petitioner is required to file a Criminal Revision Petition under Section 397 of the Cr.P.C. before the Sessions Judge. Therefore, without exhausting the remedy before the Sessions Judge filing the petition under Section 482 of the Cr.P.C. before this Court is not maintainable.

Court's Findings:

The court relying on the Apex court judgement in the case of Prabhu Chawla V. State Of Rajasthan And Another reported in (2016) 16 SCC 30 which has taken the view that availability of an alternative remedy under Section 397 of the Cr.P.C. by itself cannot be a ground to dismiss the petition under Section 482 of the Cr.P.C.

The court said, "In view of the above judgment, the contention raised by the learned counsel for the respondent that the petition is not maintainable under Section 482 of the Cr.P.C. without exhausting the remedy under Section 397 of the Cr.P.C. cannot be sustained. Therefore, it has to be rejected."

It noted "Once the cheques are dishonoured, it is clear that there was a violation of the terms and conditions of the joint memo. Therefore, the petitioner is required to take action against the respondent for recovery of Rs.33.00 lakh with interest at the rate of 2.5% as agreed by the parties and liberty was also reserved for the recovery of the said amount."

The court opined,

"The only option available to the petitioner is to file execution case before the same Judge for the execution of the order in terms of the compromise for recovery of the amount mentioned in the cheques, but the Trial Court, without application of mind, has stated that the amount has already been paid by the respondent to the petitioner without having knowledge that those cheques were already dishonoured and thereby, the respondent has violated the terms of compromise."

It added,

"Therefore, the Court ought to have registered a criminal miscellaneous case against the petitioner for the purpose of recovery of amount as fine from the accused either under Section 431 of the Cr.P.C. or under Section 421 of the Cr.P.C., but has wrongly rejected the prayer in the name of memo of calculation, which requires to be set aside."

The court passed the following order,

"The order dated 25-2-2020 passed by the XXXIV Additional Chief Metropolitan Magistrate, Bengaluru, in C.C. No.57252 of 2018 is hereby set aside. Application of the petitioner-complainant shall be treated as miscellaneous case and to proceed to issue warrant as per Section 421 of the Cr.P.C. and to recover the same as fine as per Section 431 of the Cr.P.C."

Case Title: Shally M. Peter And M/S. Banyan Projects India Pvt. Ltd.

Case No: Criminal Petition No.3157 Of 2020

Date Of Order: 20th Day Of September 2021

Appearance: Advocate Shahida Khanam J A/W Advocate Maskoor Hashmi Md For Petitioner

Advocate S.R. Sreeprasad For Respondent.