M/s. Valarmathi Oil Industries v. M/s. Saradhi Ginning Factory

IN THE HIGH COURT OF JUDICATURE AT MADRASDated: 15.04.2009CoramThe Honourable Mr. Justice S.TAMILVANANCrl. R.C.No.1857 of 20071. M/s. Valarmathi Oil Industries Rep. by its Partner K.Srinivasan S/o. A.M.Krishnaswamy2. K.Srinivasan .. Petitioners/Appellantsvs.M/s. Saradhi Ginning FactoryRep. by its PartnerA.GovindarajanS/o. N.A.Arunachala Pillai38/2-D 3, Kandampatti Main Road,Kandampatti, Salem. .. Respondent/RespondentPRAYER :Revision filed under Sections 397 & 401 of CriminalProcedure Code to set aside the order, dated 14.11.2007 made inC.M.P.No.4686 of 2007 in C.A.No.167 of 2007 on the file of theDistrict and Sessions Judge, Salem in as much as it directs thepetitioners to deposit a sum of Rs.3,75,000/- before the Trial Courtwithin a period of one month.For petitioner :Mr.Ilanthiraian for M/s. Sai Bharath & Ilan For respondent : Mr.S.Ashok KumarO R D E RThis revision petition has been preferred against the order,dated 14.11.2007 made in C.M.P.No.4686 of 2007 in C.A.No.167 of 2007on the file of the Principal District and Sessions Judge, Salem. 2. It is an admitted fact that the case in C.C.No.308 of 2006 wastaken on file by the learned Judicial Magistrate No.I, Salem on the https://hcservices.ecourts.gov.in/hcservices/ complaint given by the respondent herein that the cheque was issuedby the second petitioner herein on behalf of the first petitioner aspartner of the firm, however, the same was dishonoured by the bank,due to insufficient funds. According to the respondent, afterissuance of the legal notice to the petitioner, the complaint wasgiven under Section 138 of the Negotiable Instruments Act against thepetitioners. During the pendency of the criminal case, at request ofboth the parties, the matter was referred to Lok Adalat forsettlement. It is seen that the matter was referred to Lok Adalatunder Section 20 (1) (i) (b), 20 (1) (ii) of Legal ServicesAuthorities Act (Act.39/1987).3. Both the parties were present before Lok Adalat and as per theaward, they agreed for the settlement and accordingly, the petitioner/ accused, agreed to pay Rs.3,75,000/- (Rupees three lakhs andseventy five thousand only) to the respondent herein on or before03.09.2007. It was signed by the respondent / complainant,petitioners / accused and their respective counsel. In view of thecompromise arrived at between both the parties, the amount payable bythe accused / respondent was fixed at Rs.3,75,000/- towards full quitof the claim and that the petitioners herein agreed to pay the abovesaid amount on or before 03.09.2007 and accordingly, the award waspassed and placed before the Judicial Magistrate Court for furtherorders.4. It is seen that on 03.03.2007, the award was passed by thelearned Judge and two other members by affixing their signatures,however, the learned Judicial Magistrate, by his Judgment, dated17.10.2007, based on the award held that the petitioners hereinguilty and convicted under Section 138 of Negotiable Instruments Act,accordingly, imposed sentence of one year simple imprisonment anddirected the petitioners herein to pay a sum of Rs.3,75,000/- ascompensation to the respondent. Aggrieved by which, the petitioners /accused preferred appeal in C.S.No.167 of 2007 before the SessionsJudge, Salem.5. The learned Sessions Judge, Salem, by order, dated 14.11.2007suspended the sentence of imprisonment till 16.12.2007 and directedthe petitioners / accused to deposit the sum of Rs.3,75,000/- beforethe trial court and clarified that in case of failure of depositingthe amount, the order of suspension of sentence would stand cancelledautomatically and the petitioners were also directed to execute abond for Rs.10,000/- with two sureties each for the like sum to thesatisfaction of the trial court. Aggrieved by which, this criminalrevision has been preferred.6. Mr.Ilanthiraian, learned counsel appearing for the petitionerssubmitted that as per Section 21 of the Legal Services AuthoritiesAct, 1987, every award of the Lok Adalat shall be deemed to a decreeof civil court and therefore, after the award passed by the Lok https://hcservices.ecourts.gov.in/hcservices/ Adalat, the respondent / complainant was entitled to execute theaward like a decree of the civil court, however, in the instant case,the learned Magistrate, by his Judgment has found the petitionersguilty under Section 138 of Negotiable Instruments Act and alsoconvicted and sentenced them to undergo one year simple imprisonmentand to pay the compensation of Rs.3,75,000/-.7. Section 21 (2) of the Legal Services Authorities Act, 1987reads as follows :"Every award made by a Lok Adalat shall be finaland binding on all the parties to the dispute andno appeal shall lie to any court against theaward."8. In the instant case, admittedly after the case was referred toLok Adalat, there was a consensus between the parties, accordingly,the petitioners herein had agreed to pay Rs.3,75,000/- to therespondent on or before 03.09.2007. Though the award was signed byboth the parties, their counsel and the Judge along with two othermembers, it was wrongly referred to the Magistrate again. Consideringthe non-compliance of the award, the Magistrate convicted the secondpetitioner, who was also a partner of the first respondent firm,under Section 138 of Negotiable Instruments Act and sentenced him toundergo one year simple imprisonment and to pay a fine ofRs.3,75,000/- as compensation to the respondent. 9. The question of law involved in this criminal revisionpetition is whether the Magistrate can convict the petitioners /accused under Section 138 of Negotiable Instruments Act, after theaward was passed in the Lok Adalat. 10. By the impugned order, dated 14.11.2007, the learned SessionsJudge, considering the award passed by the Lok Adalat has grantedonly limited stay, directing the petitioners to pay Rs.3,75,000/- asa condition precedent.11. As per Section 21 (1) of the Legal Services Authorities Act,1987, the award passed by a Lok Adalat is final and binding on allthe parties to the dispute and no appeal shall lie. In this case, itis not in dispute that there was an award passed by the Lok Adalat,based on the consensus arrived at between the parties and for which,the parties and their respective counsel have signed. Then the awardwas signed by the Judge and the members of the Lok Adalat, therefore,the award could be construed as contemplated under Section 21 of theLegal Services Authorities Act a decree, passed by a civil court. Asper the award, it is seen that the petitioners / accused had agreedto pay the said award amount on or before 03.09.2007, butsubsequently, fail to pay the amount. In such circumstances, theremedy available to the respondent is similar to that of decree-holder, who obtained a decree through civil court, his remedy is https://hcservices.ecourts.gov.in/hcservices/ executing a decree passed by a civil court.12. Learned Magistrate, without considering the mandate ofSection 21 of the Legal Services Authorities Act, 1987, has convictedthe petitioners / accused under Section 138 of Negotiable InstrumentsAct and sentenced the second petitioner to undergo one year rigorousimprisonment, apart from directing him to pay Rs.3,75,000/- ascompensation to the respondent.13. Had there been no settlement in the Lok Adalat, the learnedMagistrate could have proceeded with the trial and deliver hisJudgment, for which, there is no bar. In the instant case, asadmitted by both the learned counsel, there was an award passed inthe Lok Adalat, based on the consensus arrived at between theparties. As per the award, the petitioners / accused had to payRs.3,75,000/- to the respondent / complainant on or before03.09.2007. As it is an award made by Lok Adalat, it is final andbinding on the parties to the criminal revision and as contemplatedunder Section 21 (2) of the Act, no appeal shall lie to any courtagainst the award.14. In such circumstances, the petitioners could have filed theExecution Petition before the appropriate court, seeking the awardamount to be paid with interest and costs. In such circumstances, itis clear that the learned Judicial Magistrate became functus officio,to decide the case after the award passed by Lok Adalat, to convictthe accused under Section138 of Negotiable Instruments Act, hence,the impugned order passed by the learned Sessions Judge is also notsustainable in law, however, it is clear that the petitioners /accused herein after having given consent for Lok Adalat award beingpassed and also the award amount agreed to pay Rs.3,75,000/- on orbefore 03.09.2007 to the respondent, have not complied with theirundertaking made before the Lok Adalat, which cannot be justified.However, the order passed by the learned Judicial Magistrate underSection 138 of Negotiable Instruments Act has to be set aside, inview of the Lok Adalat award passed under Section 20 (1) (i) (b), 20(1) (ii) of Legal Services Authorities Act (Act.39/1987), as theJudicial Magistrate became functus officio and the award is anexecutable decree in the eye of law, as per Section 21 of the Act. 15. In the result, this criminal revision petition is allowed andthe impugned order passed by the learned Sessions Judge, confirmingthe Judgment of the learned Judicial Magistrate No.I, Salem made inC.C.No.308 of 2006 is set aside.16. However, it is made clear that as per the award passed by theLok Adalat, the respondent / complainant is at liberty to fileExecution Petition before the appropriate court to get the awardamount Rs.3,75,000/- (Rupees Three lakhs and seventy five thousand https://hcservices.ecourts.gov.in/hcservices/ only) reimbursed with subsequent interest and costs, as per procedureknown to law. Sd/Asst.Registrar/true copy/Sub Asst.RegistrartsvnTo1. The District and Sessions Judge, Salem. 2. The Judicial Magistrate No.I Salem. 1 cc To Mr.S.Ashok Kumar, Advocate, SR.147471 cc To Mr.Sai Bharath & Ilan, Advocate, SR.14567 Crl.R.C.No.1857 of 2007PUR(CO)SRA(9/6/2009)