Case BriefsHigh Courts

Delhi High Court: Stating that, Rape is an act against society, Rajnish Bhatnagar, J., held that simply entering into a compromise allegation of rape will not lose its gravity.

The instant petition was filed by the petitioner under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 for quashing and cancelling the FIR under Sections 376, 323 and 506 of Penal Code, 1860.

Information was received from PCR wherein it was reported that Complainant was not telling anything about the complaint but was asking for urgent police assistance and on reaching the place of the incident she said that she had a scuffle with her male friend (petitioner herein) who tried to assault her.

Complainant later disclosed the act of sexual assault having been committed upon her by the accused (petitioner herein) in his ICD Patparganj Office when she had gone to talk to him regarding their marriage.

Petitioner was a customs officer and met the complainant through the website Jeevansathi.com. He concealed the fact regarding his first love marriage and that his first wife committed suicide for which case was going on this Court.

After a few meetings and conversations, the complainant asked him to proceed with marriage talks, he called her to Faridabad and took the complainant to Vivanta by Taj Hotel and that night petitioner/accused raped her against her will.

Petitioner/accused also told the complainant that he would marry her in Arya Samaj Mandir, but later on, he made excuses that the mandir was closed and also told her to return to Ayodhaya. Later, he stopped picking her phone calls.

In March 2021, petitioner/accused reached Bhopal and put vermilion on the complainant and said that now they were husband and wife, but he did not let her meet his family. Further, in April, petitioner/accused raped her in a car. Complainant again lodged a complaint against petitioner/accused in NCW which finally reached Mahila Thana, Faridabad. In June, petitioner/accused came to that police station and again he made a promise to marry the complainant and accordingly she withdrew her complaint.

Again after a few days, the petitioner/accused molested the complainant and started fingering inside her private parts forcible after which the complainant lodged a PCR call but the petitioner/accused gave threats of dire consequences and ran away from the spot.

In view of the above, FIR was registered, and an investigation went underway.

Analysis, Law and Decision

High Court noted that the petitioner was a Government Servant, working as Superintendent with Customs & CGST Department, Govt. of India, holding a Gazetted post. Being a Government Servant was expected to maintain high moral rectitude and a decent standard of conduct in his personal/private life and not bring discredit to his service by his misdemeanours.

The charges of rape are of grave concern and cannot be treated in a casual manner.

The Bench observed that whether the High Courts, while exercising its jurisdiction under Section 482 CrPC should quash an offence under Section 376 IPC came for consideration before the Supreme Court in a number of cases.

Supreme Court has, time and again, directed that the High Court should not exercise its jurisdiction under Section 482 Cr.P.C to quash an offence of rape on the ground that the parties have entered a compromise.

 Catena of decisions were referred, such as:

In the present matter, the parties compromised amicably and respondent 2 filed an affidavit stating that she and the petitioner married each other and that she had no objection if the present FIR was quashed as she did not wish to pursue any proceedings.

“…by simply entering into a compromise, charges cannot be said to have been mitigated or that the allegations leveled by the respondent 2 regarding the alleged offence lost its gravity by any means. Act of rape is not an act against individual, but this is an offence against the society.”

In view of the legal position enumerated in Gian Singh v. State of Punjab, (2012) 10 SCC 303 along with other cases referred above, the criminal proceedings from FIR registered with allegations of rape cannot be quashed in exercise of powers vested in this Court under Section 482 CrPC on the basis of settlement and subsequent marriage as it would not waive off the offence alleged by the complainant.

Therefore, petition was dismissed. [Swatantara Kumar Jaysawal v. State, 2022 SCC OnLine Del 30, decided on 3-1-2022]


Advocates before the Court:

For the Petitioner:

Mr. Manoj Chaudhary and Mr. Sachin Anand, Adv.

Petitioner in person.

For the Respondents:

Mr Rajesh Mahajan, ASC with Ms Jyoti Babbar, Adv.

Mr Lalit Valecha, Adv. for R-2

R-2 in person.

Case BriefsSupreme Court

Supreme Court: In a bid to curb the worrying trend of parallel proceedings for complaints under Section 138 of the NI Act, the bench of Dr. DY Chandrachud*, Vikram Natha and BV Nagarathna, JJ has held that a complainant cannot pursue two parallel prosecutions for the same underlying transaction.

“Once a settlement agreement has been entered into by the parties, the proceedings in the original complaint cannot be sustained and a fresh cause of action accrues to the complainant under the terms of the settlement deed.”

What led to the decision?

In the case at hand, a set of cheques were dishonoured, leading to filing of the first complaint under Section 138 of the NI Act. The parties thereafter entered into a deed of compromise to settle the matter. While the first complaint was pending, the cheques issued pursuant to the compromise deed were dishonoured leading to the second complaint under Section 138 of the NI Act. Both proceedings were pending simultaneously and hence, the issue before the Supreme Court was to decide whether the complainant can be allowed to pursue both the cases or whether one of them must be quashed and the consequences resulting from such quashing.

Analysis

Ingredients of the offence under Section 138

(1) drawing of the cheque,

(2) presentation of the cheque to the bank,

(3) returning the cheque unpaid by the drawee bank,

(4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount,

 (5) failure of the drawer to make payment within 15 days of the receipt of the notice.

Remedies under Section 138 of the NI Act

The effect of an offence under Section 138 of the NI Act is limited to two private parties involved in a commercial transaction. However, the intent of the legislature in providing a criminal sanction for dishonour of cheques is to ensure the credibility of transactions involving negotiable instruments.

Given that the primary purpose of Section 138 of the NI Act is to ensure compensation to the complainant, the NI Act also allows for parties to enter into a compromise, both during the pendency of the complaint and even after the conviction of the accused.

Worrying trend of parallel proceedings for complaints under Section 138 of the NI Act

“The pendency of court proceedings under Section 138 of the NI Act and the multiplicity of complaints in which a cause of action arising from one transaction is litigated has dampened the ease of doing business in India, impacted business sentiments and hindered investments from investors.”

The Court noticed that the introduction of a criminal remedy has given rise to a worrying trend where cases under Section 138 of the NI Act are disproportionately burdening the criminal justice system

Hence, under the shadow of Section 138 of the NI Act, parties are encouraged to settle the dispute resulting in ultimate closure of the case rather than continuing with a protracted litigation before the court. This is beneficial for the complainant as it results in early recovery of money; alteration of the terms of the contract for higher compensation and avoidance of litigation. Equally, the accused is benefitted as it leads to avoidance of a conviction and sentence or payment of a fine. It also leads to unburdening of the judicial system, which has a huge pendency of complaints filed under Section 138 of the NI Act.

Whether once the settlement has been entered into, the complainant can be allowed to pursue the original complaint under Section 138 of the NI Act?

Holding that a complainant cannot pursue two parallel prosecutions for the same underlying transaction, the Court said that allowing the complainant to pursue parallel proceedings, one resulting from the original complaint and the second emanating from the terms of the settlement would make the settlement and issuance of fresh cheques or any other partial payment made towards the original liability meaningless.

The Court explained that a contrary interpretation, which allows for the complainant to pursue both the original complaint and the consequences arising out of the settlement agreement, would lead to contradictory results.

First, it would allow for the accused to be prosecuted and undergo trial for two different complaints, which in its essence arise out of one underlying legal liability.

Second, the accused would then face criminal liability for not just the violation of the original agreement of the transaction which had resulted in issuance of the first set of cheques, but also the cheques issued pursuant to the compromise deed.

Third, instead of reducing litigation and ensuring faster recovery of money, it would increase the burden of the criminal justice system where judicial time is being spent on adjudicating an offence which is essentially in the nature of a civil wrong affecting private parties.

A complainant enters into a settlement with open eyes and undertakes the risk of the accused failing to honour the cheques issued pursuant to the settlement, based on certain benefits that the settlement agreement postulates. The benefits may include – higher compensation, faster recovery of money, uncertainty of trial and strength of the complaint, among others.

Hence,

“Once parties have voluntarily entered into such an agreement and agree to abide by the consequences of non-compliance of the settlement agreement, they cannot be allowed to reverse the effects of the agreement by pursuing both the original complaint and the subsequent complaint arising from such non-compliance. The settlement agreement subsumes the original complaint.”

The Court, hence, held that non-compliance of the terms of the settlement agreement or dishonour of cheques issued subsequent to it, would then give rise to a fresh cause of action attracting liability under Section 138 of the NI Act and other remedies under civil law and criminal law.

[Gimpex Private Limited v. Manoj Goel, 2021 SCC OnLine SC 925, decided on 08.10.2021]

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Counsels:
For appellant: Senior Advocate V Giri and Advocate Liz Mathew

For respondent: Senior Advocate Jayant Bhushan


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Case BriefsSupreme Court

Supreme Court: In a case where the members of the Lok Adalat, Madhya Pradesh High Court had entered into the merits of the writ petition and had dismissed it on merits, the bench of MR Shah* and AS Bopanna, JJ has set aside the order and has held that it was not open for the members of the Lok Adalat to enter into the merits of the writ petition and to dismiss the same on merits, in absence of any settlement arrived at between the parties.

Relevant provisions under the Legal Services Authorities Act, 1987 explained

As per sub-section (5) of Section 19, a Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or a settlement between the parties to a dispute in respect of

  • any case pending before; or
  • any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organised.

As per sub-section (1) of Section 20 where in any case referred to in clause (i) of sub-section (5) of Section 19- (i) (a) the parties thereof agree; or (i) (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.

It further provides 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.

As per sub-section (3) of Section 20 where any case is referred to a Lok Adalat under sub-section (1) or where a reference is made to it under sub-section (2), the Lok Adalat shall proceed to dispose of the case or matter and arrive at a compromise or settlement between the parties. Sub-section (5) of Section 20 further provides that where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, the record of the case shall be returned by it to the court, from which the reference has been received under sub-section (1) for disposal in accordance with law.

Analysis of the provisions

The provisions make clear that,

  • the jurisdiction of the Lok Adalat would be to determine and to arrive at a compromise or a settlement between the parties to a dispute and once the aforesaid settlement / compromise fails and no compromise or settlement could be arrived at between the parties,
  • the Lok Adalat has to return the case to the Court from which the reference has been received for disposal in accordance with law and in any case,
  • the Lok Adalat has no jurisdiction at all to decide the matter on meris once it is found that compromise or settlement could not be arrived at between the parties

Conclusion

The impugned order passed by the Lok Adalat dismissing the writ petition on merits was found to be unsustainable and deserves to be quashed and set aside.

In the present case, the consent to place the matter before the Lok Adalat was to arrive at a settlement and or a compromise between the parties and not for placing the matter before the Lok Adalat for deciding the matter on merits.

“Once there is no compromise and/or a settlement between the parties before the Lok Adalat, as provided in sub-section (5) of Section 20, the matter has to be returned to the Court from where the matter was referred to Lok Adalat for deciding the matter on merits by the concerned court.”

[Estate Officer v. Colonel H.V. Mankotia, 2021 SCC OnLine SC 898, decided on 07.10.2021]
____________________________________________________________________________________________________________

Counsels:

For appellant: Vikramjit Banerjee, ASG


*Judgment by: Justice MR Shah

Know Thy Judge | Justice M. R. Shah

Case BriefsSupreme Court

Supreme Court: In a case where a compromise was reached between parties, 28 years after an incident left the victim crippled for life, the bench of Ajay Rastogi* and Abhay S. Oka, JJ held that compromise cannot be taken to be a solitary basis for mitigating the sentence until the other aggravating and mitigating factors also support and are favourable to the accused for molding the sentence which always has to be examined in the facts and circumstances of the case on hand.

What was the case about?

On 13th December 1993, the injured victim was brutally attacked with stones, sword, Satur, etc., by the appellant, leaving him severely injured so much so that when he was taken to the hospital, his dying declaration was recorded as according to the treating Doctor, in the absence of immediate medical treatment, his death was certain. The incident led to the amputation of the leg and the arm of the victim and left him crippled for life.

The appellant was convicted under Section 326 IPC and was sentenced to rigorous imprisonment for 5 years and to pay under Section 357 CrPC of Rs. 2 lakhs as a monetary compensation to the victim.

A compromise was entered between the appellant and the injured victim on 13th July, 2021 and it was argued that,

“the relations of the families are very cordial and they are now closely related having matrimonial relations with each other’s family and the incident has occurred due to misunderstanding and on the spur of the moment and submitted that the parties have jointly prayed, in the interest of peace and harmony between both the families and as requested by the complainant to compound the offence and in the interest of justice, he may be released on the sentence undergone.”

What did the Supreme Court say?

Explaining the law on compromise, the Court said that the compromise if entered at the later stage of the incident or even after conviction can indeed be one of the factor in interfering the sentence awarded to commensurate with the nature of offence being committed to avoid bitterness in the families of the accused and the victim and it will always be better to restore their relation, if possible, but

“… the compromise cannot be taken to be a solitary basis until the other aggravating and mitigating factors also support and are favourable to the accused for molding the sentence which always has to be examined in the facts and circumstances of the case on hand.”

Further, giving punishment to the wrongdoer is the heart of the criminal delivery system, but there are no legislative or judicially laid down guidelines to assess the trial Court in meeting out the just punishment to the accused facing trial before it after he is held guilty of the charges. However, the Court takes into account a combination of different factors while exercising discretion in sentencing, that is proportionality, deterrence, rehabilitation, etc.

The Court, in the present case, was not able to record its satisfaction in reference to the kind of compromise which was obtained and placed on record after 28 years of the incident. It said that,

“… this Court cannot be oblivious of the sufferings which the victim has suffered for such a long time and being crippled for life and the leg and arm of the victim are amputated in the alleged incident dated 13th December, 1993 and since then he has been fighting for life and is pursuing his daily chores with a prosthetic arm and leg and has lost his vital organs of his body and became permanently disabled and such act of the appellant is unpardonable.”

The Court, hence, refused to give any benefit of the alleged compromise and held,

“… such a brutality cannot be ignored which is not against the individual but the crime is against the society which has to be dealt with sternly.”

[Bhagwan Narayan Gaikwad v. State of Maharashtra, 2021 SCC OnLine SC 748, decided on 20.09.2021]

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Counsels:

For appellant: Senior Advocate Mahesh Jethmalani

For State: Advocate Sachin Patil


*Judgment by: Justice Ajay Rastogi

Know Thy Judge | Justice Ajay Rastogi

Case BriefsHigh Courts

Delhi High Court: Emphasizing on the gravity of seriousness of Section 307 Penal Code, 1860, Subramonium Prasad, J., observed that,

“…an offence under Section 307 IPC will fall under the category of heinous offence, and therefore, has to be treated as a crime against the society and not against the individual alone and the proceedings under Section 307 IPC cannot be quashed only on the ground that the parties have resolved the entire disputes amongst themselves.”

Present matter was in the Court for quashing an FIR registered for offences under Section 307/34 of Penal Code, 1860.

Factual Matrix

It was stated that victim was assaulted by some unknown persons and the nature of injuries was opined to be serious, for further treatment he was shifted to RML Hospital.

Since the victim was unfit for treatment, his father gave a statement wherein he stated that Hannan and petitioner were quarrelling with his son. They both were holding the victim and then stabbed him. After stabbing, they escaped from the spot.

On father’s statement, the FIR was registered for offences under Sections 307/34 IPC.

Hannan was declared as a Proclaimed Offender.

Further, the charge sheet was filed and enough material against the accused was there to proceed against him under the above-stated Sections.

Later the parties entered into a compromise and as per the compromise deed accused was to pay a sum of Rs 3,00,000 as compensation/medical charges. Accused had paid Rs 1,00,000 at the time of settlement and remaining amount would be paid at the time of quashing the FIR.

Crux

Quashing of criminal proceedings for offences under Section 307 IPC on the ground that parties had entered into a settlement.

It was noted that Supreme Court had a conflict of opinion with regard to whether an offence under Section 307 IPC could be quashed by the High Court while exercising power under Section 482 CrPC.

In the decision of State of Rajasthan v. Shambhu Kewat, (2104) 4 SCC 149, it was held that an offence under Section 307 IPC is a serious offence and ordinarily should not be quashed by the High Court while exercising its powers under Section 482 CrPC on the ground that the parties have settled their disputes.

Further, Supreme Court in the decision of Narinder Singh v. State of Punjab, (2014) 6 SCC 466 had quashed the proceedings under Section 307 IPC after noting the judgment in State of Rajasthan v. Shambhu Kewat, (2104) 4 SCC 149.

In view of the conflict of opinion in the above two decisions, matter was referred to a larger bench of Supreme Court in State of M.P. v. Laxmi Narayan, (2019) 5 SCC 688, wherein it was observed that,

“…It would be open to the High Court to examine as to whether incorporation of Section 307 IPC is there for the sake of it or the prosecution has collected sufficient evidence, which if proved, would lead to framing the charge under Section 307 IPC. For this purpose, it would be open to the High Court to go by the nature of injury sustained, whether such injury is inflicted on the vital/delicate parts of the body, nature of weapons used, etc. However, such an exercise by the High Court would be permissible only after the evidence is collected after investigation and the charge-sheet is filed/charge is framed and/or during the trial. Such exercise is not permissible when the matter is still under investigation. Therefore, the ultimate conclusion in paras 29.6 and 29.7 of the decision of this Court in Narinder Singh [Narinder Singh v. State of Punjab, (2014) 6 SCC 466 : (2014) 3 SCC (Cri) 54] should be read harmoniously and to be read as a whole and in the circumstances stated hereinabove”

 (emphasis supplied)

In the above decision, Court also stated that the powers conferred on the High Court under Section 482 CrPC can be exercised keeping in mind the injuries sustained, whether such injury is inflicted on the vital/delicate parts of the body, nature of weapons used etc.

High Court stated that in view of the above decision of the Supreme Court, it can be seen that the fight involved in the present matter was not an ordinary fight between the neighbors, infact petitioners should be thankful that they are not facing trial in a case of murder because in ordinary circumstances the injuries inflicted by the petitioners were sufficient to cause death.

Victim was stabbed with a dangerous weapon i.e. a knife and the injuries caused were of such nature that they would have caused death in ordinary circumstances.

Hence, Court declined to quash the FIR solely on the ground that the parties entered into a compromise. [Mukhtiyaar Ali v. State (NCT of Delhi), 2021 SCC OnLine Del 4428 , decided on 20-09-2021]


Advocates before the Court

For the Petitioners: Rishipal Singh, Advocate with petitioners in person

For the respondents: Meenakshi Chauhan, APP for the State with ASI Naresh, PS Jaffrabad Complainants in person

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Manmohan and Asha Menon, JJ., remarked that the present case reflected the bane of the Indian Judicial System, namely, that there is no finality attached to any judicial proceeding.

Instant appeal was filed challenging the judgment and decree dated 18-11-2013 passed by a Single Judge of this Court accompanied by an application seeking condonation of delay under Section 14 of the Limitation Act.

As per the appellant the Single judge had failed to consider that the appellant was not a party to the compromise on the basis of which the civil suit was decreed and thus the finding of the Court that ‘the parties have settled the matter on the following terms’ did not apply to the appellant.

Further, it was added that the handwritten statements on the Index of the Compromise Application stating that ‘This is a joint application by all parties. They are duly served’ were false, as at no juncture, a copy of the said application had been served on the appellant and therefore, on this short score, the impugned judgment was liable to be set aside.

Single Judge had failed to consider that an application for compromise under Order XXIII Rule 3 of the Code of Civil Procedure, 1908 without the signatures/consent of all parties to the lis could not be allowed against all parties to the lis and be converted into a decree of the Court.

Lastly, the appellant contended that the Single Judge had failed to appreciate that it is settled law that a self-acquired property could not be partitioned during the lifetime of the owner. He contended that the Trial Court had failed to consider that the plaint was a collusive action filed by the respondents in order to lay a concocted claim whereby the plaintiff and his brothers allocated lion’s share of the said property to each other.

High Court’s reasoning

A consent decree is a contract with the imprimatur of the courts superadded.  ‘Lawful Compromise’ means that the agreement or compromise must not be unlawful by the nature of its terms or on the face of it.

‘Consent decree’ is something more than a mere contract and has elements of both command and contract. ‘Lawful Compromise’ would be unlawful if the consideration or the object of the agreement is forbidden by law or is of such a nature that if permitted it would defeat the provision of any law, or is fraudulent or the court regards it as immoral or opposed to the public policy as provided by Section 23 of the Contract Act.

High Court found that the present appeal had been preferred after a delay of over two thousand three hundred and thirty-one days. Appellant voluntarily chose not to enter appearance and therefore she was proceeded ex-parte. Consequently, the limitation for filing the present appeal shall commence from the date of the impugned judgment and order and not from the date of alleged knowledge of the judgment and decree.

Court stated that the appellant would not be entitled to the benefit of Section 14 of the Limitation Act as even the prior proceeding initiated by the appellant had not been filed within limitation and also the said prior proceeding had not been filed due to defect of jurisdiction or other cause of like nature.

No prejudice had been caused to the appellant by the impugned judgment and decree dated 18th November, 2013 as the said decree recognises her share in the suit property as accepted by her in the Family Settlement dated 23rd December, 1999, especially in the absence of any challenge to the said family settlement.

 No prejudice was caused to the appellant.

Further, the submission of the counsel for the appellant that a self-acquired property could not be partitioned during the lifetime of the owner, in view of the Family Settlement dated 23rd December, 1999 duly executed and signed by the appellant is a mixed question of fact and law and it required the appellant to lead evidence.

On the basis of a bald averment in the appeal, the suit filed by the respondent cannot be held to be ex-facie barred in law.

The only remedy to the appellant in the present matter was to prefer an application under Order IX Rule 13, or under Section 114 CPC.

Not even a ‘modicum of explanation’ was offered during the hearing as to why the ex-parte order be recalled or set aside.

High Court expressed that the Additional District Judge had given a clear finding, which order had not been challenged in the present proceedings.

 Adding to the above, High Court elaborated that

There is no law which stipulates that a court is bound to serve any compromise application on a party who had willingly allowed it to be proceeded ex-parte.

To accept the submission of the appellant would amount to reading into the Statue a duty upon the Court to ‘run after a litigant’ who had voluntarily turned to its back to the legal system – a duty which is not provided in any statute.

A bare perusal of the Family Settlement reflects that the appellant had signed on each page of it and the same was based on mutual consent and agreement. In fact, the mutation was also carried out with respect to this 1/6th portion in accordance with the said Family Settlement.

Concluding the matter, Bench held that to now recall or vary the decree at the instance of the appellant who was negligent in defending her rights would amount to placing premium on ‘callousness’ and would place the parties who diligently pursued the litigation at all stages at a serious disadvantage.

Therefore, Court stated that any judicial system which does not provide finality to disputes, can never earn the trust, confidence and goodwill of the society.

Hence, present appeal was dismissed both as barred by limitation as well as on merits. [Deepshree Singh v. Rishi Pratap Singh, 2021 SCC OnLine Del 2348, decided on 20-05-2021]


Advocates before the Court:

For the appellant: Ankur Mahindro, Advocate with Rohan Taneja, Advocate.

For the Respondents: Kritika Bhardwaj, Advocate for R-1 to3 & 5 to 8.

Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Singh Samant J. allowed the appeal and directed to take up the proceeding for conciliation under Section 18 (2) of the Act, 2006.

The facts of the case are such that respondent 4 i.e. Core Fab Projects Pvt. Ltd. moved an application under Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006 (in short ‘the Act, 2006’), before the Facilitation Council i.e. respondent 3 which was proceeded with and notice was issued to the petitioner for appearance in that proceeding. The instant petition was filed under Article 227 of the Constitution of India praying to quash the proceeding on application for reference before respondent 3 on grounds that the proceeding so initiated is against the provisions of Section 18 of the Act, 2006.

Counsel for the petitioners Mr Amit Soni submitted that the conciliation proceeding under Section 18 (2) of the Act, 2006 is a must, therefore, it is prayed that respondent 3 be directed to comply with Section 18 (2) of the Act, 2006, before proceeding to decide the reference.

Counsel for the respondents Mr B P Banjare and P R Patankar submitted that respondent 3 has followed the procedure as provided under the Act, 2006. Section 18 (5) of the Act, 2006 provides time within which the matter has to be decided and that time limit has already crossed.

The Court observed that the words in Section 18 (2) of the Act, 2006 give a mandate that the Council shall itself conduct conciliation in the matter or may seek assistance of any institution or center providing alternative dispute resolution services. The only word used in the provision is ‘conciliation’. Conciliation is procedure adopted for alternate dispute resolution in which neutral person proposes the parties in dispute to come to agreement for resolving the dispute between them, further there are specific provisions for conciliation in Arbitration and Conciliation Act, 1996. Therefore, the term ‘compromise’ has different meaning than term ‘conciliation’. In a compromise, both the parties in a dispute strictly negotiate with each other, whereas, in conciliation proceeding one neutral person is engaged in confidential manner to bring about the settlement of dispute between the parties and granted opportunity for compromise itself would not be sufficient.

The Court further observed that the parties were given opportunity to compromise and negotiate for terms and parties failed in that, subsequent to which, the proceeding under Section 18 (2) of the Act, 2006 has been closed and Facilitation Council has ordered for proceeding under Section 18 (3) of the Act. The Court further observed that the proceeding under Section 18 (2) of the Act, 2006 is still not over as the conciliation proceeding has not taken place, therefore, it is held that respondent 3 has failed to exercise its authority under Section 18 (2) of the Act, either by involving itself or by handing over the matter to any other institutions or centers providing alternate dispute resolution services.
The Court thus held “the order of the respondent 3 for proceeding under Section 18 (3) of the Act is erroneous and illegal regarding, in which interference is required for by this petition.”

In view of the above, petition was disposed off.[Sew Infrastructure Limited v. State of Chhattisgarh, 2021 SCC OnLine Chh 905, decided on 12-04-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Punjab and Haryana Case: Harnaresh Singh Gill, J., dismissed the instant petition filed for issuance of directions to Police officials to hand over the investigation of her case under Section 376 Penal Code, 1860, to the Central Bureau of Investigation or to some other independent agency. The Bench stated,

“…it is clearly established that an attempt has been made to not only abuse the process of law but also overawe the authorities.”

Background

The facts of the case were that the petitioner was working as a Nurse in a dispensary and accused Varun Joshi, who was an active member of the local wing of the ruling party, used to visit the said dispensary and started outraging the modesty of the petitioner. It was submitted that the accused approached the petitioner in her office and threatened her that he was having her nude videos and would upload the same on internet if she did not develop physical relations with him or pay Rs. 5,00,000 to him. Allegedly, Rs. 4 lakhs were paid to the accused as compromise, however, the accused again visited the office of the petitioner and told her that he had deleted only a few clips and demanded Rs. 3 lakhs further to delete them. On the petitioner showing her inability to pay Rs. 3 lakhs, the accused took her in an Innova car and had committed rape upon her.

The grievance of the petitioner was that no action was taken by the Police. The petitioner submitted that although, her statement was recorded instead of registering an FIR, the Police constituted a committee of two members to enquire into the matter. It was further averred that Deputy Superintendent of Police threatened the petitioner to settle the matter with the accused as he happened to be the man of means and belonging to the ruling party.

The respondent submitted that the DG of Police constituted a Special Investigation Team and the place of occurrence was visited by a lady member of the SIT and found the case of the petitioner to be based on false allegations. It was further submitted that a litigant who attempts to pollute the stream of justice or touches the pure fountain of justice with tainted hands, is not entitled to any relief. Therefore, exemplary costs should be imposed upon the petitioner, for such a frivolous litigation.

Observations and Conclusion

The Bench observed that the allegations raised by the petitioner were not proved as the call location of the petitioner and the accused show different places from the one where the alleged rape was committed. The investigation regarding the stay of the petitioner and the accused in Hotel Sneh Mohan was conducted and the statement of the Manager was also recorded and a conclusion was drawn that the petitioner and the accused had stayed there on different dates on friendly basis.

The SIT had also drawn a conclusion that there was a friendly relationship between the petitioner and the accused and the dispute between them arose only when the petitioner made a written complaint to the Gram Panchayat against her husband, daughter and her in-laws’ family and showed her desire to stay away from them. The Bench opined,

“It is clear that the petitioner has levelled false and frivolous allegations against the accused and has gone to the extent of lodging the FIR in question and recording the statement before the Magistrate. The petitioner has not approached this Court with clean hands.”

Relieance was placed on Phool Chandra v. State of U.P., (2014) 13 SCC 112,  wherein, the Supreme Court expressed its concern over the need to curb frivolous petitions in following words, “It is high time that the Courts should come down heavily upon such frivolous litigation and unless we ensure that the wrongdoers are denied profit or undue benefit from the frivolous litigation, it would be difficult to control frivolous and uncalled for litigation.”

Lastly, the Bench stated, from the facts and circumstances delineated above, it is clearly established that an attempt had been made to not only abuse the process of law but also overawe the authorities. In view of the above, the petition was dismissed with costs of Rs. 1 lakhs to be paid and deposited by the petitioner with the Institute for the Blind. [Pritpal Kaur v. State of Punjab, CRM-M No. 14954 of 2020, decided on 16-03-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance before the Court by:

For the Petitioner: Adv. Rajesh Bhatheja

For the Respondents: AGG. Randhir Singh Thind, AAG, Adv. Shubhra Singh, Adv.  Puru Gupta and Adv. A.S.Brar

Case BriefsHigh Courts

Meghalaya High Court: W. Diengdoh, J., allowed a petition which was filed against the rejection order of the Chief Judicial Magistrate about the compromise in a case of a non-compoundable offence.

A Motor Vehicle Accident took place which involved the vehicle driven by the petitioner herein who was proceeding from Guwahati to Shillong on the National Highway, and on reaching near Nongpoh Police Station, Ri-Bhoi District, he saw one vehicle parked on the road and on crossing that vehicle, all of a sudden one pedestrian, the victim H.N. Sangma (since deceased) crossed from the front side of the vehicle and in the process was dashed by the vehicle driven by the petitioner. The petitioner immediately had taken the victim to the Bethany Hospital, Nongpoh for treatment where the victim had succumbed to his injuries. Respondent 2 had filed an FIR in relation to the said incident, after which petitioner was arrested and was released on bail on the same day. However, in course of the investigation, the I/O submitted the charge sheet and came to the conclusion that a prima facie case under Sections 279/304A IPC was found well established against the accused/petitioner.

In the meantime petitioner and the complainant/respondent 2 had arrived at a compromise and had decided to bring to a closure all matters relating to the said incident. Chief Judicial Magistrate, Ri-Bhoi District, Nongpoh had rejected the prayer of the parties solely on the ground that the offences involved are non-compoundable not coming within the purview of Section 320 CrPC and as such, the said compromise between the parties was not allowed. Thus, the instant appeal was filed.

The Court had to consider whether a criminal proceeding involving non-compoundable offence can be set aside and quashed, all parties having reached a compromise.

The Court relied on the judgment mentioned by the counsel of the petitioner Narinder Singh v. State of Punjab, (2014) 6 SCC 499 wherein it was held,

            “29.1. Power conferred under Section 482 of the Code is to be distinguished from the power which lies in the Court to compound the offences under Section 320 of the Code. No doubt, under Section 482 of the Code, the High Court has inherent power to quash the criminal proceedings even in those cases which are not compoundable, where the parties have settled the matter between themselves. However, this power is to be exercised sparingly and with caution.”

The Court held that the High Court, therefore, has the inherent power to quash the criminal proceedings even in those cases which are not compoundable, where the parties have settled the matter between themselves. However, caution is given to the High Court to sparingly exercise this power by looking into the facts and circumstances of the case.

The Court allowing the petition and not going into merits of the case decided that since evidence had to be led, what is prima facie apparent is the conduct of the petitioner/accused who had on his own taken the victim to the hospital for treatment, conclusively no mens rea was present and for meeting ends of justice, the petitioner should not be unnecessarily embroiled in the said criminal proceeding.[Issac Lalsiemthar v. State of Meghalaya, Crl.Petn. No. 9 of 2021, decided on 01-04-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Allahabad High Court: Vivek Kumar Birla, J., expressed:

“…a party cannot be permitted to blow hot – blow cold, where he knowingly accepts the benefit of a contract, or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself.”

Petition was filed challenging the impugned orders passed by the Prescribed Authority/Judge Small Causes Courts, Bulandshahar.

Petitioners were the tenants of a shop of which the initially the tenancy was with the grandfather of the petitioners. Later after the demise of grandfather, the legal heirs of the deceased i.e. Jugmandar Das Jain received the shop by means of inheritance.

Thereafter, respondents-landlords initiated the proceedings under Section 21(1)A of Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972  against the legal heir.

Crux of the Petitioners Argument:

If the compromise decree is contrary to statutory provisions, the same is a nullity and cannot be executed.

Analysis, Law and Decision

Original tenant was in possession of a shop 7.0 ft x 23 ft and in the release application filed on the ground f personal need of the family, he agreed to remain in possession of the shop 5.6 ft wide x 12 ft. deep only, which was to be handed over to him by the landlord after the Court Order.

Comprise between the parties reflected that the old rent of Rs 18 per month was to continue. The original tenant had clearly stated that he had only daughters and no son, he, therefore, agreed in the wisdom that he will remain in possession of the shop till his lifetime and thereafter, the tenancy shall not devolve on his legal heirs.

Bench noted that in the terms of compromise, it was clearly stated that there was a clear understanding that neither his daughters nor their husbands shall claim any tenancy over the shop left in possession of Raj Bahadur Jain and shall hand over the possession to the landlord and if they failed to do so, the landlord will be at liberty to take possession through Court.

Petitioners being daughters of the tenant were obviously beneficiary, maybe indirectly, of such compromise as the tenant Raj Bahadur Jain continued in peaceful possession of the said shop till his death as the proceeding of the release application did not proceed further on the basis of such compromise.

For about 16 years, no challenge was raised to the above-mentioned compromise.

“…in cases where protection under a Rent Act is available, no eviction can be ordered unless ground seeking eviction is made out, even if parties had entered into a compromise and that the invalidity on that count can even be raised in execution.” 

Whether petitioner can take shelter from the above law in the present set of facts and circumstances?

Bench opined that a party cannot be permitted blow hot – blow cold, where he knowingly accepts the benefit of a contract or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself.

For the above position of law, Bench referred to the Supreme Court decisions in Rajasthan State Industrial Development and Investment Corpn. v. Diamond & Gem Development Corpn. Ltd., (2013) 5 SCC 470.

Net effect of the Supreme Court decision in Raghunath Prasad Pande v. State of Karnataka, (2018) 5 SCC 594 is that once the compromise decree has been acted upon, a party cannot be permitted to go back from the same and the same is not liable to be set aside.

In the instant case, property was released in part and the old tenant had entered into a compromise. It has been added that he was the sole tenant and had every right to enter into compromise about his tenancy rights. The compromise continued for about 10 years till the death of the tenant Raj Bahadur Jain and they enjoyed the benefits arising out of such compromise.

Since the original tenant remained in possession over the agreed part of the accommodation during his lifetime, now the legal heirs cannot come forward and say that they are a statutory tenant and the said compromise was a nullity as they were not a party or that the same was contrary to law.

With regard to injunction suit, decree of a civil court granting permanent injunction cannot override the proceedings under the provisions of UP Act 13 of 1972 between the landlord and tenant.

Compromise was validly entered between the landlord and the sole tenant, who enjoyed the fruits or the benefits of the same.

Concluding the matter, Bench decided that :

  • Tenant-petitioner shall handover the peaceful possession of the premises in question to the landlord-opposite party on or before 31.8.2021;
  • Tenant-petitioner shall file the undertaking before the Court below to the said effect within two weeks from the date of passing of this order
  • Tenant-petitioner shall pay damages at Rs 2,000/- per month by 07th day of every succeeding month and continue to deposit the same in the Court below till 31.8.2021 or till the date he vacates the premises, whichever is earlier and the landlord is at liberty to withdraw the said amount
  • Tenant-petitioner shall also state that he will not create any interest in favour of the third party in the premises in dispute
  • Tenant-petitioner shall not be evicted from the premises in question till the aforesaid period.

[Anshu Jain v. Suresh Prakash, 2021 SCC OnLine All 217, decided on 10-03-2021]


Advocates before the parties:

Counsel for Petitioner: Nagendra Kumar Srivastava

Counsel for Respondent : Sanjai Srivastava, Ajit Kumar,Vivek Srivastava

Case BriefsHigh Courts

Delhi High Court: Subramonium Prasad, J., with regard to the settlement of disputes stated that:

“In crimes which seriously endangers the well being of the society, it is not safe to leave the crime doer only because he and the victim have settled the dispute amicably. “

The instant petition was filed under Section 482 CrPC for offence under Sections 419, 467, 471, 474, 376, 354, 506 read with Section 34 of the Penal Code, 1860.

Petitioner/Accused had met respondent 2 and revealed that his name to be Shiva and promised the complainant to marry her. Complainant and the Petitioner became intimate and had a physical relationship she had been promised marriage by the petitioner.

Later the respondent 2/complainant came to know that the petitioner had concealed his identity and his real name as ‘Akhtar’.

Respondent 2/Complainant stated in the FIR that the petitioner took her to Arya Samaj Mandir wherein they got married and in the marriage certificate he gave his name as Akhtar. After the marriage, the petitioner started demanding money and when respondent 2 visited his parents, she was driven away with them.

The instant petition was filed as the parties amicably settled their dispute.

A Status Report was also filed wherein it was stated that Akhtar/Shiva hid his identity and was sexually exploiting the respondent 2 for five years. It was also stated that the petitioner forged Aadhaar Cards and has got two Aadhaar Cards, one in the name of Akhtar and the second in the name of Shiva. On further investigation, it was also found that the marriage certificate was also fake.

Analysis and Decision

Bench stated that the power of the High Court under Section 482 CrPC to quash proceedings is those offences which are non-compoundable is recognized.

Court noted that the Supreme Court time and again held that the High Court has to keep in mind the subtle distinction between the power of compounding offences given to the Court under Section 320 CrPC and the quashing of criminal proceedings and the jurisdiction conferred upon it under Section 482 CrPC.

For the above purpose, Court cited the Supreme Court’s decision in Shiji v. Radhika, (2011) 10 SCC 705.

Further, the Bench added that:

“While exercising its power under Section 482 CrPC, High Court is guided by the material on record as to whether the ends of justice would justify such exercise of power.”

 Court referred to the Supreme Court decision in Gian Singh v. State of Punjab, (2012) 10 SCC 303, wherein it has been elaborated under what circumstances, criminal proceedings in a non-compoundable case could be quashed when there is a settlement between the parties.

In the case of Narinder Singh v. State of Punjab, (2014) 6 SCC 466, the Supreme Court laid down principles by which the High Courts should be guided in giving adequate treatment to the settlement between the parties.

Court expressed that:

An offence of rape is an offence against the society at large and apart from offence under Section 376, the petitioner is also accused of committing offences under Sections 419,467,468,471,474,506 and 34 IPC.

In view of the facts and circumstances of the case, Bench opined that it is not in a position to quash the FIR on the basis of compromise entered into between the parties and wherein it was stated that the petitioner/accused and the respondent 2 decide to stay as husband and wife and lead their peaceful marital life.

Supreme Court has repeatedly stated that when parties reach a settlement and on that basis a petition is filed for quashing criminal proceedings, the guiding factor for the High Court before quashing the complaint in such cases would be to secure; a) ends of justice, b) to prevent abuse of process of any court.

In view of the FIR and Status Report, Bench held that it’s evident that the petitioner has been accused of serious offences like rape and forgery having a bearing on vital societal interest and these offences cannot be construed to be merely private or civil disputes but rather will have an effect on the society at large.[Akhtar v. GNCTD,  2021 SCC OnLine Del 260 , decided on 01-02-2021]


Advocates for the parties:

Petitioner: Haraprasad Sahu, Advocate

Respondents: Kusum Dhalla, APP for State

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., addressed a matter with regard to the settlement of divorce proceedings.

Parties in the present petition have deposed before the Court below that they have entered into a compromise.

Hence, in view of the above, the petition is taken for final disposal.

It has been observed that certain offences were non-compoundable and they were within the power of Magistrate to compound namely under Sections 498-A of Penal Code, 1860 and 3/4 of the Dowry Prohibition Act.

Section 498A: Husband or relative of husband of a woman subjecting her to cruelty.—Whoever, being the husband or the relative of the husband of a woman, subjects such woman to cruelty shall be punished with imprisonment for a term which may extend to three years and shall also be liable to fine

Section 3: Penalty for giving or taking dowry

Section 4: Penalty for demanding dowry

Further, it was noted that both the parties, i.e. the husband and wife and other family members settled the matter and decided to leave in peace after taking divorce.

The Court was of the view that the settlement between the parties should be accepted and the offence compounded. The decision of the Supreme Court in Bitan Sengupta v. State of W.B., (2018) 18 SCC 366 was referred.

Therefore, proceedings were quashed and settlement was recorded under Section 482 CrPC. In Supreme Court’s decision in B.S. Joshi v. State of Haryana, (2003) 4 SCC 675, it was observed that in matrimonial offences, it becomes the duty of the Court to encourage genuine settlement of matrimonial disputes.

Bench exercising its powers under Section 482 read with 397 of CrPC, 1973 permitted the parties to leave in peace.

Section 482 CrPC: Saving of inherent powers of the High Court.

Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.

Section 397 CrPC: Calling for records to exercise of powers of revision

(1) The High Court or any Sessions Judge may call for and examine the record of any proceeding before any inferior Criminal Court situate within its or his local jurisdiction for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior Court, and may, when calling for such record, direct that the execution of any sentence or order be suspended, and if the accused is in confinement, that he be released on bail or on his own bond pending the examination of the record.

Explanation.—All Magistrates, whether Executive or Judicial, and whether exercising original or appellate jurisdiction, shall be deemed to be inferior to the Sessions Judge for the purposes of this sub-section and of Section 398.

(2) The powers of revision conferred by sub-section (1) shall not be exercised in relation to any interlocutory order passed in any appeal, inquiry, trial or other proceedings.

(3) If an application under this section has been made by any person either to the High Court or to the Sessions Judge, no further application by the same person shall be entertained by the other of them.

Court quashed the proceedings under Section 397 CrPC and allowed the petition.

The petitioner’s counsel pointed the orders passed by the Court below and hence the bench defied the proceedings if not yet defied. [Deena Nath v. State of U.P., 2020 SCC OnLine All 1057, decided on 23-09-2020]

Case BriefsHigh Courts

Karnataka High Court: M.G. Uma, J., setting aside the conviction order by the fast track Court, allows compromise between the parties.

The appellant-accused in the present case has been tried and convicted by the fast track Court against the offences punishable under Sections 324, 325, 504, 506 and 307 of Penal code, 1860

Counsel for the complainant submitted that the dispute between the complainant and the accused has been compromised and hence the charges may be compounded and the appellant-accused be acquitted accordingly. Additional Advocate General opposed the application stating that the offences under Sections 324 and 307 IPC are not compoundable. Supreme Court decision in, Yogendra Yadav v. State of Jharkhand, (2014) 9 SCC 653 and Gian Singh v. State of Punjab, (2012) 10 SCC 303 was relied on by the counsel for the appellant, wherein it was held, “High Courts can quash criminal proceedings under section 482 even though the offence alleged is non-compoundable if parties have amicably settled their dispute and victim has no objection. Further, this would depend on the fact of each case. Offences which involve moral turpitude, grave offences like rape, murder cannot be effaced by quashing proceedings because they have harmful effect on society and are not restricted to two individuals or groups.”

Further, the earlier order of the present Court was referred, where the decision in S.S. Joshi v. State of Haryana, 2003 Crl. L.J. 2028 was obeyed, allowing a compromise petition by setting aside the judgment of conviction by the trial court.

The Court while setting aside the conviction of the accused allowed the compounding of offences and ordered the deposition of fine as ordered by the trial court.[Yesaiah v. State of Karnataka, Criminal Appeal No. 2603/2012, decided on 3-09-2020]

Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Chandra Singh Samant, J., while addressing a petition made an observation with regard to matrimonial disputes that,

“…in a matrimonial dispute, the cause of action can arise again and again, even if the dispute is settled and compromised before the court and the case has been withdrawn.”

Present matter pertained to the quashing of an order passed by the Family Court, Bilaspur in a Civil Suit.

Petitioners’ counsel submits that respondent had filed a civil suit under Section 9 of the Hindu Marriage Act, 1955 and during the pendency, it was placed before the National Lok Adalat and as the respondent did not want to press on the said proceedings, it was disposed of.

Respondent in the present matter has filed a repeat application under Section 9 of the Hindu Marriage Act. Petitioner challenged the maintainability of the civil suit under Order 7 Rule 11 read with Section 23 Rule 4 of CPC on the ground that the previous application filed by the respondent had been disposed of by award.

Order 23 Rule 4 of CPC specifically provides about the abandonment of a suit under sub-rule 1 without permission of Court.

Further, it has been submitted that Section 21 of the Legal Services Authorities Act, 1987 provides that any award passed in the Lok Adalat shall be final and binding on all the parties and no appeal shall lie to any court against the award, hence in view fo the said the repeat application filed by the respondent stands unsustainable.

Respondent’s Counsel submitted that since the petitioner did not honour the ut of court compromise, respondent was compelled to file an application under Section 9 of the HMA, 1955.

Bench on perusal of the submissions and facts stated that under Section 21 of the Legal Services Authorities Act, 1987, an award of Lok Adalat shall be deemed to be a decree of a civil court which includes the order on compromise or settlement between the parties before the Lok Adalat.

Court stated that Lok Adalat has no authority to exercise the power under Order 23 Rule 1 of CPC. The Lok Adalat on taking cognizance in any matter referred to it from a court, can act only in accordance with Section 20 sub-section 4, 5 & 6 of the Act, 1955 and there is no mention that the Lok Adalat can allow the withdrawal of the civil suit.

Hence the Lok Adalat’s order having lo legality is not an order at all.

“the case of the respondent against the petitioner was terminated on the basis of the statement made by the respondent side, that some agreement has taken place between the parties out of the court.”

Court added that, in a matrimonial dispute, the cause of action can arise again and again, even if the dispute is settled and compromised before the court and the case has been withdrawn.

Therefore,

When a dispute crops up again at any subsequent stage on account of differences between the parties to the matrimony, that would be a separate cause of action, on which the party aggrieved, has an entitlement to maintain legal proceeding under the provision of the Hindu Marriage Act, 1955.

In view of the above, the petition was dismissed. [Harsha Dewani v. Ashutosh Gupta, 2020 SCC OnLine Chh 149, decided on 10-08-2020]

Op EdsOP. ED.

Interest republicae ut sit finis litium, meaning it is in the interest of the State that there should be an end to litigation. In pursuance of this objective, the Indian legal regime adopted various alternative forms of adjudicatory mechanism. The capital market regulator, Securities and Exchange Board of India (hereinafter referred as ‘SEBI’) introduced the consent mechanism efficacy of which has been discussed in this article.

Concept

The Code of Civil Procedure, 1908 and the Criminal Procedure Code, 1973 enumerate concepts of ‘compromise’ and ‘compounding of offences’ respectively. Similarly, under Section 15-JB[1] of the Securities and Exchange Board of India Act, 1992 is vested with the power to settle cases of securities law violation in the capital market. The idea was adopted from the success of its US counterpart, the Securities and Exchange Commission. Initially, the consent mechanism was proposed vide circular, Circular No. EFD/ED/Cir-1/2007 that enumerated the Guidelines for Consent Orders, introduced in 2007. The mechanism has evolved over the past years to take the form of the Settlement Regulations, 2018.[2]

The consent mechanism may be defined as “a proceeding in which the regulator and the alleged violator, may at any stage of the proceeding negotiate a settlement in lieu of administrative/civil proceeding, in the process saving cost, time and efforts for the parties involved. The mechanism does not require admission or denial of findings.”

Interpreting settlement orders

To test the proposition in respect of the success of this mechanism, a few cases of settlement have been analysed. The vital question that arises is “Where the interest of investors is at stake, is settlement a viable solution?”

The recent settlement order passed by SEBI in the matter of HDFC AMC (hereinafter referred to as ‘the applicant’) provides insight to the above question. The applicant was served with a show-cause notice for violation of the SEBI (Mutual Funds) Regulations, 1996.  The applicant had invested in the debt instruments of Essel group of companies through its various mutual fund schemes. As per the show-cause notice, the investment made did not adhere to the (Mutual Funds) Regulations, 1996 as it failed to maintain proper due diligence that led to the loss of the unit-holders. In furtherance of the notice, the applicant filed a settlement application with SEBI and the High Powered Committee (constituted under the Settlement Regulations, 2018) agreed to settle the matter. As a part of the settlement terms, the applicant ensured that the unit-holders were compensated along with redressal of their complaints. Further, it was agreed that the settlement amount would be paid by the funds of the applicant.

Certainly, the above order was in the interest of the investors and the regulator. The alleged violations were committed in May 2019, and within a span of a year, the settlement process has been concluded. Settlement in the present case indeed served as an expeditious solution contrary to the prolonged administrative/legal proceedings.

One major concern that has hindered the growth of the settlement mechanism is the conundrum surrounding the settlement of serious offences like insider trading and fraudulent unfair trade practices. It is pertinent to note here that such offences were a part of the initial guidelines issued under the circular in 2007. Subsequently, the amended Settlement Regulations, 2014 removed serious offences based on the severity of such offences. However, the Committee set up under the chairmanship of Justice Dave that drafted the Settlement Regulations, 2018, undertook an alternative approach by vesting discretion with the Board to decide based on facts and circumstances of each case than make it principle based by creating an absolute bar to settle such offences.

The question that requires attention is that “Has the discretion vested with the Board regarding the nature of offences to be settled been exercised wisely by it?”

On observation of previously adjudicated cases that have been settled, it was noticed that only those cases where market interests and market impact was limited and loss to the investors was minuscule, were taken through the settlement route. In  Abhay Gandhi and Kiran Abhay Gandhi, the CEO of Ranbaxy Laboratories Limited, was charged under the  Prohibition of Insider Trading Regulations, 2015[3] for selling shares while in possession of Unpublished Price Sensitive Information, the matter was settled by remitting an amount of Rs Thirty-five lakhs, that would have been evaluated considering the profit made by the applicants, the multiplier for deciding penalty as provided in  Chapter VI[4] of the Settlement Proceedings Regulations, 2018.    

Settlement – An Antidote to Litigation?

On considering the above proposition, it raises two further questions.

1. Will SEBI in all cases allow the settlement process?

2. Is the settlement mechanism a full proof mechanism where the interests of SEBI, stakeholders and investors can be balanced?

To answer the former, the essential grounds for the basis of the settlement are laid down exhaustively under the purview of Regulation 10 of the Settlement Regulations, 2018. The Board established under Section 5 of the Act may reject matters for settlement that have a wide impact on investors, are repetitive in their defaults or the person making the application is a wilful defaulter. SEBI has adopted a stringent approach in accepting applications for Consent Orders. For instance, NSE was alleged to have deals with brokers and unduly favouring and assisting them in unauthorised trading, and it applied for settlement. SEBI rejected the NSE settlement application and ordered disgorgement by asking them to pay over INR 1000 Crores.

After the infamous IL&FS scam where credit rating agencies were under the scanner for not changing the credit rating of the instruments before the default, SEBI based on a reasoned order categorically stated that the matter involved wide market impact including an adverse effect on the interest of the investors thereby questioned the integrity of the market, and rejected ICRA’s application for settlement.   

To answer the latter, no mechanism can be a panacea, it comes with its fragilities. In the author’s opinion, the biggest drawback of this mechanism is that it may undermine the problem which may in a certain point of time be the tip of the iceberg. To illustrate, in the case of Yes Bank, it was charged for violating the disclosure norms prescribed in Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, that required the disclosure of material information.

Yes Bank as per the settlement order made selective disclosure of divergence and partially concealed the report the issued by RBI and its settlement then, concluded the matter but all those along with a gamut of other issues including a liquidity crisis and failure of the corporate governance bounced back together and led to its collapse. Therefore, in certain cases, it may not be possible for the regulator to see through and understand the actual reasons behind the violation, divergence. 

The way ahead

The increasing role of the consent mechanism can be witnessed from the fact that an average of ten settlement orders were passed in the year 2019. It is evident that the Settlement Regulations, 2019 have ushered a fresh air in the arena of ‘Consent Orders’. Certain key features of the regulations are that transparency is ensured by vesting limited discretion with the Board. The penalty payable by the applicant is derived based on a comprehensive multiplier on consideration of the number of defaults, the stage of proceedings along with the stage at which settlement is introduced. It will not be a misnomer to say that capital market regulations in India have evolved tremendously along with the market and provided an effective adjudication process that serves the need of the hour. In cases where all three chords of prompt action, investor interest, and effective enforcement are struck, it is only then the underlying objective of consent orders will be achieved in its essence.


*Legal professional, with an avid interest in Securities Law and previously worked with KPMG as a part of the Forensic Investigation Team.

[1] Section 15-JB, Securities and Exchange Board of India Act, 1992    

[2] Securities and Exchange Board of India (Settlement Proceedings) Regulations, 2018

[3] The SEBI (Prohibition of Insider Trading) Regulations, 2015 

[4] Ch. VI, SEBI (Settlement Proceedings) Regulations, 2018  

Case BriefsHigh Courts

Rajasthan High Court: Vijay Bishnoi, J., allowed a criminal revision petition seeking to set aside judgments convicting the petitioner with regard to offences under the Negotiable Instruments Act. 

In the present case, the petitioner being aggrieved by the orders of the trial court and the appellate court wherein he was convicted for an offence under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) has filed this criminal revision petition. 

Learned counsel representing the petitioner, Umesh Shrimali submitted that in view of the fact that the parties have entered into a compromise, the impugned orders under challenge may be set aside and the petitioner may be acquitted from the charges.

The public prosecutor representing the respondent, Laxman Solanki submitted that the respondent has agreed to the compromise entered into and it does not want to press any charges for the offence punishable under the NI Act.

The Court perused Section 147 of the NI Act and stated that every offence punishable under the Act is compoundable hence the impugned orders are set aside and the criminal revision petition is set aside. However, the Court upon placing reliance on the Supreme Court judgment Damodar S. Prabhu v Sayed Babalal H, (2010) 5 SCC 663 and directed the petitioner to submit 15% of the cheque amount by way of the cost before the Legal Services Authority. [Jasmel Singh v. State of Rajasthan,2020 SCC OnLine Raj 334, decided on 03-03-2020]

Case BriefsHigh Courts

Rajasthan High Court: The Division Bench comprising of Narendra Singh Dhaddha and Mohammad Rafiq, JJ. allowed a decree of divorce which was filed through a joint application under Section 13 B(1) of the Hindu Marriage Act, 1955.

In the present case, a joint application was filed by the husband and wife under Section 13B (1) of HMA, for dissolution of their marriage. Along with this, they also filed an application under Section 13B (2) of the Hindu Marriage Act, 1955 for waiver of the cooling-off period.

Further, the above was filed in the family court and dismissed thereafter. Hence the present appeal has been filed challenging the said order.

Parties stated that the marriage could not be consummated fro inability of the husband and there is absolutely no possibility of the parties living together. In such circumstances, they both started living separately and decided to obtain a decree of divorce.

Counsel on behalf of the parties submitted that the application filed under Section 13 B (1) of the stated Act clearly mentions that the parties have been living separately from last more than 1 year. Further, it has been stated in the application that, wife received all her ‘stridhan’ and dowry articles along with a sum of Rs 15, 00,000 as permanent alimony.

In order to support the above submission, counsel relied on the Judgments of the Supreme Court in Veena v. State (Govt. of NCT, Delhi) (2011) 14 SCC 614; Devinder Singh Narula v. Meenakshi Nangia, (2012) 8 SCC 580 and Amardeep Singh v. Harveen Kaur, (2017) 8 SCC 746.

The High Court, on noting the submissions of the parties along with keeping in view the facts and circumstances of the case, stated that, the compromise arrived between the parties persuaded the court to allow the said appeal and therefore the marriage is to be dissolved with immediate effect.[Sachin Gupta v. Ram Kumari Gupta, 2019 SCC OnLine Raj 2402, decided on 22-08-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: Rajbir Sehrawat, J. quashed the FIR after the parties entered into the compromise as same was held to be done with the free consent and without any pressure.

A petition was filed under Section 482 of Code of Criminal Procedure, 1973 for quashing the FIR and all consequential proceedings as parties have entered into compromise against the offence committed under Section 420 of the Penal Code, 1860.

A report was received from the Judicial Magistrate in which it had been noticed that the matter has been compromised with the intervention of respectable and friends of both the parties, compromise has been affected with their free consent and without any pressure or undue influence from any quarter.

High Court while allowing the petition discussed resolving the civil and criminal dispute by giving absolute freedom to the parties to settle their dispute by compromise with certain legal consequences. The court with regard to the compromised in criminal cases said that In criminal cases as tend to cast their effect and consequences even upon the society at large. Therefore, the law prescribes punishment, severe punishments and extreme punishments, including the death penalty for criminal acts. The criminal law provides for the compromise between the parties under Section 320 of the Code of Criminal Procedure, 1973 which permits compounding even at the appellate and revisional stage but this section relates only to the offences prescribed under the Indian Penal Code. For other offences the power lies with the High Court in order to maintain the sanctity of the procedure prescribed for a criminal trial.

Further, the Court also put forth the case of Gian Singh v. State of Punjab, (2012) 10 SCC 303 in which the Supreme Court had amply clarified the legal position in recognizing the position of compromise. The court in the above mentioned case held that the High Court must consider whether it would be unfair or contrary to the interest of justice to continue with the criminal proceeding or continuation of the criminal proceeding would tantamount to abuse of process of law despite settlement and compromise between the victim and wrongdoer and whether to secure the ends of justice, it is appropriate that criminal case is put to an end and if the answer to the above question(s) is in affirmative, the High Court shall be well within its jurisdiction to quash the criminal proceeding.”

Thus the Court held that no useful purpose would be served by keeping the proceedings alive. It will be in the interest of justice, if the settlement reached between the parties is accepted.[Harmesh Singh v. State of Punjab, 2019 SCC OnLine P&H 1322, decided on 29-07-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: Hari Pal Verma, J. quashed the criminal proceeding as there was a compromise signed between the parties.

A petition was filed under Section 482 of the Code of Criminal Procedure, 1973 for quashing the FIR registered under Sections 406, 498-A of the Penal Code, 1860.

The records of the case are such that the parties appeared before the Judicial Magistrate 1st Class in which it was submitted that compromise was effected between the parties voluntarily without any coercion or undue influence. The complainant/respondent made a joint statement in which she had made the statement regarding the compromise between the two.

Gaganpreet Kaur, counsel for State had not disputed the fact of the compromise between the parties.

The Court thus opined that no useful purpose would be served to continue with the proceedings before the trial court. The Court reiterated the case of Gold Quest International (P) Ltd. v. State of T.N., 2014 (4) RCR (Criminal) 206, in which the Supreme Court held that “disputes which are substantially matrimonial in nature, or the civil property disputes with criminal facets, if the parties have entered into settlement, and it has become clear that there are no chances of conviction, there is no illegality in quashing the proceedings under Section 482 CrPC read with Article 226 of the Constitution.” Thus, all the proceeding was quashed qua the petitioner on the basis of the compromise entered between the parties.[Pankaj v. State of Haryana, 2019 SCC OnLine P&H 1112, decided on 04-07-2019]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Bench of Arvind Singh Sangwan, J., quashed the FIR on the basis of the compromise entered into by the parties.

A petition was filed by the petitioner for quashing the FIR for the offences punishable under Sections 377, 34 of Penal Code, 1908 and all the subsequent proceedings arising therefrom.  The ground for quashing the FIR mentioned was with respect to the compromise entered by the party. The Court revealed that they have voluntarily entered into a compromise and the Court is satisfied that the parties have amicably settled their dispute without any fear, pressure, threat or coercion and out of their free will. Hence the Application for quashing of FIR was filed.

The Learned counsel for the petitioner, Piyush Sharma, submitted apart from the amicable settlement between the parties there was no other criminal case pending and none of the petitioners is a proclaimed offender. Reliance was placed upon the case of Navtej Singh Johar v. Union of India, (2018) 10 SCC 1.

The Learned counsel for the respondent, M.S. Nagra, has not disputed the fact that the parties have arrived at a settlement with intent to give burial to their differences.

The Court after noting the submissions of both the parties held that “since the parties have arrived at a compromise and have decided to live in peace, no useful purpose would be served in allowing the criminal proceedings to continue.”[Pipal Singh v. State of Punjab, 2019 SCC OnLine P&H 450, decided on 29-04-2019]