Prathiba M. Singh, J
1. The Appellants (hereinafter ‘Defendants’) were the Defendants in the suit filed by the Respondents/Plaintiffs (hereinafter ‘Plaintiffs’)
under Order XXXVII of Code of Civil Procedure, 1908 (hereinafter, CPC’). The Plaintiffs sought recovery of Rs.15,50,000/-. The trial court
decreed the suit for the sum of Rs.15,50,000/- along with interest @ 12% per annum from the date of filing of the suit till realization.
Plaintiffs’ case
2. The case of the Plaintiffs is that they are permanent residents of London, UK and had appointed the Defendant No. 1 as their agent for taking care
of their properties etc. and their affairs in India. Accordingly, they had executed a Special Power of Attorney in the name of the Defendant No. 1 on
6th October, 2011. They cancelled the same on 21st December, 2013, after they suspected that the Defendants were indulging in suspicious
transactions and were breaching their fiduciary duties.
3. The Plaintiffs claimed to have paid a sum of Rs.35 Lakhs through electronic transfers as well as in cash on their visits to India. Defendants
continued to demand these amounts on one pretext or the other. The plaint listed the various electronic transfers made by the Plaintiffs to the
Defendants.
4. In the last quarter of 2013, when the Plaintiffs realised that the Defendants were not telling them the true facts and the manner in which their
money was being spent, they confronted the Defendants. During that process, the Defendant No.1 and his family members, on 22nd December, 2013
undertook to pay and refund a sum of Rs.15,50,000/- out of a total of Rs.20,05,374/-, within six months from the execution of the said receipt,.
Accordingly, Defendant No. 1 issued a cheque dated 1st May, 2014 in favour of Plaintiff No. 1 for the said sum.
5. The Plaintiffs issued a notice of demand dated 12th June, 2014 to the Defendants, to make payment after the cheque was returned with the
remarks “Funds Insufficientâ€. Since the Defendants failed to make the payment, the Plaintiffs filed a complaint under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter, ‘NI Act’) as also a suit under Order XXXVII of the CPC.
Defendants’ case
6. The Defendants argued before the trial court that the document dated 22nd December, 2013, termed as receipt, was a forged document and that
they are entitled to leave to defend. However, the trial court relied upon a settlement agreement dated 9th January, 2015 entered into between the
parties. The said settlement agreement had fructified during the course of the complaint under Section 138 of the NI Act, which was referred to
mediation. The said settlement proceedings were conducted under the auspices of the mediation centre at the Rohini courts. The finding of the trial
court in this regard is set out below:
“10. It is pertinent to mention that another criminal complaint under section 138 of the Negotiable Instruments Act, 1881 on the said
cheque was also pending in the court of Ld. Metropolitan Magistrate, Rohini Courts, Delhi wherein mediation proceedings were taken
place and as per the settlement/agreement dated 09.01.2015 in the Mediation Centre, in para no.l, it has been amicably settled between the
parties that defendant no.l shall pay a sum of Rs.15,50,000/- in full and final settlement of the present case and in para no.4 of the
mediation settlement, it has been mentioned that if the payment is made by the defendants on or before 16.05.2015 then the present civil suit
shall also be withdrawn after realization of the settled amount but the defendant did not make any payment to the plaintiffs in terms of
settlement/agreement dated 09.01.2015 in the Mediation Centre, Rohini Courts, Delhi. Reliance is placed upon Afcons Infrastructure Ltd. &
Anr. Vs. Cherian Varkey Construction Co. (P) Ltd. & Ors. Civil Appeal No.6000 of 2010 (Arising out of SLP (C) No.760 of 2007) wherein
Hon'ble Justice R.V. Raveendran has elaborated and explained the scope of Sec.89 of CPC:-
89. Settlement of disputes outside the court.-(1) Where it appears to the Court that there exist elements of settlement which may be
acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after
receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for -
(a) arbitration;
(b) conciliation;
(c) judicial settlement including settlement through Lok Adalat; or (d) mediation.
(2) where a dispute has been referred -
(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings
for arbitration or conciliation were referred for settlement under the provisions of that Act;
(b) to Lok Adalat, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok
Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok
Adalat under the provisions of that Act;
(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to
be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a
Lok Adalat under the provisions of that Act;
(d) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed."" Order 10
Rule lA. Direction of the Court to pt for any one mode of alternative dispute resolution, --After recording the admission and denials, the
Court shall direct the parties to the suit to opt either mode of the settlement outside the Court as specified in sub-section (1) of section 5â€.
7. The trial court, thereafter, relied upon both - the receipt and the settlement agreement and rejected the leave to defend filed by the Defendants.
Appeal proceedings
8. In the present appeal, on 23rd May 2016, an option was given to the Defendants to deposit the decretal amount. However, since the Defendants
did not avail of the said option, this Court directed that execution petition would be proceeded with. It was recorded on 16th March, 2017 that
subsequent to the settlement agreement entered into in the mediation centre, the complaint under Section 138 of the NI Act was rejected and the
Defendants were acquitted.
9. During the course of hearing, the counsel for the Defendants under instructions from the Defendant No. 1, submitted that if they are given some
time they are willing to pay the money due to the Plaintiffs. Accordingly, the matter was passed over and the parties were requested to discuss
settlement terms. The parties, thereafter, reported that they have been able to settle the matter on the following terms and conditions:
1. Appellant No.1/Defendant No.1 in the suit, who is present in court, has agreed to pay a sum of Rs.20,00,000/- (Rupees Twenty Lakhs) to the
Respondents/Plaintiffs within a period of one year as full and final settlement of the disputes between the parties. The amount shall be paid on or
before 31st January, 2019. The said amount shall be paid in the following manner:
(i) Rs.25,000/- by the 15th day of every month for the months of January, 2018 to August, 2018.
(ii) Rs.18 Lakhs shall be paid between September, 2018 to January, 2019 in equal instalments to be paid by the 15th of each month.
(iii) Entire payment shall be made by 31st January, 2019.
2. The Respondents/Plaintiffs are agreeable to accept the amount of Rs.20 lakhs in full and final satisfaction of the judgement and decree dated 9th
October 2015.
10. The statements of Defendant No.1, Mr. Kamal Kapoor-Appellant No.1 and Mr. Arvind Kumar Gupta - Counsel for the Plaintiffs, are accordingly
recorded. The appeal and all pending applications are disposed of in terms of the settlement. The judgment and decree dated 9th October, 2015 stands
modified in terms of this settlement. The parties shall abide by the terms and conditions recorded today in the Court.
11. List for reporting compliance on 1st August, 2018.
