MADHYA PRADESH STATE LEGAL SERVICES AUTHORITYversusPRATEEK JAIN & ANR.

                   [2014] 7 S.C.R. 743

     MADHYA PRADESH STATE LEGAL SERVICES                         A
                  AUTHORITY
                              V.
                   PRATEEK JAIN & ANR.
             (Civil Appeal No. 8614 OF 2014)
                  SEPTEMBER, 10, 2014                            B

        [J. CHELAMESWAR AND A.K. SIKRI, JJ.]

    ALTERNATIVE DISPUTES REDRESSAL:

    Lok Adalats - Object and advantages - Discussed - Code
                                                                 c
of Civil Procedure, 1908 - s.89 - Legal Service Authority Act,
1987 - s.19.

     Lok Adalats - Applicability of directions/guidelines given
in *Damodar S. Prabhu case in cases which are resolved/ D
settled in Lok Adalats - Dishonour of cheque dispute -
Settlement of dispute - Application by parties for referring the
matter to Lok Ada/at - Held: If the matter is settled between
the parties then it need not be referred to Lok Ada/at -
Tendency of sending settled matters to Lok Ada/at deprecated E
- When a case is decided in Lok Ada/at, the requirement of
guidelines contained in *Damodar S. Prabhu should normally
not be dispensed with - However, if there is a special/specific
reason to deviate therefrom, .the Court is not remediless as
                                   --.;)'··


*Damodar S. Prabhu its~l.~ has given discretion to the F
concerned Court to reduce;~h.fJ :~~ts •. with regard to specific
facts and circumstances of the d~~e. while recording reasons
in writing about such variance,.~ th matters where the case has
to be decided/settled in the LokAdalat, if the Court finds that
it is a result of positive attitude of the parties, in such G
appropriate cases, the Court can always reduce the costs by
imposing minimal costs or even waive the same - For that, it
 would be for the parties, particularly the accused person, to
 make out a plausible c~se for the waiver/reduction of costs
                             ~3                                  H
    744      SUPREME COUR~ REPORTS               [2014] 7 S.C.R.

A and to convince the concerned Court about the same - This
    course of action would strike a balance between the two
    competing .but equally important interests, namely, achieving
    the objectives delineated in *Damodar S. Prabhu on the one
    hand and the public interest which is sought to be achieved
8   l:)y encouraging settlements/resolution of case through Lok
    Ada/ats - Negotiable Instruments Act, 1881 - s. 147.

       Respondent no. 1 was the complainant of dishonour
  of cheque against respondent no. 2. The matter reached
  before the Additional Session Judge in the form of
C criminal appeal and during the pendency of appeal, a
  joint application was filed by both the parties under
  Section 147 of the Negotiable Instruments Act, 1881
  stating that a compromise had taken place between them
  With mu'tual consent and that respondent no. 1 did not
D want to proceed against respondent no. 2 and wanted the
  appeal to be disposed of on the basis of compromise. On
  their application, the matter was referred to Lok Adalat.
  However, since the deposit was not made in terms of the
  direction given in *Damodar S. Pradhu, the Presiding
E Officer in the Lok Adalat did not give imprimatur to the
  said settlement. Respondent no. 2 filed a writ petition
  before the High Court which was dismissed.

       The question for consideration in the instant appeal
F .was whether the directions/guidelines given in *Damodar
   S. Prabhu case are inapplicable in cases which are
   resolved/settled in Lok Adalats.
          Disposing of the appeal, the court

G       HELD: 1. No doubt, the purpose and objective with
  which Lok Adalats have been constituted under Section
  19 of the Legal Service Authority Act, 1987 i$ to have
  speedy resolution of the disputes through these Lok
  Adalats, with added advantage of cutting the cost of
H litigation and avoiding further appeals. The advent of the
   M.P. STATE LEGAL SERVICES AUTHORITY v.             745
                PRATEEK JAIN
1987 Act gave a statuto!'Y status to Lok Adalats, pursuant A
to the constitutional mandate in Article 39-A of the
Constitution of India. It is an Act to constitute legal
services authorities to provide free and competent legal
services to the weaker sections of the society to ensure
that opportunities for securing justice are not denied to B
any citizen by reason of economic or- other disabilities,
and to organize Lok Adalats to secure·that the operation
of the legal system promotes justice on a basis of equal
opportunity. In fact, the concept of Lok Adalat is an
innovative Indian contribution to the world jurisprudence. c
It is a new form of the justice dispensation system and
has largely succeeded in providing a supplementary
forum to the victims for settlement of their disputes. This
system-is based on Gandhian principles. It is one of the
components of Alternate Dispute Resolution systems 0
specifically provided in Section 89 of the Code of Civil
 Procedure, 1908 as well. It has proved to be a very
 effective alternative to litigation. Lok Adalats have been
 created to restore access to remedies and protections
 and alleviate the institutional burden of the millions of E
 petty cases clogging the regular courts. It offers the
 aggrieved claimant whose case would otherwise sit in the
 regular courts for decades, at least some compensation
 now. The Presiding Judge of a Lok Adalat is an
 experienced adjudicator with a documented record of
 public service and has legal acumen. Experience has F
 shown that not only huge number of cases are settled
 through Lok Adalats, this system has definite
 advantages, some of which are listed below: (a) speedy
justice and saving from the lengthy court procedures; (b)
 justice at no cost; (c) solving problems of backlog cases; G
 and (d) maintenance of cordial relations. Thus, it cannot
 be doubted that Lok Adalats are serving an important
 public purpose. [Para 15) [756-C-H; 757-A-D]

    2. The Court, in the instant case, did not persuade the   H
   146      SUPREME COURT REPORTS              [2014] 7 S.C.R.


A parties to use the medium· of Lok Ada lat for the settlement
   of their dispute. On the contrary, the parties had already
   $ettled the matter between themselves before hand and
   filed the application in this behalf before the Additional
   Sessions Judge with a request that the matter be taken
B !JP before the Lok Adalat that was being organized on the
   same date. In the first instance, the matter was not
   required to be sent to Lok Adalat when the parties had
   settled the matter between themselves and application to
   this effect was filed in the Court. In such a situation, the
c Court could have passed the order itself, instead of
  .relegating the matter to the Lok Adalat. The methods
  need to be devised to ensure that faith in the system is
   maintained as in the holistic terms access to justice is
  .achieved through this system. This tendency of referring
   even those matters to the Lok Adalat which have already
0
   been settled is deprecated. This tendency of sending
  settled matters to the Lok Adalats just to inflate the
  figures of decision/settlement therein for statistical
   purposes is not a healthy practice. There is criticism from
E the lawyers, intelligentsia and general public in adopting
  this kind of methodology for window dressing and
  showing lucrative outcome of particular Lok Adalats.
   [Paras 17 and 18] [757-F-H; 758-A-E]

      *Damodar S. Prabhu v. Sayed Baba/a/ H. (2010) 5 SCC
F 663: 2010 (5) SCR 678 - relied on.

       3. In the instant case, when the case had been
  settled between the parties and application in this behalf
  was made before the Court, it cannot be denied that had
G the Court passed the compounding order on this
  application under Section 147 of the Act, as per the
  rigours of *Damodar S. Prabhu, 15% of the cheque
  amount had to be necessarily deposited by the accused
  person (respondent No.2). If it is held that such a cost is
H not to be paid when the matter is sent to the Lok Adalat,
   M.P. STATE LEGAL SERVICES AUTHORITY v.             747
                PRATEEK JAIN
this route would be generally resorted to, to bypass the      A
applicability of the directions contained in *Damodar S.
Prabhu. Such a situation cannot be countenanced. [Para
19] [758-E-G]
     4. *Damodar S. Prabhu case was concerned with the        8
stage of the case when compounding of offence under
Section 147 of the Act is to be permitted. The Court
noticed that there was a tendency on the part of the
accused persons to drag on these proceedings and
resort to settlement proc~ss only at a stage when the         C
accused persons were driven to wall. It is for this reason
that most of the complaints filed result in compromise or
settlement before the final judgment on the one side and
even in those cases where judgment is pronounced and
conviction is recorded, such cases are settled at appellate
stage. This particular tendency had prompted the Court        D
to accept the submission of the Attorney General to frame
guidelines for a graded scheme of imposing costs on
parties who unduly delay compounding of the offence
inasmuch as such a requirement of deposit of the costs
will act as a deterrent for delayed composition since free    E
and easy compounding of offences at any stage,.
however belated, was given incentive to the drawer of the
cheque to delay settling of cases for years. For this
reason, the Court framed the guidelines permitting
compounding with the imposition of varying costs              F
depending upon the stage at which the settlement took
place in a particular case. The Court made it clear that
framing of the said guidelines did not amount to judicial
legislation. In the opinion of the Court, since Section 147
of the Act did not carry any guidance on how to proceed       G
with compounding of the offences under the Act and
Section 320 of the Code of Criminal Procedure, 1973
could not be followed in strict sense in respect of
offences pertaining to Section 138 of the Act, there was
a legislative vacuum which prompted the Court to frame        H
    748     SUPREME COURT REPORTS                [2014) 7 S.C.R.

A those guidelines to achieve the following objectives: (i)
  to discourage litigants from unduly delaying the
  composition of offences in cases involving Section 138
  of the Act; (ii) it would result in encouraging
  compounding at an early stage of litigation saving
B valuable time of the Court which is spent on the trial of
  such cases; and (iii) even though imposition of costs by
  the competent Court is a matter of discretion, the scale
  of cost had been suggested to attain uniformity. At the
  same time, the Court also made it abundantly clear that
c the concerned Court would be at liberty to reduce the
  costs with regard to specific facts and circumstances of
  a case, while recording reasons in writing for such
  variance. [Paras 21, 22 and 24) [759-A, D-F; 760-G-H; 761-
  A; 762-B-G]
D        O.P. Dholakia v. State of Haryana (2000) 1 SCC 672;
    K.N. Govindan Kutty Menon v. G.D. Shaji (2012) 2 SCC 51:
    2011 (15) SCR 447 - relied on.

       5. Even when a case is decided in Lok Adalat, the
E requirement of guidelines contained in Damodar S.
  Prabhu should normally not be dispensed with. However,
  jf there is a special/specific reason to deviate therefrom,
  the Court is not remediless as Damodar S. Prabhu itself
  has give·n discretion to the concerned Court to reduce the
F costs with regard to specific facts and circumstances of
  the case, while recording reasons in writing about such
  variance. Therefore, in those matters where the case has
  to be decided/settled in the Lok Adalat, if the Court finds
  that it is a result of positive attitude of the parties, in such
G appropriatp cases, the Court can always reduce the costs
  by imposing minimal costs or even waive the same. For
  that, it would be for the parties, particularly the accused
  person, to make out a plausible case for the waiver/
  reduction of costs and to convince the concerned Court
  about the same. This course of action would strike a
H
    M.P. STATE LEGAL SERVICES AUTHORITY v.                749
                 PRATEEK JAIN
balance between the two competing but equally                    A
important interests, namely, achieving the objectives
delineated in Damodar S. Prabhu on the one hand and
the public interest which is sought to be achieved by
encouraging settlements/resolution of case through Lok
Adalats. The parties had already settled the matter and          B
the purpose of going to the Lok Adalat was only to have
a rubber stamp of the Lok Adalat in the form of its
imprimatur thereto, there was no error in the impugned
judgment. [Paras 26, 27] [763-C-H; 764-A]
                     Case Law Reference:                         c
    2010 (5) SCR 678          Relied on            Para 3
    2011 (15) SCR 447         Relied on            Para;13
    (2000) 1 sec 672          Relied on            Para 20       D
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8614 of 2014

     From the Judgment and Order dated 27.02.2012 of the
High Court of M.P. Bench at Gwailor in Writ Petiton No. 1519     E
of 2012.                             ·

    Varun K. Chopra, Rahul Kau.shik for the Appellants.

    The Judgment of the Court was delivered by
                                                                 F
    A.K. SIKRI, J. 1. Leave granted.
    2. Madhya Pradesh State Legal Services Authority, the
appellant herein, has filed the instant appeal challenging the
propriety of orders dated February 27, 2012 passed by the        G
High Court of Madhya Pradesh in Writ Petition No. 1519 of
2012, which was filed by one Rakesh Kumar Jain (respondent
No.2 herein) impleading Prateek Jain (respondent ,No.1 herein)
as the sole respondent. Essentially the lis was between
respondent Nos. 1 and 2. Respondent No.1 had filed a             H
    750       SUPREME COURT REPORTS               [2014] 7 S.C.R.


A   complaint under Section 138 of the Negotiable Instruments Act,
    1881 (hereinafter referred to as the 'Act') against respondent
    No.2. Matter reached before the Additional Sessions Judge in
    the form of criminal appeal. During the pendency of the said
    appeal, the matter was settled between the parties. On their
s   application, the matter was referred to Mega Lok Adalat.
    However, the concerned Presiding Officer in the Lok Adalat did
    not give his imprimatur to the said settlement in the absence
    of deposit made as per the direction given in the judgment of
    this Court in Damodar S. Prabhu v. Sayed Baba/al H., (2010)
c   5 SCC 663. Against the order of Aaditional Sessions Judge,
    a writ petition was filed by respondent No.2 but the same is
    also dismissed by the High Court, accepting the view taken by
    the Additional Sessions Judge.

        3. From the aforesaid, it would be clear that the matter in
D issue was between .respondent Nos. 1 and 2. The appellant
  comes in picture only because the parties had approached the
   Mega Lok Adalat organised by the appellant. The reason for
  filing the present appeal is the apprehension of the appellant
  that if the settlement arrived at in the Lok Adalats are not
E accepted by the Courts, one of the essential function and duty
  of Legal Services Authority cast upon by the Legal Services
  Authorities Act, 1987 (hereinafter referred to as the '1987 Act')
  would be greatly prejudiced and, therefore, it is necessary to
  straighten the law on the subject matter. Acknowledging the
F significance of the issue involved, permission was granted to
  the appellant to file the special leave petition and notice was
  issued in the special leave petition on December 06, 2012.
  Operation of the impugned order of the High Court was also
  stayed in the following words:
G         "In the meantime, having regard to the objects to be
          achieved by the provisions of the Legal Services
          Authorities Act, 1987, the operation of the order passed
          by the ~ok Adalat-1, Gwalior, Madhya Pradesh, on 30th
          July, 2011, and that of the High Court impugned in this
H         petition, shall remain stayed."
    M.P. STATE LEGAL SERVICES AUTHORITY v.                   751
           PRATEEK JAIN [A.K. SIKRI, J.]
     4. Notice has been duly served upon both the respondents,       A
but neither of them have put in appearance. Be that as it may,
since we are concerned with the larger question raised in this
appeal, we hard the learned counsel for the appellant in the
absence of any representation on the part of the respondents.
                                                                     B
    5. With the aforesaid gist of the controversy involved, we
now proceed to take note of the relevant facts in some detail.

     6. As pointed out above, there was some dispute between
respondent Nos. 1 and 2. Nature of the dispute is not reflected
from the papers filed by the appellant. However, since it pertains   C
to a complaint filed under Section 138 of the Act, one can safely
infer that the complaint was filed because of dishonour of the
cheque. It also appears from the record that this complaint was
filed bY. respondent No.1 against respondent No.2 and had
resulted· in some conviction/adverse order against respondent        D
No.2, though exact nature of the orders passed by the learned
 Magistrate is not on record. Be that as it may, respondent No.2
 had filed the appeal against the order of the Magistrate in the
Court of Additional Sessions Judge.
                                                                     E
      7. During the pendency of this appeal, a joint application
 was filed by both the parties stating that a compromise had
 taken place between them with mutual consent and they have
 reestablished their relationship and wanted to maintain the
 same cordial relation in future as well. On that basis it was       F
 stated in the application that respondent No.1 herein did not
 want to proceed against respondent No.2 and wanted the
 appeal to be disposed of on th~ basis of compromise by filing
 a compromise deed in the appeal. This application was filed
 under Section 147 of the Act which permits compounding of
 such offences. We would like to point out at this stage that on     G
 what terms the parties had settled the matter is not on record
,as compromise deed has not been filed.
      '
    8. When this application came up for hearing on July 30,
2011 before the learned appellate Court, counsel for both the        H
    752        SUPREME COURT REPORTS                 [2014) 7 S.C.R.

A parties requested that the matter be forwarded to the Mega Lok:
  Adalat which was being organized on the same date. On this
  application, following order was passed by the learned
  Additional Sessions Judge:

B
          "30.07.2011

          xx                           xx                xx
          An application under section 147 Negotiation (sic)
          Instrument Act filed on behalf of both sides for compromise
c         and request is made to direct the matter be taken up
          before the Lok Adalat organized today's date.

          In view of the facts mentioned in the application, for
          abrogation of the compromise application, the matter be
D         taken up today before the concerned bench of Lok-Adalat."

       9. When the matter was placed before the Lok Adalat, the
  Presiding Officer refused to act upon the settlement recorded
  between the parties on the ground that the accused person had
  not deposited 15% amount of the cheque for compounding of
E matter at the appeal stage as per ''The Guidelines" contained
  in the judgment of this Court in the case of Damodar S. Prabhu
  (supra). The exact order passed is reproduced below:

          "30.07.2011
F
          The matter produced pefore the bench of L.ok Adalat No.1.

          Appellant along with Shri N.S. Yadav, Advocate.

          Non-Applicant along with Shri Mohan Babu Mangal ·
G         Advocate.

          The instant matter is related to the appeal filed against the
          conviction order passed under Section 138 of N~gotiation
          (sic) of Instrument Act, wherein, both parties, being
H         appeared along with their counsels, while filing application
   M.P. STATE LEGAL SERVICES AUTHORITY v.                      753
          PRATEEK JAIN [A.K. SIKRI, J.]
    for compromise, have requested to mitigate the matter.             A
    But, the defendant/accused has not deposited 15 percent
    amount of cheque for mitigation of matter at the appeal
    stage according to the guide lines of judgment dated
    3.5.2010 passed in Criminal Appeal No. 963/2010 in the
    matter of Damodar M. Prabhu Vs. Sayyad Baba Lal                    B
    passed by the Hon'ble Supreme Court, in the District Legal
    Services Authority, due to said reason, it is not lawful to
    grant permission of mitigation of the matter to both sides.
     Hence, the compromise 3pplication is hereby dismissed.
                                                                       c
    The matter be returned b~ck to the Regular Court for
    abrogation in accordance with law."

     10. It is this order which was challenged by respondent
No.2 by filing a writ petition under Article 227 of the Constitution
of India. The High Court has dismissed the said writ petition          D
stating that the judgment of this Court in Damodar S. Prabhu
(supra) is binding on the subordinate Courts under Article 141
of the Constitution and, therefore, the subordinate Court had
not committed any legal error.
                                                                       E
     11. "The Guidelines" in the form of directions given in the
aforesaid judgment read as under:

                       "THE GUIDELINES

     (I) In the circumstances, it is proposed as follows:              F

     (a) That directions can be given that the Writ of Summons
     be suitably modified making it clear to the accused that
     he could make an application for compounding of the
     offences at the first or second hearing of the case and that      G
     if such an application is made, compounding may be
     allowed by the court without imposing any costs on the
     accused.

     (b) If the accused does not make an application for
     compounding as aforesaid, then if an app!ication for              H
    754       SUPREME COURT REPORTS                 [2014] 7 S.C.R.


A         compounding is made before the Magistrate at the
          subsequent stage, compounding can be allowed subject
          to the condition that the accused will be required to pay
          10% of the cheque amount to be deposited as a condition
          for compounding with the Legal Services Authority, or such
B         authority as the Court deems fit.

          (c) Similarly, if the application for compounding is made
          before the Sessions Court or a High Court in revision or
          appeal, such compounding may be allowed on the
          condition that the accused pays 15% of the cheque amount
c         by way of costs.

          (d) Finally, if the application for compounding is made
          before the Supreme Court, the figure would increase to
          20% of the cheque amount."
D
         12. The question of consideration in the aforesaid
    backdrop is as to whether directions/guidelines given by this
    Court in the aforesaid judgment are inapplicable in cases which
    are resolved/settled in Lok Adalats.
E       13. What was argued before us by the learned counsel for
  t,he appellant was that these guidelines containing the schedule
  of costs should not be made applicable to the settlements
  which are arrived at in the Lok Adalats inasmuch as provision
  for imposition of such costs would run contrary to the very
P purpose of Lok Adalats constituted under Section 19 of the
  1987 Act. It was emphasized that Lok Adalats were constituted
  to promote the resolution of disputes pending before Court by
  amicable settlement between the parties and in order to reduce
  the pendency of cases before the Courts, including appellate
G Courts. Learned counsel also referred to the judgment of this
  Court in K.N. Govindan Kutty Menon v. G.D. Shaji, (2012) 2
  sec 51, wherein it is held that a compromise or settlement
  arrived at before the Lok Adalat and award passed pursuant
  thereto is to be treated as decree of civil Court by virtue of
H deeming provision contained in Section 21 and Section 2(aaa)
    M.P. STATE LEGAL SERVICES AUTHORITY v.                 755
           PRATEEK JAIN [A.K. SIKRI, J.]
and (c) of the 1987 Act. The Court held that even a settlement A
of a case under Setion 138 of the Act and Lok Adalat award
passed pursuant thereto would be a decree executable under ·
the Code of Civil Procedure, 1908. The position in this behalf
is summed up in para 26 of the said judgment, which reads as
unde~                                                          B

    "26. From the above discussion, the following propositions
    emerge:

    (1) In view of the unambiguous language of Section 21 of
    the Act, every award of the Lok Adalat shall be deemed         C
    to be a decree of a civil court and as such it is executable
    by that court.

    (2) The Act does not make out any such distinction
    between the reference made by a civil court and a criminal     0
    court.

    (3) There is no restriction on the power of the Lok Adalat
    to pass an award based on the compromise arrived at
    between the parties in respect of cases referred to by
    various courts (both civil and criminal), tribunals, Family    E
    Court, Rent Control Court, Consumer Redressal Forum,
    Motor Accidents Claims Tribunal and other forums of
    similar nature.

    (4) Even if a matter is referred by a criminal court under     F
    Section 138 of the Negotiable Instruments Act, 1881 and
    by virtue of the deeming provisions, the award passed by
    the Lok Adalat based on a compromise has to be treated
    as a decree capable of execution by a civil court."

     14. Taking sustenance from the aforesaid dicta, the . G
t:ubmission of learned counsel for the appellant was that even
the proceedings under Section 138 of the Act were governed
by the Code of Criminal Procedure, 1973, such an award was
executable as a decree of the civil Court under the Code of Civil
Procedure, 1908. The submission, therefore, was that once H
    756      SUPREME COURT REPORTS                    [2014] 7 S.C.R.


A · award of the Lok Adalat is given the effect of the decree and
    attaches this kind of sanctity behind it, it should be carved out
    as an exception to 'The Guidelines' framed by this Court in
  . Damodar S. Prabhu's case (supra).

           15. We have considered the aforesaid submission of the
8
    learned counsel with utmost intensity of thought. It appears to
    be of substance in the first blush when this submission is to be
    considered in the context of the purpose and objective with
    which Lok Ada!ats have been constituted under Section 19 of
    the 1987 Act. No doubt, the manifest objective is to have
C   speedy resolution of the disputes through these Lok. Adalats,
    with added advantage of cutting the cost of litigation and
    avoiding further appeals. The advent of the 1987 Act gave a
    statutory status to Lok Adalats, pursuant to the constitutional
    mandate in Article 39-A of the Constitution of India, contains
D   various provisions of settlement of disputes through Lok Adalat.
    It is an Act to constitute legal services authorities to provide free
    and competent legal services to the weaker sections of the
    society to ensure that opportunities for securing justice are not
    denied to any citizen by reason of economic or other
E   disabilities, and to organize Lok Adalats to secure that the
    operation of the legal system promotes justice on a basis of
    equal opportunity. In fact, the concept of Lok Adalat is an
    innovative Indian contribution to the world jurisprudence. It is a
    new form of the justice dispensation system and has largely
F   succeeded in providing a supplementary forum to the victims
    for settlement of their disputes. This system is based on
    Gandhian principles. It is one of the components of Alternate
    Dispute Resolution systems specifically provided in Section 89
    of the Code of Civil Procedure, 1908 as well. It has proved to
G   be a very effective alternative to litigation. Lok Adalats have
    been created to restore access to remedies and protections
    and alleviate the institutional burden of the millions of petty
    cases clogging the regular courts. It ·offers the aggrieved
    claimant whose case would otherwise sit in the regular courts
H   for decades, at least some compensation now. The Presiding
     M.P. STATE LEGAL SERVICES AUTHORITY v.                   757
            PRATEEK JAIN [A.K. SIKRI, J.]

  Judge of a Lok Adalat is an experienced adjudicator with a          A
  documented· record of public service and has legal acumen.
  Experience has shown that not only huge number of cases are
  settled through Lok Adalats, this system has definite
· advantages, some of which are listed below:           ,
                                                                      B
       (a}   speedy justice and saving from the lengthy court
             procedures;

       (b)   justice at no cost;

       (c)   solving problems of backlog cases; and                   c
       (d)   maintenance of cordial relations.

     Thus, it cannot be doubted that Lok Adalats are serving
 an important public purpose. .
                                                                      D
       16. Having said so, it needs to be examined as to whether
  in the given case it becomes derogatory to the movement of
  the Lok Adalats if the costs amounting to 15% of the cheque
  amount, as per the guidelines contained in Damodar S.
  Prabhu (supra), is insisted? However, before discussing this        E
  central issue, we would like to analyse the events of the present
: case, as that would be of help to answer the pivotal issue raised
  before us.

      17. As pointed out above while taking note of the factual       F
 details of the case, it was not a situation where the Court
 persuaded the parties to use the medium of Lok Adalat for the
 settlement of their dispute. On the contrary, the parties had
 already settled the matter between themselves before hand
 and filed the application in this behalf before the learned          G
 Additional Sessions Judge on July 30, 2011 with a request
 which the matter be taken up before the Lok Adalat that was
 being organized on the same date. It is clear from the order
 passed by the learned Additional Sessions Judge on July 30,
 2011, which is already extracted above.
    .758     SUPREME COURT REPORTS                   [2014] 7 S.C.R.


A          18. In the first instance, we do not understand as to why
    the matter was sent to Lok Adalat when the parties had settled
    the matter between themselves and application to this effect
    was filed in the Court. In such a situation, the Court could have
    passed the order itself, instead of relegating the matter to the
B Lok Adalat. We have ourselves highlighted the importance and
    significance of the Institution of Lok Adalat. We would be failing
  · in our duty if we do not mention that, of late, there is some
    criticism as well which, inter alia, relates to the manner in which
    cases are posted befoie the Lok Adalats. Y./e have to devise
c. the methods to ensure that faith in the system is maintained as
    in the holistic terms access to justice is achieved through this
    system. We, therefore, deprecate this tendency of referring
    even those matters to the Lok Adalat which have already been
    settled. This tendency of sending settled matters to the Lok
    Adalats just to inflate the figures of decision/settlement therein
0
    for statistical purposes is not a healthy practice. We are also
    not oblivious of the criticism from the lawyers, intelligentsia and
    general public in adopting this kind of methodology for window
    dressing and showing lucrative outcome of particular Lok
E Adalats.
       19. Be that as it may, reverting to the facts of the present
  case, we find that when the case had been settled between the
  parties and application in this behalf was made before the
  Court, it cannot be denied that had the Court passed the
F compouding order on this application under Section 147 of the
  Act, as per the rigours of Damodar S. Prabhu (supra), 15% f
  the cheque amount had to be necessarily deposited by the
  accused person (respondent No.2). If we hold that such a cost
  is not to be paid when the matter is sent to the Lok Adalat, this
G route would be generally resorted to, to bypass the applicability
  of the directions contained in Damodar S. Prabhu (supra).
  Such a situation cannot be countenanced.

      20. The purpose of laying down the guidelines in Damodar
H S. Prabhu (supra) is explained in the said judgment itself. The
    M.P. STATE LEGAL SERVICES AUTHORITY v.                        759
           PRATEEK JAIN [A.K. SIKRI, J.]
Court in that case was concerned with the stage of the case               A
when compounding of offence under Section 147 of the Act is
to be permitted. To put it otherwise, the question was as to
whether such a compounding can be only at the trial Court
stage or it is permissible even at the appellate stage. It was
noted that even before the insertion of Section 147 of the Act,           B
by way of amendment in the year 2002, some High Courts had
permitted the compounding of offence contemplated by Section
 138 of the Act during the later stages of litigation. This was so
done by this Court also in O.P. Dholakia v. State of Haryana,
(2000) 1 sec 672 and in some other cases which were noticed               c
by the Bench. From these judgments the Court concluded that
the compounding of offence at later stages of litigation in
cheque bounding cases was held to be permissible.
     21. While holding so, the Court also took note of the
phenomena which was widely prevalent in the manner in which               D
cases under Section 138 of the Act proceed in this country. It
noticed that there was a tendency on the part of the accused
persons to drag on these proceedings and resort to settlement
process only at a stage when the accused persons were driven
to wall. It is for this reason that most of the complaints filed result   E
in compromise or settlement before the final judgment on the
one side and even in those cases where judgment is
pronounced and conviction is recorded, such cases are settled
at appellate stage. This was so noted in para 13 of the
judgment, which reads as under:                                           F
     "13. It is quite obvious that with respect to the offence of
     dishonour of cheques, it is the compensatory aspect of the
     remedy which should be given priority over the punitive
     aspect. There is also some support for the apprehensions             G
     raised by the learned Attorney General that a majority of
     cheque bounce cases are indeed being compromised or
     settled by way of compounding, albeit during the later
     stages of litigation thereby contributing to undue delay in
     justice-delivery. The problem herein is With .the tendency           H
    760     SUPREME COURT REPORTS                   [2014] 7 S.C.R.

A        of litigants to belatedly choose.compounding as a means
         to resolve their dispute. Further more, the writen
         submissions filed on behalf of the learned Attorney
         General have stressed on the fact that unlike Section 320
         of the CrPC, Section 147 of the Negotiable Instruments
B       'Act provides ·no explicit guidance as to what stage
         compounding can or cannot be done and whether
         compounding can be done· at the instance of the
         complainant or with the leave of the court. As mentioned
         earlier, the learned Attorn~y General's submission is that
c        in the absence of statutory guidance, parties are choosing
         compounding as a method of last resort instead of opting
         for it as soon as the Magistrates take cognizance of the
         complaints. One explanation for such behaviour could be
         that the accused persons are willing to take the chance of
         progressing through the various stages of litigation and
D
         then choose the rou'te of settlement only when no other
         route remains. While such behaviour may be viewed as
         rational from the viewpoint of litigants, the hard facts are
         that the undue delay in opting for compounding contributes
         to' the arrears pending before the courts at various levels.
E     · If the accused is willing to settle or compromise by way of
         compounding of the offence at a later stage of litigation, it
         is generally indicative of some merit in the complainant's
         case. In .such cases it would be desirable if parties choose
         compounding during the earlier stages of litigation. If
F        however, the accused has a valid defence such as a
         mistake, forgery or coercion among other grounds, then
         the matter can be litigated through the specified forums."
    .. 22. This particular tendency had prompted the Court to
G accept the submission of the Attorney General to frame
  guidelines for a graded scheme of imposing costs on parties
  who unduly delay compounding of the offence inasmuch as such
  a requirement of deposit of the costs will act as a deterrent for
  delayed composition since free and easy compounding of
H offences at any stage, however belated, was given incentive
    M.P. STATE LEGAL SERVICES AUTHORITY v.                    761
           PRATEEK JAIN [A.K. SIKRI, J.]
to the drawer of the cheque to delay settling of cases for years,     A
For this reason, the Court framed the guidelines permitting
compounding with the imposition of varying costs depending
upon the stage at which the settlement took place in a particular
case.
                                                                      B
     23. After formulating "The Guidelines", which are already
extracted above, the Court made very pertinent observations
in para 17 of the said judgment which would have bearing in
the present case. Thus, we reproduce the same below:

     "17. We are also conscious of the view that the judicial         c
     endorsement of the above quoted guidelines could be
     seen as an act of judicial law-making and therefore an
     intrusion into the legislative domain. It must be kept in mind
     that Section 147 of the Act does not carry any guidance
     on t"1ow to proceed with the compounding of offences             o
     under the Act. We have already explained that the scheme
     contemplated under Section 320 of the CrPC cannot be
     followed in the strict sense. In view of the legislative
     vacuum, we see no hurdle to the endorsement of some
     suggestions which have been designed to discourage               E
     litigants from unduly delaying the composition of the
     offence in cases involving Section 138 of the Act. The
     graded scheme for imposing costs is a means to
     encourage compounding at an early stage of litigation. In
     the status quo, valuable time of the Court is spent on the
                                                                      F
     trial of these cases and the parties are not liable to pay
     any Court fee since the proceedings are governed by the
     Code of Criminal Procedure, even though the impact of
     the offence is largely confined to the private parties. Even
     though the imposition of costs by the competent court is a
     matter of discretion, the scale of costs has been suggested      G
     in the interest of uniformity. The competent Court can of
     course reduce the costs with regard to the specific facts
     and circumstances of a case, while recording reasons in
     writing for such variance. Bona fide litigants should of
      course contest the proceedings to their logical end. Even       H
    762           SUPREME COURT REPORTS                 [2014] 7 S.C.R.


A         in the past, this Court has used its power to do complete
          justice under Article 142 of the Constitution to frame
          guidelines in relation to subject-matter where there was a
          legislative vacuum."

        24. It is clear from the reading of the aforesaid para that
8
   the Court made it clear that framing of the said guidelines did
   not amount to judicial legislation. In the opinion of the Court,
   since Section 147 of the Act did not carry any guidance on how
   to proceed with compounding of the offences under the Act and
   Section 320 of the Code of Criminal Procedure, 1973 could
C not be followed in strict sense in respect of offences pertaining
 . to Section 138 of the Act, there was a legislative vacuum which
   prompted the Court to frame those guidelines to achieve the
   following objectives:

D          (i)     to discourage litigants from unduly delaying the
                   composition of offences in cases involving Section
                   138 of the Act;

           (ii)    it would result in encouraging compounding at an
                   early stage of litigation saving valuable time of the
E
                   Court which is spent on the trial of such cases; and

           (iii)   even though imposition of costs by th~ competent
                   Court is a matter of discretion, the scale of cost had
                   been suggested to attain uniformity.
F
          At the same time, the Court also made it abundantly clear
    that the concerned Court would be. at liberty to reduce the costs
    with regard to specific facts and circumstances of a case, while
    recording reasons in writing fo.r such variance.
G       25. What follows from the above is that normally costs as
    specified in the guidelines laid down in the said judgment has
    to be imposed on the accused persons while permitting
    compounding. There can be departure therefrom in a particular
    case, for good reasons to be recorded in writing by the
H
    M.P. STATE LEGAL SERVICES AUTHORITY v.                     763
           PRATEEK JAIN [A.K. SIKRI, J.]
concerned Court. It is for this reason that the Court mentioned       A
three objectives which were sought to be achieved by framing
those guidelines, as taken note of above. It is thus manifestly
the framing of "Guidelines" in this judgment was also to achieve
a particular public purpose. Here comes the issue for
consideration as to whether these guidelines are to be given          B
a go by when a case is decided/settled in the Lok Adalat? Our
answer is that it may not be necessarily so and a proper
balance. can be struck taking care of both the situations.

     26. Having regard thereto, we are of the opinion that even C
when a case is decided in Lok Adalat, the requirement of
following the guidelines contained in Damodar S. Prabhu
(supra) should normally not be dispensed with. However, if there
is a special/specific reason to deviate therefrom, the Court is
not remediless as Damodar S. Prabhu (supra) itself has given
discretion to the concerned Court to reduce the costs with D
regard to tpecific facts and circumstances of the case, while
recording reasons in writing about such variance. Therefore, in
those matters where the case has to be decided/settled in the
Lok Adalat, if the Court finds that it is a result of positive attitude
of the parties, in such appropriate cases, the Court can always E
reduce the costs by imposing minimal costs or even waive the
same. For that, it would be for the parties, particularly the
accused person, to make out a plausible case for the waiver/
reduction of costs and to convince the concerned Court about
the same. This course of action, according to us, would strike F
a balance between .the two competing but equally important
interests, namely, achieving the objectives delineated in
Damodar S. Prabhu (supra) on the one hand and the public
interest which is sought to be achieved by encouraging
settlements/resolution of case through Lok Adalats.                     G
     27. Having straightened the position in the manner above,
insofar as the present case is concerned, as we find that the
parties had already settled the matter and the purpose of going
to the Lok A~alat was only to have a rubber stamp of the Lok           H
   .764      SUPREME COURT REPORTS                [2014] 7 S.C.R.

A Adalat in the form of its imprimatur thereto, we do not find any
  error in the impugned judgment, though we are giving our own
  reasons in support of the conclusion arrived at by the High
  Court in dismissing the writ petition filed by respondent No.2,
  while straightening the approach that should be followed
B henceforth in such matters coming before the Lok Adalats.

          28. The appeal stands disposed of in the aforesaid terms.

   Devika Gujral                                  Appeal disposed of.