It is common knowledge that the parties to a case, with the intervention of
friends and well-wishers or based on legal advice, enter into a compromise with
the aim to put an end to vexatious endless litigation. The compromise sometimes
takes place after a long time of the institution of the case and also during the
pendency of SLP/Appeal in the Apex Court. A question arises whether a belated
compromise should be encouraged by the Courts or should be penalized as
amounting to wastage of the 'Precious Judicial Time' of the Courts.
The Apex Court recently in SLP (Crl.) No. 119/2022 in the case of Santhosh, J
vs. Narasimha Murthy
decided on 18-10-2022 passed an exemplary order which
shall have bearing on similar matters that shall come up in the various Courts
The brief facts are that the complainant, respondent in the aforesaid SLP, filed
a complaint u/s 138 of the Negotiable Instruments Act, 1881 against the present
Petitioner. The said complaint was tried by three different Courts in the
hierarchy and all these three Courts concurrently upheld the conviction of the
This process had taken 10 precious judicial years before the matter was
compromised between the Petitioner & the Respondent, during the pendency of the
SLP in the Apex Court. During the hearing by the Court, the counsel of the
complainant informed the Court that the said dispute between the complainant and
the present petitioner had been settled and a sum of Rs. 69 Lakhs had been paid
by the present Petitioner to the complainant and therefore he does not want to
proceed against the petitioner any further.
The Apex Court was pinched by the compromise at the stage of admission of SLP,
more so as the matter had travelled for 10 long years in 3 Courts and amounted
to abuse of the 'precious judicial time' of the Courts and imposed exemplary
costs. The Court observed thus:
".....but this Court cannot be oblivious of the situation that precious judicial
time of almost 10 years of the Courts has been consumed in this litigation and
mere compromise entered into by the parties may not be sufficient to close the
proceedings. Looking to the quantification of default amount in reference to
which the petitioner was convicted under Section 138 of the NI Act, let an
additional sum of Rs. 5 lakhs be deposited by the petitioner with the Supreme
Court Advocate-on-Record Advocates Welfare Fund within a period of two months
and the receipt of money deposited be placed with the Registry of this Court."
A question that arises is that the Courts usually promote & propagate 'Out of
Court Settlements' in order to curb litigation, bring finality and reduce
pendency. In fact the Apex Court and the High Courts often ask the contesting
counsels to facilitate out-of-court settlement. Both the Government and the
Judiciary are promoting ' Mediation' and 'Alternate Dispute Resolution' in order
to minimize litigation.
Out of the Court settlements, even belatedly, ought not to be deprecated but on
the contrary should be encouraged. It is pertinent that Alternative Dispute
Mechanism. Mediation, Conciliation, Lok Adalats are the new tools of the justice
dispensing system which provide different ways of settling a case out of court.
It cannot be denied that Alternate Dispute Resolution is the need of the hour.
It is more convenient to settle a case outside the court in a regulated
mechanism than to fight the same in the court of law. The concept of ADR through
Arbitration, Conciliation, Mediation and Neutral Evaluation are being resorted
to rescue to help people settling their cases out of court. It is relevant that
the legislature with a view to curb litigation has mandated mandatory statutory
pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015 as
amended by the Amendment Act of 2018.
It would would be trite to refer to Suresh Narayan Kadam & Ors vs Central
Bank Of India & Ors
decided on 5 February, 2016(2016 Latest Caselaw 123 SC).
The prologue to the said judgment is very relevant as it highlights the need of
mediation mechanism for settlement of cases amongst litigating parties & is
The relevant extracts of the said report are reproduced as under:
- The proceedings in these petitions as indeed the proceedings in the
Bombay High Court (out of which the present petitions have arisen) indicate
a clear need for encouraging an amicable settlement process, preferably
through mediation, in which the services of a mediator well-versed in the
art, science and technique of mediation may be taken advantage of. The
alternative, of course, is protracted litigation which may not be the best
alternative for the contesting parties or for a society that requires
expeditious justice delivery.
- In his Foreword written on 12th April, 2011 to the first edition of
Mediation Practice & Law:
The path to successful dispute resolution written by Mr. Sriram Panchu,
Senior Advocate and Mediator, Mr. Fali S. Nariman, a Senior Advocate of this
Court and a respected jurist, writes:
The same subject matter of disputation between two parties can be dealt with
in two different ways, not necessarily exclusive: first, by attempting to
resolve a dispute in such a way that the parties involved win as much as
possible and lose as little as possible through the intervention of a third
party steeped in the techniques of mediation; and second, (failing this) the
dispute would be left to be resolved by each party presenting its case
before a disinterested third party with an expectation of a binding decision
on the merits of the case: a win-all lose-all, final determination.
The second alternative may not be the best alternative, as already mentioned
- The decision rendered by the High Court which is under challenge before
us states that efforts were made to have the disputes between the contesting
parties settled but it is clear that no institutional mechanism was invited
to assist in the settlement process.
The proceedings before us also indicate that several efforts were made to
encourage the contesting parties to arrive at a settlement, and at one point
of time the parties did reach an interim arrangement but that could not
fructify into a final settlement only because of the absence of an
intervention through an institutional mechanism.
Appreciating this, this Court has consistently encouraged the settlement of
disputes through an institutionalized alternative dispute resolution
mechanism and there are at least three significant decisions rendered by
this Court on the subject.
- Salem Advocate Bar Assn. (II) v. Union of India (2005) 6 SCC 344
- Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.(2010)
8 SCC 24
- K. Srinivas Rao v. D.A. Deepa(2013) 5 SCC 226.
- That apart this Court has, on several occasions, referred disputes for
amicable settlement through the Mediation Centre functioning in the Supreme
Court premises itself and Mediation Centres across the country in a large
variety of disputes including (primarily) matrimonial disputes.
In spite of the encouragement given by this Court, for one reason or another,
institutionalized mediation has yet to be recognized as an acceptable method of
dispute resolution provoking Mr. Fali S. Nariman to comment in the same Foreword
in the context of the Afcon's decision that:
"Mediation must stand on its own; its success judged on its own record,
un-assisted by Judges.
It would be apropos to refer to the Report No. 222 of the Law Commission of
India titled 'Need for Justice-dispensation through ADR etc.
1.3 Man is not made for law, but the law is for man. Law is a regulator of human
conduct. No law works smoothly unless the interaction between the two is
voluntary. An act is justified by law, only if it is warranted, validated and
made blameless by law.
1.12 The Judiciary is playing a significant role in providing justice to the
under-privileged, indigent and helpless individuals through public interest
litigation. The legal aid network is taking firm roots and legal services
functionaries are actively engaged in fulfilling the constitutional promise of
equality before the law.
The provision of legal aid to eligible persons, the speedy settlement of their
legal disputes by counselling and conciliation and failing that by Lok Adalats
rank high on the agenda of legal services functionaries, as high as running
legal education awareness programmes. Of course, we have miles to go before we
can claim that the realm of equal justice for all has become a reality.
Dr. A. S. Anand, a former Chief Justice of India, has wished that the next
century would not be a century of litigation, but a century of negotiation,
conciliation and arbitration. This dream has to be fulfilled for settling
disputes both pending in courts as well as at pre-litigative stage.
Where there is a huge pendency of cases, the only panacea is establishment of
more and more permanent Lok Adalats where the expertise of the judicial officers
both in service and retired could be effectively utilized in resolution of
matters by conciliation. A large number of consumers in our country feel
handicapped in getting justice due to poverty, illiteracy, social backwardness
and also geographical barriers.
1.22 Legal aid without legal literacy is less meaningful and purposeful. So, it
would be highly useful if some important legal topics are included as compulsory
subjects from primary education stage itself. Such education would enable the
people to settle several of their disputes outside the courts at the grass roots
level without seeking help from legal experts who are generally expensive.
1.23 It is high time that fora for the poor and needy people for redressal of
their grievances speedily are created. As we all know, delay in disposal of
cases in law courts, for whatever reason it may be, has really defeated the
purpose for which the people approach the courts for redressal. It is said that
justice delayed is justice denied. So, we will have to find out a via media to
render social justice to the poor and needy who want their grievances redressed
through law courts.
1.32 Advantages of ADR:
- It is less expensive.
- It is less time-consuming.
- It is free from technicalities as in the case of conducting cases in law
- Parties are free to discuss their differences of opinion without any
fear of disclosure of this fact before any law courts.
- Parties have the feeling that there is no losing or winning side between
them but at the same time their grievance is redressed and their
relationship is restored.
1.38 The development of ADR methods will provide access to many litigants. It
helps in reducing the enormous work-load that is put on the Judiciary. This will
go a long way in improving not only the access to justice, but even the quality
It is worth mentioning that the Apex Court has compounded the offence of Rape on
the basis of compromise reached between the victim & the accused. It is all the
more relevant that rape is a non-compoundable offence due to its gravity, as
enshrined under section 320 of the Code of Criminal Procedure 1973.
It is worthwhile to refer to the Apex Court judgment in the case of Baldev Singh
v. State of Punjab, Criminal Appeal No. 749 of 2007 decided on 22 February, 2011
which gave sanctity to the compromise/out of Court settlement in a case of gang
rape and in consonance of the compromise/out of court settlement reduced the 10
year sentence to the period already undergone.
Various High Courts have quashed the complaint of rape on the basis of
compromise/ out of Court settlement between the victim and the accused. It is
pertinent that rape is a crime not just against the victim but against the whole
society. The aforesaid case of Santhosh, J relates to NI Act and the offence is
just pecuniary and in no way similar to offence of rape which is regularly being
compounded on the basis of compromise/out of Court settlement in the higher
It would be befitting to refer to Apex Court judgment in Madan Mohan Abbot vs
State of Punjab in Appeal (crl.) 555 of 2008 decided on 26 March, 2008 wherein
the Apex Court not only accepted the compromise/ out of Court settlement holding
that the time so saved can be better utilized in deciding more effective and
meaningful litigation, thereby encouraging out of Court settlement. The Court
"We need to emphasize that it is perhaps advisable that in disputes where the
question involved is of a purely personal nature, the Court should ordinarily
accept the terms of the compromise even in criminal proceedings as keeping the
matter alive with no possibility of a result in favour of the prosecution is a
luxury which the Courts, grossly overburdened as they are, cannot afford and
that the time so saved can be utilized in deciding more effective and meaningful
litigation. This is a common sense approach to the matter based on ground of
realities and bereft of the technicalities of the law."
Needless to say out of Court settlement/ compromise at any stage of litigation
is in consonance with the judicial pronouncements and recommendation of the Law
Commission. Moreover, the aforesaid case dated 18-10-2022 would be a binding
precedent and may act as a deterrent to the litigants who wish to go for out of
court settlement belatedly for fear of exemplary costs and may also prove to be
an impediment in the way to promote Judicial Reforms & contain mounting pendency
by way of Out of Court settlements.
Written By: Inder Chand Jain
Email: [email protected]
, Ph no: 8279945021