Dayawati v. Yogesh Kumar Gosain (2017)

Mediation is easy to justify in a civil suit. The hard question is whether a criminal complaint can be sent to mediation at all, and what happens when the resulting settlement is broken. Cheque dishonour under s. 138 is where the question bites, because the proceeding is criminal in form and a debt recovery in substance, and because settlements in such matters are routinely for more than the cheque amount and routinely part-performed.

Dayawati is the reference in which those questions were formally put to a High Court. For this paper it is the anchor of the section on mediation in criminal matters.

Dayawati filed two complaints under s. 138 of the Negotiable Instruments Act, 1881 for dishonour of two cheques totalling Rs. 27 lakh, issued towards a larger liability. The Magistrate referred the parties to a court-annexed mediation centre. On 14 May 2015 they signed a settlement under which the accused would pay Rs. 55,54,600 in instalments and the complainant would withdraw the complaints on full payment.

The accused paid only part of the first instalment. When the complainant sought enforcement, the accused argued that the settlement was onerous, being roughly twice the cheque amounts, and that it was not binding because the parties' statements adopting it had not been recorded by the court. The Magistrate referred the questions to the High Court under s. 395 CrPC.

The questions referred were: whether a complaint under s. 138 can be referred to mediation; the procedure to be followed on a settlement; and the legal consequences of breach of a mediated settlement.

The High Court's detailed answers on the procedure for recording mediated settlements in s. 138 cases and on the consequences of breach are not set out in this course. Read the judgment before relying on them. What the course establishes is the frame in which those questions were decided, and that frame is examinable in its own right.

The Division Bench worked from three Supreme Court decisions, and it is that framework a student should be able to reproduce.

1. Gian Singh v. State of Punjab ((2012) 10 SCC 303). A High Court may quash criminal proceedings under s. 482 CrPC on a settlement where the case has an overwhelmingly civil flavour — commercial, financial, partnership, matrimonial or family disputes of a private nature — and continuation would be oppressive. But not for serious offences, and not for economic offences affecting the State.
2. Parbatbhai Aahir v. State of Gujarat (2017). Restated those principles as guidelines.
3. K. Srinivas Rao v. D.A. Deepa ((2013) 5 SCC 226). Criminal courts dealing with complaints under s. 498A IPC should, where elements of settlement exist and both parties are willing, refer them to mediation, without diluting the rigour of the offence; mediation centres should set up pre-litigation desks for matrimonial disputes.

The method those three supply is a two-stage one: first ask whether the offence is of a kind in which private settlement is legitimate at all, judged by the civil flavour of the dispute and the public interest in prosecution; and only then ask what procedure gives the settlement legal effect.

It opens any question on mediation in criminal matters, and any problem in which a cheque-dishonour complaint is compromised. State the frame, state the facts — they are the most quotable part of the case, and the mismatch between Rs. 27 lakh in cheques and a Rs. 55,54,600 settlement is what makes the problem of breach vivid — and say what was referred.

Give the current statutory position alongside. Section 6 of the Mediation Act, 2023 now expressly allows courts to refer compoundable offences to mediation, with the outcome considered by the court under the law rather than enforced as a decree. That Act was brought into force only in part on 9 October 2023, so check commencement for any provision you rely on.

It disposes of the assumption that a criminal complaint can never go to mediation, and equally the assumption that a mediated settlement in a criminal matter enforces itself.

It does not decide — for your purposes — the detailed procedure on recording the settlement or the consequences of breach; say so honestly rather than inventing directions. And it is a High Court decision: where it rests on Gian Singh, Parbatbhai Aahir and K. Srinivas Rao, cite those for the principle.