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Neeru Saxena Vs State & Ors: In The Event Of Default Or Non-Compliance Or Breach Of The Settlement Agreement By The Accused Person, The Magistrate Would Pass An Order U/S 431 Read With Section 421 Of The CrPC To Recover The Amount Agreed To Be Paid By The Accused

minakshi bindhani ,
  28 August 2021       Share Bookmark

Court :
The Court of Dwarka, New Delhi
Brief :
In the present case as per the mediation settlement, the petitioner failed to pay the settled amount. In case of any post-dated cheque that has been dishonoured, the settlement would become null and void. Thereby, the complainant’s case continued as per the law under Section 138 of the NI Act.
Citation :
CR No: 183/2018

5th October 2018

Justice Sh.Harish Dudani

Petitioner- Neeru Sexena
Respondent- State & Ors.


  • The Court held that the Trial Court should follow the prescribed procedure and the judicial mind before passing the order.


  • The revision petition has been filed against the judgment passed by the learned Metropolitan Magistrate under the NI Act.
  • The revision petition raised a complaint case under Section 138 of the NI Act by the respondent.
  • The respondent entered into a Memorandum of Undertaking (MOU) with the petitioner for the sale of a portion of constructed residential complex at Dwarka, New Delhi.
  • The respondent was given a “buyback offer” of Rs. 32,90,00/- and the petitioner herein issued nine cheques but all the cheques were dishonoured, except the one bearing of Rs. 2,10,000/-
  • Thereafter, the petitioner assured to fulfil the conditions of the MOU and agreed to execute the sale deed of Rs. 28 lakhs. But the petitioner had failed to fulfil the conditions and once again, the accused entered into another MOU with the petitioner and agreed to pay Rs.29,26,00, in furtherance of the previous MOUs.
  • The petitioner had issued 3 cheques which were dishonored due to insufficient funds. The respondent had issued a legal notice but the petitioner failed to make the payment. Thereafter, the respondent filed a complaint u/s 138 of the NI Act.
  • Both the parties agreed to the settlement and the learned MM was sent to the Mediation Cell. The matter has been settled in the Mediation Cell for a total sum of Rs. 37 lacs. The petitioner had handed over 11 post-dated cheques (PDC) in favor of the respondents and the revisionist could pay only 3 lacs.
  • So, the learned court made the settlement null and void, as the mediation settlement was dishonoured. The application filed by the accused for the recovery of Rs. 3 lacs from the complainant was dismissed without mentioning any reason thereof.



  • Whether the order passed by the learned Magistrate in terms of mediation settlement is maintainable?
  • Whether not following the procedure or availed remedies would vitiate the learned court’s proceedings?


  • The settlement shall become null and void as per the mediation settlement. Accordingly, the complainant’s case proceeded under Section 138 of the NI Act. Therefore, there can be no review ordered by the MM. The Trial Court failed to adopt the procedure prescribed under Order-XXIII of the CPC.
  • Further, the Trial Court failed to record the statement of the parties on oath affirming the terms of the settlement. The Magistrate should record a statement on oath of the parties affirming the terms of the settlement.
  • In addition to that, the Magistrate, in the event of default or non-compliance or breach of the settlement agreement, would pass an order under Section 431 read with Section 421 of the Cr. PC.
  • Additionally, the fine would be recovered in a breach of the undertaking given to the Magistrate/Court or the Court would initiate proceedings under Section 2(b) of the Contempt of Courts Act, 1971 for violation of the court orders.
  • The procedure laid down in Dayawati vs.Yogesh Kumar Gosain has not been followed.
  • The Trial Court did not give any reasons for disallowing the application of revisionist for the recovery of the sum of Rs. 3 lacs which were paid by the revisionist to the respondent. Therefore, it was open to the revisionist to apply before the recovery of the money. The Court ordered the 3 lacs paid by the revisionist to be disposed of.
  • Therefore, the impugned order passed by the learned court for the recovery of the settlement amount of Rs. 34 lacs by the respondent from the revisionist was set aside.


The Magistrate should independently apply his judicial mind to ensure that the settlement agreement is genuine, equitable, lawful, not opposed to public policy, voluntary and does not impede the accepting of the terms in the mediation settlement under O-XXIII of the CPC. Thereafter, the court should pass the order.

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