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Supreme Court: Complaint cannot be Proceeded once entered into Settlement Agreement

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Supreme Court - law insider

Alka Verma-

Published On: October 09, 2021 at 12:51 IST

Supreme Court of India observed that a complaint under Section 138 of Negotiable Instruments Act cannot be proceeded once entered into Compromise Agreement.

Supreme Court, in its observations stated that once an Accused and a Complainant entered into a settlement agreement, the Complaint of that matter can’t be proceeded.

A Bench comprising Justices DY Chandrachud, Vikram Nath and BV Nagarathna also observed that disobeying the terms and conditions of the compromise agreement or dishonouring of cheques issued following it, then would give rise to a fresh cause of action.

The Court also added that such actions will then attract the liability under Section 138 of the Negotiable Instruments Act, 1881 and then to all other remedies under Civil Law and Criminal Law.

The Apex Court made these observations while it was hearing an issue that is the complaint is allowed to purse parallel prosecutions arising from a single transaction under Section 138 of the NI Act.

The Court, in its response observed that the firstly the first complaint must be quashed, and then the parties should move ahead with the compromise deed and remedies available for it under the law.

“A complainant cannot pursue two parallel prosecutions for the same underlying transaction. Once a settlement agreement has been entered into by the parties, the proceedings in the original complaint cannot be sustained and a fresh cause of action accrues to the complainant under the terms of the settlement deed,” stated the Bench.

In this case, the complainant and the accused entered into a compromise agreement, when their case filed under Section 138 of NI Act was pending.

The Cheques issued during the compromise deed were dishonored, and second complaint was filed following this under Section 138 of the NI Act.

When a Petition filed by the accused, the High Court in its Decision quashed the second complaint and hence the issue was raised before the Apex Court.

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