Court says complainant cannot disown counsel’s statement that full and final payment was received; writ petition dismissed in limine.
The Delhi High Court has dismissed a writ petition filed by Equitas Small Finance Bank Ltd. seeking to set aside a Lok Adalat award that had disposed of a cheque dishonour complaint as compounded under the Negotiable Instruments Act, 1881.
Justice Saurabh Banerjee held that the petitioner could not be allowed to resile from the clear and repeated statements made by its own counsel before the trial court and the National Lok Adalat, where it was recorded that the matter had been settled and the entire payment towards the cheque amount had been received. The Court said such an attempt, made after a long delay, was legally unsustainable and would undermine the sanctity of the advocate-client relationship as well as the finality of judicial and Lok Adalat proceedings.
The case arose out of a loan transaction in which the respondents had availed a loan of Rs. 14,50,000 from the bank and had issued a cheque towards repayment. After the cheque was dishonoured with the remark “Refer to Drawer,” the bank filed a complaint under Sections 138 and 142 of the Negotiable Instruments Act. During the pendency of the complaint, the bank’s counsel informed the trial court on 8 August 2024 that the matter had been settled and that full and final payment had been received. The matter was then referred to the National Lok Adalat.
On 14 September 2024, the same position was reiterated before the Lok Adalat, which thereafter disposed of the complaint as compounded under Section 147 of the NI Act and acquitted the accused. Nearly a year later, the bank sought revival of the complaint, claiming that its earlier counsel had acted under confusion and without authority, and that no settlement amount had actually been received.
The High Court rejected this argument. It noted that the statement had been made not once but twice, before two different forums, by the petitioner’s own nominated counsel holding a valid vakalatnama. The Court also observed that the petitioner had waited for about 13 months before raising the objection and had not taken any action against the counsel allegedly responsible for the mistake. This silence, the Court said, raised serious doubt about the petitioner’s version.
Justice Banerjee further held that allowing a litigant to disown orders passed on the basis of counsel’s submissions after substantial delay would create chaos in the justice system. The Court emphasized that a party cannot be permitted to have a “second bite at the cherry” by later alleging lack of instructions, authority, or ratification.
Finding no merit in the petition, the High Court dismissed it in limine and refused to restore the complaint case.
Bottom Line :
Negotiable Instruments Act - Lok Adalat award disposing complaint as compounded on statement of complainant's counsel that full and final payment had been received - Complainant cannot, after long delay, resile from counsel's statements on plea of lack of instructions, authority or ratification - Such plea undermines sanctity of advocate-client relationship and finality of judicial and Lok Adalat proceedings.
Statutory provision(s): Article 226 of the Constitution of India, Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, Sections 138, 142 and 147 of the Negotiable Instruments Act, 1881
Equitas Small Finance Bank Ltd. v. Nirmala Bai Shanthilal, (Delhi) : Law Finder Doc id # 2984994
