TMI Blog2012 (6) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... ss there are special circumstances, in all cases of conviction, uniformly exercise the power to levy fine upto twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Nature of proceedings under NI Act - Proceedings under section 138 of the Act cannot be treated as civil suits for recovery of the cheque amount with interest. Uniformity and consistency in decisions - If some courts grant compensation and if some other courts do not grant compensation, the inconsistency, though perfectly acceptable in the eye of law, will give rise to certain amount of uncertainty in the minds of litigants about the functioning of courts. Citizens will not be able to arrange or regulate their affairs in a proper manner as they will not know whether they should simultaneously file a civil suit or not. The problem is aggravated having regard to the fact that in spite of section 143(3) of the Act requiring the complaints in regard to cheque dishonour cases under section 138 of the Act to be concluded within six months from the date of the filing of the complain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the High Court. The High Court allowed the appeal in part. It held that the service of notice was duly proved. As a consequence it restored the conviction entered by the learned Magistrate in reversal of the judgment of the first appellate court. However the High Court held that it could only restore the fine of Rs. 2000/- imposed by the Magistrate with the default sentence but not the direction for payment of compensation under section 357(3) of the Code, as it could not co-exist with the imposition of fine. Therefore, the direction for payment of compensation was not restored. The said judgment is challenged in this appeal by special leave. 4. The appellant contends that sections 29 and 357 of the Code and section 138 of the Act should be read harmoniously and complementary to each other; and if so done, compensation could be awarded in cases under section 138 of the Act to meet the loss sustained by the dishonour and that if compensation could not be awarded for any reason, fine could be levied upto twice the cheque amount; and therefore the High Court ought to have restored the direction for payment of Rs. 20,000/- to the appellant either by way of compensation un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of award of compensation would arise where the court imposes a sentence of which fine does not form a part." This Court also held that section 357(3) will not apply where a sentence of fine has been imposed. 8. In Sivasuriyan v. Thangavelu [2004] 13 SCC 795, this Court held : "In view of the submissions made, the only question that arises for consideration is whether the court can direct payment of compensation in exercise of power under sub-section (3) of Section 357 in a case where fine already forms a part of the sentence. Apart from sub-section (3) of Section 357 there is no other provision under the Code whereunder the court can exercise such power:" After extracting section 357(3) of the Code, the Court proceeded to hold thus: "On a plain reading of the aforesaid provision, it is crystal clear that the power can be exercised only when the court imposes sentence by which fine does not form a part. In the case in hand, a court having sentenced to imprisonment, as also fine, the power under sub-section (3) of Section 357 could not have been exercised. In that view of the matter, the impugned direction of the High Court directing payment of compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a court of a Magistrate of First Class to pass a sentence of imprisonment for a term not exceeding three years or fine not exceeding Rs. 5,000/- or of both. (Note : By Act No. 25 of 2005, sub-section (2) of Section 29 was amended with effect from 23.6.2006 and the maximum fine that could be levied by the Magistrate of First Class, was increased to Rs. 10,000/-). At the relevant point of time, the maximum fine that the First Class Magistrate could impose was Rs. 5,000/-. Therefore, it is also not possible to increase the fine to Rs. 22,000/- so that Rs. 20,000/- could be awarded as compensation, from the amount recovered as fine. 11. The first respondent was a widow and police woman. On the facts and circumstances the learned Magistrate thought fit to impose only a fine and not imprisonment. When the conviction was set aside, the appellant filed a revision, challenging the non-grant of compensation of Rs. 20,000/-. He did not however challenge the non-imposition of sentence of imprisonment. The High Court was, therefore, justified in holding that once the sentence consists of only fine, the power under Section 357(3) could not be invoked for directing payment of compensation. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , addressed the question of reluctance of offenders to compound the cases at earlier stages of the case prosecution leading to a huge pendency of cheque dishonour cases, and issued the following guidelines proposing levy of 'a graded scale of fine' to encourage compounding at earlier stages of the case : "( a ) That directions can be given that the Writ of Summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused. ( b ) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the Court deems fit. ( c ) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to levy fine exceeding Rs. 5,000/- (Section 143) notwithstanding the ceiling to the fine, as Rs. 5,000/- imposed by section 29(2) of the Code; ( iii ) The provision relating to mode of service of summons (section 144) as contrasted from the mode prescribed for criminal cases in section 62 of the Code; ( iv ) The provision for taking evidence of the complainant by affidavit (section 145) which is more prevalent in civil proceedings, as contrasted from the procedure for recording evidence in the Code; ( v ) The provision making all offences punishable under section 138 of the Act compoundable. 15. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation under section 357(1)(b) of the Code. Though a complaint under section 138 of the Act is in regard to criminal liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount, (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged under section 138 of the Act, a civil suit is seldom filed to recover the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount but interest thereon at a reasonable rate. Uniformity and consistency in deciding similar cases by different courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of courts of justice. 17. We are conscious of the fact that proceedings under section 138 of the Act cannot be treated as civil suits for recovery of the cheque amount with interest. We are also conscious of the fact that compensation awarded under section 357(1)(b) is not intended to be an elaborate exercise taking note of interest etc. Our observations are necessitated due to the need to have uniformity and consistency in decision making. In same type of cheque dishonour cases, after convicting the accused, if some courts grant compensation and if some other courts do not grant compensation, the inconsistency, though perfectly acceptable in the eye of law, will give rise to certain amount of uncertainty in the minds of litigants about the functioning of courts. Citizens will not be able to arrange or regulate their affairs in a proper manner as they will not know whether they should simultaneously file a civil suit or not. The problem is aggravated having regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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