TMI Blog2021 (6) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... complainant is duly compensated and this Court is of the opinion that the proceedings can be closed. The Criminal Revision case stands partly allowed. In lieu of the petitioner/accused paying twice the cheque amount as compensation, the conviction and sentence of imprisonment for one year stands set aside. It is made clear that the petitioner shall not suffer any stigma of disqualification of his service by the payment of compensation. - Crl.R.C.No.161 of 2014 And M.P.No.1 of 2014 - - - Dated:- 31-3-2021 - THE HON'BLE MR. JUSTICE A.D.JAGADISH CHANDIRA For the Petitioner : Mr.A.Thiyagarajan For the Respondent : Mr.D.Shivakumaran ORDER ( The cases have been heard through video conference) For the sake of convenience, the petitioner and the respondent will be referred to as accused and complainant respectively. 2.It is a case of the complainant that the accused had approached her on 15.01.2006 and borrowed a sum of ₹ 2,85,000/- from her as hand loan for emergency purpose and agreed to repay the same with interest at the rate of 18% per annum. In order to discharge his liability, the accused had executed a Promissory Note, but the accused neit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also denied and he has stated that he was not aware as to how the cheque went to the hands of the complainant even after closing the account. On the side of the defence, the accused examined three witnesses viz. DW1 to DW3 and marked Ex.D1 to Ex.D3 to defend his case. 6.After considering the evidence on record and hearing either side, the trial Court, by judgment and order dated 30.06.2010 in S.T.C.No.348 of 2009 had found the accused guilty and convicted him u/s.138 of Negotiable Instruments Act, 1881 and sentenced him to undergo simple imprisonment for a period of one year. Against the said conviction and sentence, the accused had filed an appeal in C.A.No.73 of 2010 and the learned Additional District Judge, Namakkal by judgment and order dated 20.12.2013 finding that the accused is guilty for the offence u/s.138 of N.I. Act, confirmed the conviction and sentence imposed by the trial Court. Aggrieved by the findings of the Courts below, the accused has preferred the present Criminal Revision under Section 397 r/w 401 Cr.P.C. 7.Heard Mr.A.Thiyagarajan, learned counsel appearing for the accused and Mr.D.Shivakumaran, learned counsel appearing for the complainant. 8.Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability. In support of his contention, the learned Counsel for the respondent/complainant would rely on the Judgment of the Hon'ble Apex Court in Rajneesh Aggarwal Vs. Amit J.Bhalla reported in (2001) 1 SCC 631. 10. In reply, the learned Counsel for the petitioner would submit that in lieu of the conviction and sentence of imprisonment for one year, the petitioner has now offered to pay twice the cheque amount as compensation cost. He would further submit that in Rajneesh Aggarwal Vs. Amit J.Bhalla, the Hon'ble Apex Court has held that though the payment of cheque amount will not absolve the liability of criminal offence, it may have some effect in the matter awarding sentence and would pray that the sentence of imprisonment may be set aside and the petitioner may be admonished. 11. Heard the learned Counsels on either side and perused the materials on record. 12. The petitioner/accused and the respondent/complainant are present before the Court. 13. It is the case of the complainant that the petitioner/accused had approached her on 15.01.2006 and borrowed a sum of ₹ 2,85,000/- from her as hand loan for emergency purpose and agreed to repay the same with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows: 138. Dishonour of cheque for insufficiency, etc., of funds in the account.-Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both : Provided that nothing contained in this Section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt as in the case of criminal offences), must then be proved. Section 140 is also important, in that it shall not be a defence in a prosecution for an offence under Section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that Section, thus making it clear that strict liability will attach, mens rea being no ingredient of the offence. Section 141 then makes Directors and other persons statutorily liable, provided the ingredients of the section are met. Interestingly, for the purposes of this Section, explanation (a) defines company as meaning any body corporate and includes a firm or other association of individuals. 42. We have already seen how the language of Sections 96 and 101 would include a Section 138/141 proceeding against a firm so that the moratorium stated therein would apply to such proceedings. If Shri Mehta's arguments were to be accepted, under the same Section, namely, Section 141, two different results would ensue - so far as bodies corporate, which include limited liability partnerships, are concerned, the moratorium provision contained in Section 14 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction,- (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or (b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated. Explanation.-For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account. 44. A cursory reading of Section 142 will again make it clear that the procedure under the CrPC has been departed from. First and foremost, no court is to take cognizance of an offence punishable under Section 138 except on a complaint made in writing by the payee or the holder in due course of the cheque - the victim. Further, the language of Section 142(1) (b) would again show the hybrid nature of these provisions inasmuch as a complaint must be made within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que. (3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque. (4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant. (5) The interim compensation payable under this Section may be recovered as if it were a fine under Section 421 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) The amount of fine imposed under Section 138 or the amount of compensation awarded under Section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this Section. 148. Power of Appellate Court to order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy are contemplated to be passed. But the whole area of proceedings, which reach the High Courts is not exhausted by classifying the proceedings as civil and criminal. There are certain proceedings which may be regarded as neither civil nor criminal. For instance, proceeding for contempt of court, and for exercise of disciplinary jurisdiction against lawyers or other professionals, such as Chartered Accountants may not fall within the classification of proceedings, civil or criminal. But there is no warrant for the view that from the category of civil proceedings, it was intended to exclude proceedings relating to or which seek relief against enforcement of taxation laws of the State. The primary object of a taxation statute is to collect revenue for the governance of the State or for providing specific services and such laws directly affect the civil rights of the tax- payer. If a person is called upon to pay tax which the State is not competent to levy, or which is not imposed in accordance with the law which permits imposition of the tax, or in the levy, assessment and collection of which rights of the tax-payer are infringed in a manner not warranted by the statute, a proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in which the jurisdiction of the High Court to certify a case under Article 133(1) was negatived it appears to have been assumed that the expression other proceeding used in Article 132 of the Constitution is or includes a proceeding of the nature of a revenue proceeding, and therefore the expression civil proceeding in Article 133(1) does not include a revenue proceeding. This assumption for reasons already set out is erroneous. (at page 199) 48. A perusal of this judgment would show that a civil proceeding is not necessarily a proceeding which begins with the filing of a suit and culminates in execution of a decree. It would include a revenue proceeding as well as a writ petition filed under Article 226 of the Constitution, if the reliefs therein are to enforce rights of a civil nature. Interestingly, criminal proceedings are stated to be proceedings in which the larger interest of the State is concerned. Given these tests, it is clear that a Section 138 proceeding can be said to be a civil sheep in a criminal wolf's clothing, as it is the interest of the victim that is sought to be protected, the larger interest of the State being subsumed in the victim alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aily needs as consumers, it is all the more necessary that people's faith in such instruments should be strengthened rather than weakened. Provisions contained in Sections 138 to 142 of the Act are intended to discourage people from not honouring their commitments by way of payment through cheques. It is desirable that the court should lean in favour of an interpretation which serves the object of the statute. The penal provisions contained in Sections 138 to 142 of the Act are intended to ensure that obligations undertaken by issuing cheques as a mode of payment are honoured. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. A cheque is a well-recognized mode of payment and post-dated cheques are often used in various transactions in daily life. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. If stoppage of payment of a post-dated cheque is permitted to take the case out of the purview o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Instruments Act. Setting out the provision, the Court held: 10. At present, we are of course concerned with Section 147 of the Act, which reads as follows: 147. Offences to be compoundable.- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable. At this point, it would be apt to clarify that in view of the non obstante clause, the compounding of offences under the Negotiable Instruments Act, 1881 is controlled by Section 147 and the scheme contemplated by Section 320 of the Code of Criminal Procedure (hereinafter CrPC ) will not be applicable in the strict sense since the latter is meant for the specified offences under the Penal Code, 1860. 11. So far as CrPC is concerned, Section 320 deals with offences which are compoundable, either by the parties without the leave of the court or by the parties but only with the leave of the court. Sub-section (1) of Section 320 enumerates the offences which are compoundable without the leave of the court, while sub-section (2) of the said Section specifies the offences which are compoundable with the leave of the court. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tim of the crime should not absolve the accused from criminal responsibility. However, where the offences are essentially of a private nature and relatively not quite serious, the Code considers it expedient to recognise some of them as compoundable offences and some others as compoundable only with the permission of the court. 17. In a recently published commentary, the following observations have been made with regard to the offence punishable under Section 138 of the Act [cited from : Arun Mohan, Some thoughts towards law reforms on the topic of Section 138, Negotiable Instruments Act-Tackling an avalanche of cases (New Delhi : Universal Law Publishing Co. Pvt. Ltd., 2009) at p. 5]: Unlike that for other forms of crime, the punishment here (insofar as the complainant is concerned) is not a means of seeking retribution, but is more a means to ensure payment of money. The complainant's interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail. The threat of jail is only a mode to ensure recovery. As against the accused who is willing to undergo a jail term, there is little available as remedy for the holder of the cheque. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. And inasmuch as the law permits not merely the person injured by a crime, but also all other members of the community, to prosecute, it is criminal for anyone to make such a composition; even though he suffered no injury and indeed has no concern with the crime. (emphasis in original) 79. Russell on Crime (12th Edn.) also describes: Agreements not to prosecute or to stifle a prosecution for a criminal offence are in certain cases criminal. (Ch. 22 - Compounding Offences, p. 339.) 80. Later on compounding was permitted in certain categories of cases where the rights of the public in general are not affected but in all cases such compounding is permissible with the consent of the injured party. 81. In our country also when the Criminal Procedure Code, 1861 was enacted it was silent about the compounding of offence. Subsequently, when the next Code of 1872 was introduced it mentioned about compounding in Section 188 by providing the mode of compounding. However, it did not contain any provision declaring what offences were compoundable. The decision as to what offences were compoundable was governed by reference to the exception to Section 214 of the Penal Code. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Negotiable Instruments Act, observing that Chapter XVII is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. The Court held: 16. We propose to address an aspect of the cases under Section 138 of the Act, which is not dealt with in Damodar S. Prabhu [(2010) 5 SCC 663 : (2010) 2 SCC (Cri) 1328 : (2010) 2 SCC (Civ) 520]. It is sometimes said that cases arising under Section 138 of the Act are really civil cases masquerading as criminal cases. The avowed object of Chapter XVII of the Act is to encourage the culture of use of cheques and enhance the credibility of the instrument . In effect, its object appears to be both punitive as also compensatory and restitutive, in regard to cheque dishonour cases. Chapter XVII of the Act is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. It provides a single forum and single proceeding, for enforcement of criminal liability (for dishonouring the cheque) and for enforcement of the civil liability (for realisation of the cheque amount) thereby obviating the need for the creditor to move two different fora for relief. This is evident from the following pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary. (emphasis supplied) 56. In Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129, a three-Judge Bench of this Court answered the question as to whether the territorial jurisdiction for filing of cheque dishonour complaints is restricted to the court within whose territorial jurisdiction the offence is committed, which is the location where the cheque is dishonoured, i.e, returned unpaid by the bank on which it is drawn. This judgment has been legislatively overruled by Section 142(2) of the Negotiable Instruments Act set out hereinabove. However, Shri Mehta relied upon paragraphs 15.2 and 17 of the judgment of Vikramjit Sen, J., which states as follows: 15.2 We have undertaken this succinct study mindful of the fact that Parliamentary debates have a limited part to play in interpretation of statutes, the presumption being that legislators have the experience, expertise and language skills to draft laws which unambiguously convey their in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 can be said to have taken place. This case, therefore, has no direct relevance to the point that has been urged before us. 58. In Lafarge Aggregates Concrete India (P) Ltd. v. Sukarsh Azad, (2014) 13 SCC 779, this Court, continuing the trend of the earlier judgments in describing the hybrid nature of these provisions, held: 6. The respondents have agreed to pay the said amount but the appellant has refused to accept the payment and insisted that the appeal against rejection of the recall application should be allowed by this Court. The counsel for the appellant submitted that merely because the accused has offered to make the payment at a later stage, the same cannot compel the complainant appellant to accept it and the complainant appellant would be justified in pursuing the complaint which was lodged under the Negotiable Instruments Act, 1881. In support of his submission, the counsel for the appellant also relied on Rajneesh Aggarwal v. Amit J. Bhalla [(2001) 1 SCC 631 : 2001 SCC (Cri) 229].1 7. However, we do not feel persuaded to accept this submission as the appellant has to apprise himself that the primary object and reason of the Negotiable Instruments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptability of cheques in the settlement of liabilities. The drawer of cheque is made liable to prosecution on dishonour of cheque with safeguards to prevent harassment of honest drawers. The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to amend the Act was brought in, inter alia, to simplify the procedure to deal with such matters. The amendment includes provision for service of summons by speed post/courier, summary trial and making the offence compoundable. 7. This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques were issued merely as a device to defraud the creditors. Dishonour of cheque causes incalculable loss, injury and inconvenience to the payee and credibility of business transactions suffers a setback. [Goaplast (P) Ltd. v. Chico Ursula D'Souza, (2004) 2 SCC 235, p. 248, para 26 : 2004 SCC (Cri) 499] At the same time, it was also noted that nature of offence under Section 138 primarily related to a civil wrong and the 2002 Amendment specifically made it compoundable. [Vinay Devanna Nayak v. Ryot Sewa Sahakari Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court. 18.3 Though compounding requires consent of both parties, even in absence of such consent, the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused. 18.4 Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the court has jurisdiction under Section 357(3) CrPC to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 CrPC. With this approach, prison sentence of more than one year may not be required in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in the dishonoured cheque together with interest and costs, expeditiously and cheaply. We have already seen how it is the victim alone who can file the complaint which ordinarily culminates in the payment of fine as compensation which may extend to twice the amount of the cheque which would include the amount of the cheque and the interest and costs thereupon. Given our analysis of Chapter XVII of the Negotiable Instruments Act together with the amendments made thereto and the case law cited hereinabove, it is clear that a quasi-criminal proceeding that is contained in Chapter XVII of the Negotiable Instruments Act would, given the object and context of Section 14 of the IBC, amount to a proceeding within the meaning of Section 14(1)(a), the moratorium therefore attaching to such proceeding. 14. As stated above, the proceedings under Chapter XVII of the Negotiable Instrument Act are quasi criminal in nature and that the gravamen of the proceedings though makes the act complained of as an offence, the object of the Act is really in order to get back through a summary proceedings, the amount contained in the dishonoured cheque together with interest and cost expeditiousl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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