TMI Blog2021 (11) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... . Before we proceed, it would be appropriate to set out the provisions of Section 357 as well. The law with regard to grant of compensation under Section 357 (3) of Cr.P.C in the cases arising under Section 138 of N.I. Act is now well settled. As observed above, the object of Section 138 of N.I. Act is not only punitive, but is compensatory as well. As the supreme Court says, the compensatory aspect must receive priority over the punitive aspect of Section 138 of N. I. Act - it cannot be contended that while imposing sentence under Section 138 of N.I.Act, the Court should exercise its discretion in imposing fine by having regard to Section 357 (3) of Cr.P.C. Rather, the Criminal Court should bear in mind the laudable object of engrafting Chapter XVII containing Section 138 to 142 of NI Act and give priority to the compensatory aspect of remedy. In the instant case, the trial Court has miserably failed to take all these aspects into consideration and has awarded ₹ 2.00 lac, to be paid as compensation to the complainant, when admittedly the cheque amount was to the tune of ₹ 10.00 lacs. The petitioner, who was complainant before the trial Court, has been deprived of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner by way of compensation. 3 In response to the notice issued, the respondent has entered appearance through Mr. Syed Ansar Advocate, but has chosen not to appear when the case was taken up for consideration. The respondent, however, is not aggrieved of the impugned order and has not assailed the same by filing any appeal. 4 Having heard learned counsel for the petitioner and perused the record, the only question that begs determination in this case is what should be the approach of the trial Court while awarding punishment to an accused convicted for commission of offence under Section 138 of N.I. Act; whether the trial Court should, with or without the punishment of imprisonment, impose fine which is sufficient enough to meet the liability of the accused towards the complainant as represented by the bounced cheque ?. 5 With a view to appreciate the issue raised by learned counsel for the petitioner, it is necessary to first set out Section 138 of N.I. Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, has done away with this discretion, it is not open to the court to impose only a part of the sentence prescribed by the legislature, for that would amount re-writing the provisions of the statute. 8 In Section 138 of N.I. Act, the word or has been employed which would mean discretion has been conferred in the matter of sentencing the person convicted for offence under Section 138 of N.I. Act. However, while exercising this discretion, the trial Court must be alive to the object of the enactment i.e., N.I. Act, particularly the object of engrafting Section 138 in the said Act. The prime object of enacting Chapter XVII, which was inserted in the N.I. Act by Act 66 of 1988 w.e.f 01.04.1989, is to control and discourage the menace of cheque bouncing in the course of commercial transactions and to encourage the culture of use of cheques and enhancing the credibility of the instrument. This was very aptly noticed by the Hon ble Supreme Court in the case of Damoder S. Prabhu vs Sayed Babalal H. (2010) 5 SCC 663. Paragraphs (3) and (4) of the judgment are noteworthy in this regard and are, thus, reproduced hereunder: 3. However, there are some larger issues which can be appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of offence of dishonor of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. For ready reference, the observations of the Hon ble Supreme Court in paragraphs (17) and (18) are reproduced: 17. In a recently published commentary, the following observations have been made with regard to the offence punishable under Section 138 of the Act. Unlike that for other forms of crime, the punishment here (in so far 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. If we were to examine the number of complaints filed which were `compromised' or `settled' before the final judgment on one side and the cases which proceeded to judgment and conviction on the other, we will find that the bulk was settled and only a miniscule number continued. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, the Court may, when passing judgment, order the whole or any part of the fine recovered to be applied:- (a) in defraying the expenses properly incurred in the prosecution; (b) in the payment to any person of compensation for any loss or injury caused by the offence, when compensation is, in the opinion of the Court, recoverable by such person in a Civil Court; (c) when any person is convicted of any offence for having caused the death of another person or of having abetted the commission of such an offence, in paying compensation to the persons who are, under the Fatal Accidents Act, 1855 (13 of 1855), entitled to recover damages from the person sentenced for the loss resulting to them from such death; (d) when any person is convicted of any offence which includes theft, criminal misappropriation, criminal breach of trust, or cheating, or of having dishonestly received or retained, or of having voluntarily assisted in disposing of, stolen property knowing or having reason to believe the same to be stolen, in compensating any bona fide purchaser of such property f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht heartedly. The very object of enactment of provisions like Section 138 of the Act would stand defeated if the sentence is of the nature passed by the trial Magistrate. It is a different matter if the accused paid the amount at least during the pendency of the case . (underlining mine ) 14 In a later case of R. Vijayan vs Baby Anr, (2012) 1 SCC 260, their Lordships of Hon ble Supreme Court culled out the following principle from the provisions of Chapter XVII of N.I. Act which states as under: The provision for levy of fine which is linked to the cheque amount and may extend to twice the amount of the cheque (section 138) thereby rendering section 357(3) virtually infructuous in so far as cheque dishonour cases are concerned . The Hon ble Supreme Court in the later part of the said judgment while alluding to the intention of the Legislature for enacting Section 138 held thus: 17. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic, which would mean not only the payment of the cheque amount 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 . 19. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The amount of cheque and the date from which the amount under the cheque has become payable along with payment of reasonable interest may serve as good guide in this regard. To be consistent and uniform, it is always advisable to impose a fine equivalent to the amount of cheque plus at least 6% interest per annum from the date of cheque till the date of judgment of conviction. However, before inflicting such fine, the trial Magistrate must eschew the amount of interim compensation, if any, paid under Section 143A of N.I. Act or such other sum which the accused might have paid during the trial or otherwise towards discharge of liability. It may or may not accompany the sentence of simple imprisonment. It is purely in the discretion of the trial Magistrate but having regarding to the object of legislation, it shall be appropriate if the sentence of imprisonment imposed is kept at the minimum unless, of course, the conduct of accused demands otherwise. 21 In the instant case, the trial Court has miserably failed to take all these aspects into consideration and has awarded ₹ 2.00 lac, to be paid as compensation to the complainant, when admittedly the cheque amount was to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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