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2019 (7) TMI 1561 - HC - Indian LawsDishonor of cheque - adjustment of the amount already recovered under the SARFAESI Act towards directions of the appellate court to deposit certain percentage of the compensation or fine under Section 148 of the NI Act - non-deposit of the amount as directed under Section 148 of the Negotiable Instrument Act, 1881 - cancellation of bail. Adjustment of amount - HELD THAT - Section 143A of the NI Act enables the trial courts to award interim compensation in the cases arising out of dishonor of the cheques. It is provided that 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 - Another relevant provision is in sub-section (5) of Section 357 of the Code of Criminal Procedure providing that while awarding compensation in any subsequent civil suit relating to the same matter, the Court shall take into account any sum paid or recovered as compensation under this section - Section 421Cr.P.C. deals with the procedure for execution of the fine. It provides that the Court can adopt any of the procedure prescribed in Section 421(1) Cr.P.C.. First option with the court is to issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender. Second option is to issue a warrant to the Collector of the district, authorising him to realise the amount as arrears of land revenue from the movable or immovable property, or both, of the defaulter. Thus, the interim compensation or compensation ordered by the Court while dealing with criminal case is liable to be accounted for in any subsequent civil suit or proceedings. Even otherwise, this court did not find that there is any prohibition or impediment in ordering adjustment. The intention of the legislature is to introduce provision for speedy recovery of some part of the amount representing the cheque amount as an interim measure. It is not the intention of the legislature that if some part of the cheque amount has already been recovered in a separate proceedings, may be civil proceedings, the amount ordered to be deposited as interim compensation or fine shall still liable to be deposited in the appeal or the trial Court. This Court is of the view that the facts of each case particularly when the amount under cheque and recovery proceedings under any other provision is same and interconnected, the Courts are well within their power to order adjustment. Whether on non-deposit of the amount as directed under Section 148 of the Negotiable Instrument Act, 1881, bail granted to the appellant is liable to be automatically/consequently liable to be cancelled? - HELD THAT - Sections 143A and Section 148 of the NI Act, it is nowhere, specifically provided that if the payment as ordered has not been deposited, the bail granted shall be liable to be consequently cancelled. Section 143 do provide that recovery can be made of such defaulted amount as if it is a fine under Section 421 Cr.P.C., therefore, obviously during the trial of the case, the Court should not cancel the bail already granted on this ground alone. The offence under Section 138 of the NI Act is bailable - Default in payment of certain percentage of compensation or fine, would not ipso facto result in cancellation of the bail. There are long series of judgments passed by the Hon'ble Supreme Court that normally conditions for grant of bail cannot be made onerous for the accused. Once the legislature or framers of the NI Act have not made any specific provision for automatic cancellation of the bail granted by the trial court or the appellate court on account of default of payment of interim compensation or certain percentage of compensation or fine, it would not be appropriate to hold it otherwise - answered in favour of the petitioners. The amount recovered under the SARFAESI Act shall be deemed to have been adjusted towards 20% of the compensation as ordered by the Court - Appeal allowed.
Issues Involved:
1. Adjustment of amount recovered under SARFAESI Act towards compensation or fine under Section 148 of the NI Act. 2. Automatic cancellation of bail on non-deposit of the amount directed under Section 148 of the NI Act. Detailed Analysis: Issue 1: Adjustment of Amount Recovered under SARFAESI Act The primary question is whether a convict under Section 138 of the NI Act, while appealing the conviction, can request the adjustment of the amount already recovered under the SARFAESI Act towards the deposit of compensation or fine as directed by the appellate court under Section 148 of the NI Act, especially when the amounts involved in both proceedings arise from the same transaction. The court noted that the petitioners had taken credit facilities and issued cheques that were dishonored, leading to proceedings under both the NI Act and the SARFAESI Act. The Judicial Magistrate convicted the petitioners under Section 138 of the NI Act and sentenced them to imprisonment and compensation. Meanwhile, under the SARFAESI Act, two mortgaged properties were sold, and the respondent bank recovered ?1.73 crores. The appellate court directed the petitioners to deposit 20% of the compensation amount under Section 148(2) of the NI Act. The petitioners sought adjustment of this amount against the amount recovered under the SARFAESI Act, which was dismissed by the court on the grounds of no legal provision permitting such adjustment. The High Court, however, found that the appellate court erred in its approach. It emphasized that if multiple proceedings are pending for the recovery of the same or connected amount, the court should adjust the amount paid/recovered in one proceeding against another. It cited examples from maintenance proceedings under different statutes and noted that no one should be required to pay more than what is due, even under different proceedings. The court referred to Sections 143A and 148 of the NI Act, which provide for interim compensation and deposit of a minimum percentage of the fine or compensation awarded by the trial court. It also examined Sections 357 and 421 of the Code of Criminal Procedure, which deal with compensation and the recovery of fines. The court concluded that there is no prohibition against ordering such an adjustment and that the legislative intent is to ensure speedy recovery without creating an undue burden on the appellant. The court cited the Supreme Court's judgment in D. Purshotama Reddy and another vs. K. Sateesh, which held that compensation recovered under the NI Act should be adjusted in civil proceedings for the same amount. Thus, the court held that the facts of each case should allow for such adjustments, answering the first question in favor of the petitioners. Issue 2: Automatic Cancellation of Bail on Non-Deposit of Amount The second question addressed whether bail granted to an appellant should be automatically canceled if the amount directed under Section 148 of the NI Act is not deposited. Upon examining Sections 143A and 148 of the NI Act, the court found no specific provision stating that non-deposit of the ordered amount would result in automatic cancellation of bail. Section 143A allows for recovery as if it were a fine under Section 421 of the Cr.P.C., but does not mandate bail cancellation for non-payment. The court noted that the offense under Section 138 of the NI Act is bailable and that conditions for granting bail should not be onerous. The court emphasized that the legislature did not include a provision for automatic bail cancellation in Section 148 of the NI Act. It referred to a series of judgments by the Supreme Court, which held that bail conditions should not be unduly burdensome. Therefore, the court concluded that non-payment of interim compensation or a certain percentage of compensation or fine should not automatically result in bail cancellation. Conclusion: The court set aside the challenged order and deemed the amount recovered under the SARFAESI Act as adjusted towards the 20% compensation ordered by the court. The appellate court was directed to proceed with the appeal in accordance with the law. Both questions were answered in favor of the petitioners.
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