2016 (12) TMI 1093 - HC - Indian Laws

Offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - Dishonour of cheques (PDC) - default sentence in case of non-payment of the compensation - High Seas Sale Agreements - loss of government dues / input duty (tax) liability - Held that - The issuance of legal notices by the respondent/Govt. company to the revisionists are not disputed between the parties. It is also not in dispute that the payment so demanded was made by the revisionists within the stipulated period or subsequent period till date which attracts conviction under Section 138 read with Section 141of the Negotiable Instruments, Act, 1881. However, all the aforesaid cheques issued by the revisionist to the respondent company were to meet their liability amounting to ₹ 9,94,98,634 which forms part of one single transaction giving rise to one cause of action and the same could not be said to be distinct offences committed in each of the complaint cases to attract the provisions of Section 138 read with Section 141 of the Negotiable Instruments, Act having different cause of action. Therefore, the substantive sentence awarded to the revisionists could have been one year concurrently rather than independent/consecutive sentence in each complaint cases The conviction of the revisionists in the eighteen complaint case under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 is affirmed. The Court below went wrong while awarding substantive sentence to run consecutively rather than to award the sentence concurrently.

Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act.
2. Substantive sentence and default sentence.
3. Concurrent vs. consecutive sentences.
4. Compensation and default sentence legality.
5. Section 219 of the Criminal Procedure Code (Cr.P.C.).

Detailed Analysis:

1. Conviction under Section 138 of the Negotiable Instruments Act:
The respondent company filed 18 complaint cases under Section 138 read with 141 of the Negotiable Instruments Act, 1881, against the revisionists and two other directors of M/s Shree Sainath Wires Pvt. Ltd. The revisionists were convicted and sentenced to one year of simple imprisonment and a fine of ?51 lakhs as compensation for each complaint case. The cheques issued by the revisionists to meet their liability of ?9,94,98,634 were dishonored, leading to the complaints.

2. Substantive Sentence and Default Sentence:
The Metropolitan Magistrate sentenced the revisionists to one year of simple imprisonment and a fine of ?51 lakhs as compensation. In default of payment, the revisionist Mr. Satpal Jain was to undergo further simple imprisonment for six months in each complaint case. The Additional Sessions Judge upheld this judgment.

3. Concurrent vs. Consecutive Sentences:
The revisionists argued that the sentences should run concurrently since the cheques were issued on the same date and for the same transaction. The court noted that under Section 219 of Cr.P.C., three offences of the same kind within a year may be charged together. The court concluded that the substantive sentence should be concurrent, not consecutive, as the offences arose from a single transaction.

4. Compensation and Default Sentence Legality:
The court examined the legality of awarding a default sentence for non-payment of compensation. It was noted that the default sentence should not exceed one-fourth of the substantive sentence, which in this case would be three months per complaint. The court upheld the compensation amount of ?51 lakhs per complaint but modified the default sentence to three months in each case.

5. Section 219 of the Criminal Procedure Code (Cr.P.C.):
The court emphasized that Section 219 of Cr.P.C. allows for the trial of up to three offences of the same kind within a year together. The court found that the offences in question formed part of a single transaction, thus warranting concurrent substantive sentences.

Judgment Summary:
The court affirmed the conviction of the revisionists under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. The substantive sentence was modified to run concurrently, resulting in one year of simple imprisonment for the revisionists. The compensation amount of ?51 lakhs per complaint was upheld, but the default sentence was modified to three months of simple imprisonment per complaint in case of non-payment. The court directed the respondent to take civil action to recover the government money involved and to ensure compliance with statutory limitations. The revision petitions were disposed of accordingly, and copies of the judgment were to be placed on the files of the remaining 17 revision petitions.

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