2019 (8) TMI 373 - HC - Indian Laws

Dishonor of cheque - cheques returned uncashed - insufficiency of funds - offence punishable under Section 138 of the N.I. Act - HELD THAT - This Court finds that respondents No. 1 and 2 in spite of the orders of the learned trial Court, Appellate Court as well as by this Court and also by the Hon ble Supreme Court, have not paid the cheques amount and flouted the order by putting the technical procedure hurdles and not obeying the order. This conduct shows that the respondents issued the cheques merely as device to fraud the complainant and this dishonored of the cheques caused incredible loss, injuries and inconvenience to the complainant and also reflected the credibility of the business transaction. This Court is of the view that the learned trial Court without assigning any reason reduced the sentence of imprisonment into the lowest one till rising of the Court, which does not seem to be warranted in this situation - the reduction of sentence without assigning any reason is not sustainable and deserved to be reconsidered. This Court is not found fit to reconsider the sentence at this stage, therefore, this case should be remitted back to the Appellate Court for reconsidering the sentence. Conviction under Section 138 of the N.I. Act is hereby affirmed and the order of sentence passed by the Appellate Court is hereby set aside - Learned Appellate Court is directed to restore the appeal to its original number and by assigning the cogent reasons reconsidered the appeal on the point of sentence - revision partly allowed.

Summary

Issues Involved:
1. Modification of interest rate from 9% per annum to 16% per annum for calculating the interest on the cheque amount.
2. Reduction of the period of imprisonment by the Appellate Court.

Issue-wise Detailed Analysis:

1. Modification of Interest Rate:
The applicant firm sought to modify the interest rate on the compensation from 9% per annum to 16% per annum. The trial court had calculated the compensation at a rate of 9% per annum. The applicant argued for an enhancement to 16% per annum. However, the court rejected this argument, stating, "at the time of transaction, the Bank interest on the commercial transaction was not @ 16% per annum." Thus, the court found no "illegality, perversity or incorrectness in the order of the trial Court while calculating the compensation imposed rate of interest @ 9% per annum." Consequently, the request to enhance the rate of interest was not accepted.

2. Reduction of Period of Imprisonment:
The Appellate Court had modified the original sentence of 1-year rigorous imprisonment (R.I.) to imprisonment till the rising of the court and imposed an additional fine of ?40,000. The applicant contested this reduction, arguing that the Appellate Court "has not considered the point how he is modifying and reducing the imprisonment of respondent and imposed fine of ?40,000/-." The court referred to the Supreme Court's judgment in M/s Meters and Instruments Private Limited and another V. Kanchan Mehta, which emphasized the punitive and compensatory nature of Section 138 of the N.I. Act. The court noted that the respondents had not complied with multiple court orders, reflecting a "conduct that shows the respondents issued the cheques merely as a device to fraud the complainant."

The court found that the Appellate Court "without assigning any reason reduced the sentence of imprisonment into the lowest one till rising of the Court, which does not seem to be warranted in this situation." It was noted that if a fine is imposed, compensation can be awarded out of the fine under Section 357(1)(b) of the Cr.P.C., and if not, compensation can be awarded under Section 357(3) of the Cr.P.C. The court concluded that the Appellate Court "has not modified the sentence as per law," and thus, the reduction of the sentence was "not sustainable and deserved to be reconsidered."

Conclusion:
The court affirmed the conviction under Section 138 of the N.I. Act but set aside the sentence order passed by the Appellate Court. The case was remitted back to the Appellate Court for reconsideration of the sentence, directing the Appellate Court to "restore Criminal Appeal No.2700046/2016 to its original number and by assigning the cogent reasons reconsidered the appeal on the point of sentence." The dismissal of Appeal No.2700073/2016 required no interference. The parties were directed to appear before the Appellate Court on 16.09.2019. All interlocutory applications, if pending, were dismissed.