2017 (7) TMI 179 - HC - Indian Laws

Cheques on presentation got dishonoured with remarks insufficient funds - complaints filed under Section 138 of the Negotiable Instruments Act - Held that - Mere availing of the OCC/OD limit of ₹ 50,00,000/- does not ipso facto suggest that the offence committed is one. Whereas, the cheques issued on the different dates constitute different cause of action under Negotiable Instruments Act. The trial Court correctly awarded substantive sentence to run consecutively rather than to award the sentence concurrently although the cheques issued by the petitioner were to meet their outstanding liability for the OCC/OD limit availed by him qua against the respondent/complainant-Bank but it does not form one single transaction rather constitute separate cause of action. It is an admitted fact emerging on the record that the petitioner was directed to pay a fine of ₹ 1,00,000/- in each complaint cases as compensation to the respondent/complainant-Bank and in default of payment the petitioner shall further undergo a simple imprisonment of one month for each complaint cases which does not exceeds one fourth of the term of imprisonment that the learned Metropolitan Magistrate could have awarded. The trial Court while awarding the sentence and fine as compensation under Section 357(3) of the Cr.P.C. could have increased the fine amount twice the cheque amount under Section 138 of the N.I. Act, whereas the learned Metropolitan Magistrate has awarded the compensation of only ₹ 1 lakhs in each complaint cases which shows nothing biased/adverse qua against the petitioner exist in the factual parametric of the present revision petitions. As discussed above, this Court is of the view that the conviction judgment passed by the learned Metropolitan Magistrate-03, NI Act, Tis Hazari Courts, Delhi and order on sentence passed by the learned Metropolitan Magistrate-03, NI Act, Tis Hazari Courts, Delhi does not require any interference by this Court.

Issues Involved:
1. Validity of the conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Whether the appellate court erred in modifying the sentence without addressing the merits of the conviction.
3. Whether the sentences should run concurrently or consecutively.
4. Whether the cheques were issued as part of a settlement proposal and not for the discharge of debt.

Detailed Analysis:

1. Validity of the Conviction under Section 138 of the Negotiable Instruments Act, 1881:

The petitioner had availed an OCC/OD limit of ?50,00,000 from the respondent bank since 2005. The petitioner issued six cheques to the respondent bank which were dishonoured due to "insufficient funds." The respondent bank issued legal notices demanding payment, but the petitioner failed to comply. Consequently, the bank filed complaints under Section 138 of the NI Act.

The trial court convicted the petitioner and sentenced him to six months of simple imprisonment in each case and ordered compensation of ?1,00,000 to the bank. The appellate court reduced the imprisonment to three months but upheld the conviction.

The court reiterated the ingredients for taking cognizance under Section 138 NI Act as laid down by the Supreme Court in Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. and Others, (2000) 2 SCC 745. The court found that the petitioner had issued the cheques, the cheques were presented within the validity period, they were dishonoured due to insufficient funds, legal notices were issued, and the petitioner failed to make the payment within 15 days of receiving the notices.

The court rejected the petitioner's argument that the cheques were issued under a settlement proposal, citing Sampelly Satyanarayana Rao vs. Indian Renewable Energy Agency Ltd., MANU/SC/1021/2016, which clarified that if on the date of the cheque, liability or debt exists, Section 138 is attracted.

2. Whether the Appellate Court Erred in Modifying the Sentence Without Addressing the Merits of the Conviction:

The petitioner argued that the appellate court erred by only modifying the sentence without addressing the merits of the conviction. The court held that the appellate court's decision to modify the sentence was within its discretion and did not require addressing the merits of the conviction, especially since the petitioner had not challenged the conviction itself but only sought leniency in sentencing.

3. Whether the Sentences Should Run Concurrently or Consecutively:

The petitioner contended that the sentences should run concurrently as the cheques were issued as part of a single loan transaction. The court held that the cheques issued on different dates constituted separate causes of action under the NI Act. Therefore, the trial court correctly awarded substantive sentences to run consecutively.

The court referred to Section 427 of the Code of Criminal Procedure, 1973, which allows for consecutive sentences unless the court directs otherwise. The court found no reason to interfere with the trial court's decision to run the sentences consecutively.

4. Whether the Cheques Were Issued as Part of a Settlement Proposal and Not for the Discharge of Debt:

The petitioner argued that the cheques were issued under a settlement proposal and not towards the discharge of debt. The court rejected this argument, stating that the cheques were issued to meet the liability arising from the OCC/OD limit availed by the petitioner. The court cited Sampelly Satyanarayana Rao vs. Indian Renewable Energy Agency Ltd., which distinguished between cheques issued for discharge of debt and those issued as security.

The court concluded that the cheques represented an existing enforceable debt and the petitioner's failure to make the payment within the stipulated period attracted conviction under Section 138 of the NI Act.

Conclusion:

The court dismissed the revision petitions, upholding the conviction and the modified sentence of three months of simple imprisonment in each case, with compensation of ?1,00,000 to the respondent bank. The court found no merit in the petitioner's contentions and ruled that the judgments of the trial court and the appellate court did not require any interference.

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