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2021 (6) TMI 222 - HC - Indian LawsDishonor of Cheque - payment of compensation or fine - proceedings contained in chapter XVII of the Negotiable Instruments Act - Quasi criminal proceedings or not - HELD THAT - The proceedings under Chapter XVII of the Negotiable Instrument Act are quasi criminal in nature and that the gravamen of the proceedings though makes the act complained of as an offence, the object of the Act is really in order to get back through a summary proceedings, the amount contained in the dishonoured cheque together with interest and cost expeditiously and cheaply. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, the sentence of imprisonment can be modified inlieu of compensation paid which is twice the amount of the cheque. In this case, the petitioner/accused has now come up with a proposal to pay twice the cheque amount ₹ 7,41,000/- as compensation and also ₹ 9,000/- towards cost in lieu of the sentence of imprisonment of one year. This Court is satisfied that the respondent / complainant is duly compensated and this Court is of the opinion that the proceedings can be closed. The Criminal Revision case stands partly allowed. In lieu of the petitioner/accused paying twice the cheque amount as compensation, the conviction and sentence of imprisonment for one year stands set aside. It is made clear that the petitioner shall not suffer any stigma of disqualification of his service by the payment of compensation.
Issues Involved:
1. Whether the accused borrowed money from the complainant and issued a cheque to discharge the liability. 2. Whether the cheque issued by the accused was dishonoured due to the closure of the account. 3. Whether the accused is guilty under Section 138 of the Negotiable Instruments Act, 1881. 4. Whether the accused's offer to pay twice the cheque amount as compensation can be accepted in lieu of imprisonment. 5. Whether the proceedings under Chapter XVII of the Negotiable Instruments Act are quasi-criminal in nature. Issue-wise Analysis: 1. Borrowing of Money and Issuance of Cheque: The complainant alleged that the accused borrowed ?2,85,000/- on 15.01.2006 for emergency purposes and agreed to repay with 18% interest per annum. To discharge this liability, the accused issued a cheque dated 14.09.2007 for ?3,70,500/-. The accused denied borrowing any money, issuing the cheque, and signing the promissory note. 2. Dishonour of Cheque: The cheque issued by the accused was presented for collection on 24.09.2007 but was returned with the endorsement "Account Closed" on 25.09.2007. The complainant issued a statutory demand notice on 05.01.2007, which the accused refused to receive. The trial court found that the accused knowingly issued a cheque from a closed account with the intention to cheat. 3. Guilty under Section 138 of the NI Act: The trial court convicted the accused under Section 138 of the NI Act and sentenced him to one year of simple imprisonment. The appellate court confirmed this conviction and sentence. The accused filed a criminal revision under Section 397 r/w 401 Cr.P.C., arguing that he is ready to compound the offence by paying twice the cheque amount as compensation. 4. Offer to Pay Twice the Cheque Amount: The accused offered to pay ?7,50,000/- in total, with ?7,41,000/- towards twice the cheque amount and ?9,000/- towards costs. The complainant agreed to receive the amount without prejudice to her rights in civil litigation. The court deemed it fit to accept this offer, noting that the object of the NI Act is primarily compensatory. 5. Quasi-Criminal Nature of Proceedings: The court referred to the Supreme Court's judgment in P. Mohanraj and Others Vs. Shah Brothers Ispat Pvt. Ltd., which held that proceedings under Chapter XVII of the NI Act are quasi-criminal. The object is to get back the amount contained in the dishonoured cheque together with interest and costs expeditiously. The court noted that the punitive element is mainly to enforce the compensatory element. Conclusion: The court accepted the accused's offer to pay twice the cheque amount as compensation and set aside the sentence of imprisonment. The accused handed over two demand drafts totaling ?7,50,000/- to the complainant, who acknowledged receipt. The court concluded that the petitioner shall not suffer any stigma of disqualification from his service due to the payment of compensation. The criminal revision case was partly allowed, and the connected miscellaneous petition was closed.
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