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2021 (7) TMI 736 - HC - Indian LawsDishonor of Cheque - insufficiency of funds - interpretation of statute - Section 138 of the NI Act - imposition of punishment of imprisonment, which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both - whether the learned appellate Court has rightly interfered with the sentence and sentenced to fine only which the accused had already deposited? - HELD THAT - Here in the instant case, in Section 138 of the NI Act the word or has been employed and discretion has been conferred to the Criminal Court sentencing the convicted person for offence under Section 138 of the NI Act. Thus, there is a discretion left with the Criminal Court dealing with complaint under Section 138 of the NI Act either to sentence the accused with imprisonment or to punish the accused with the sentence of fine upon considering the facts and circumstances of the case. From the provisions contained in Section 138 of the NI Act and following the principles of law laid down by their Lordships of the Supreme Court in the case of Somnath Sarkar v. Utpal Basu Mallick and another 2013 (10) TMI 949 - SUPREME COURT , it is quite vivid that Criminal Court sentencing the accused for commission of offence under Section 138 of the NI Act is competent to impose sentence of fine only as imposition of jail sentence is not mandatory as it is the discretion vested with the Criminal Court dealing with complaint under Section 138 of the NI Act either to impose jail sentence or sentence of fine only depending on the facts and circumstances of particular case. Whether the trial Court as well as the Court of Session is justified in not imposing compensation upon the accused/respondent No. 1 under Section 357(1)(b) of the CrPC? - HELD THAT - The law with regard to grant of compensation under Section 357(3) of the CrPC in cases arising from Section 138 of the NI Act is well settled. The object of Section 138 of the NI Act appears to be punitive as well as compensatory in nature as it provides a single forum and single proceeding for enforcement in criminal liability (for dishonouring the cheque) and for enforcement of civil liability (for realization of cheque amount). It is quite vivid that under Section 138 of the NI Act, Criminal Court is competent to levy fine up to twice the cheque amount and direct payment of such amount as compensation by way of restitution in regard to the loss on account of dishonour of cheque under Section 357(1)(b) of the CrPC and as such, the power under Section 357(3) of the CrPC cannot be exercised by Criminal Court in the cheque dishonour cases. It is quite vivid that the trial Magistrate has convicted the accused/respondent No. 1 under Section 138 of the NI Act and sentenced him to undergo RI for three months, but no fine was imposed, however, in appeal filed by the accused, the appellate Court maintained conviction, but reduced sentence to fine sentence only. Taking into consideration, the provisions contained in Section 138 of the NI Act in which punishment imposable is two years imprisonment or with fine which can be twice the amount of cheque - ends of justice would be served if fine awarded ₹ 5,000/- is enhanced to ₹ 2,67,011/- and an additional amount of ₹ 25,000/- towards interest on the said amount is imposed. Accordingly, the accused/respondent No. 1 is sentenced to pay fine of ₹ 2,67,011/- and ₹ 25,000/- which shall be paid as compensation to the complainant/petitioner under Section 357(1)(b) of the CrPC. It is stated at the Bar that respondent No. 1 has deposited fine of ₹ 5,000/- in compliance of the order passed by the appellate Court. The criminal revision is allowed in part.
Issues Involved:
1. Conviction and sentencing under Section 138 of the Negotiable Instruments Act (NI Act). 2. Appropriateness of the sentence imposed by the appellate Court. 3. Competence of the complainant's revision against the non-awarding of compensation. 4. Application of Section 357 of the Criminal Procedure Code (CrPC) regarding compensation. Issue-Wise Detailed Analysis: 1. Conviction and Sentencing under Section 138 of the NI Act: The respondent issued a cheque for ?2,67,011/- which was dishonored due to insufficient funds. The complainant served a legal notice and subsequently filed a criminal complaint under Section 138 of the NI Act. The trial Magistrate convicted the accused and sentenced him to three months of rigorous imprisonment. The appellate Court upheld the conviction but modified the sentence to a fine of ?5,000/- with a default imprisonment of one month. 2. Appropriateness of the Sentence Imposed by the Appellate Court: The complainant argued that the appellate Court's decision to impose only a fine of ?5,000/- was unjustified and legally flawed. The complainant contended that the sentence should either restore the trial Court’s imprisonment or impose a fine equivalent to the cheque amount or double it. The appellate Court's discretion to interfere with the sentence was challenged, citing that the sentence should reflect the cheque amount or its double, as per Section 138 of the NI Act. 3. Competence of the Complainant's Revision Against the Non-Awarding of Compensation: The revisional Court dismissed the complainant's revision, suggesting that the complainant should have pursued an appeal under Section 372 of the CrPC. The complainant filed the current criminal revision (Cr.M.P. No. 357/2013) against this decision. 4. Application of Section 357 of the CrPC Regarding Compensation: The Court examined whether the trial and appellate Courts were justified in not imposing compensation under Section 357(1)(b) of the CrPC. The law mandates that compensation should be considered, especially in cases under Section 138 of the NI Act, which are both punitive and compensatory. The Supreme Court has emphasized the need for compensation to ensure the complainant recovers the cheque amount. Judgment Summary: The Court highlighted that under Section 138 of the NI Act, the Criminal Court has the discretion to impose either imprisonment or a fine, or both. However, the primary objective is to ensure the payment of the cheque amount, making imprisonment a secondary measure to enforce recovery. The Court cited multiple precedents, including the Supreme Court's rulings, which support the imposition of fines and compensation over imprisonment to achieve the Act's compensatory purpose. The Court concluded that the trial Magistrate's failure to impose a fine and the appellate Court's imposition of a mere ?5,000/- fine were inadequate. The Court enhanced the fine to ?2,67,011/- (the cheque amount) and an additional ?25,000/- towards interest, payable as compensation to the complainant under Section 357(1)(b) of the CrPC. The respondent was given 45 days to deposit the remaining amount, failing which he would undergo one month of simple imprisonment. Conclusion: The criminal revision was allowed in part, modifying the sentence to a fine of ?2,67,011/- plus ?25,000/- as compensation. The related petition (Cr.M.P. No. 357/2013) was dismissed as infructuous following the revision's outcome.
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