Ajay Bansal vs Nirmal Jain

Satish Kumar Mittal, J.—The question for consideration in this petition is : Whether the Trial Court, while imposing sentence for the offence u/s 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ''the Act'') should normally take course of Section 357(3) of the Code of Criminal Procedure (hereinafter referred to as ''the Code'') for awarding suitable compensation to the extent of double the amount of the dishonoured cheque, particularly when the amount of dishonoured cheque remains unpaid?

In this case, the respondent had borrowed a sum of Rs. 1.50 lacs from the petitioner in the year 2000. In discharge of that liability, she issued a cheque in favour of the petitioner with the assurance that the same would be encashed as and when presented in the Bank. The petitioner presented the said cheque in the Bank for encashment, which was dishonoured. After issuing a legal notice, when the amount of cheque was not paid, the petitioner filed a criminal complaint u/s 138 of the Act against the respondent. In the complaint, the following prayer was made:

It is, therefore, respectfully prayed that the complaint of the complainant be registered, the accused be summoned, tried and punished with a sentence of one year and fine and compensation of double of amount of the cheque u/s 138 of the Negotiable Instruments Act, 1881 as amended upto date.

Before the Trial Court, the respondent, in her statement u/s 313 of the Code, denied the charges and claimed false implication. It was pleaded by her that the amount was never advanced to her.

The Trial Court, after recording evidence and following due procedure, vide judgment dated 22.10.2003 ordered conviction of the respondent, while holding that the respondent borrowed a sum of Rs. 1.50 lacs from the petitioner and in order to discharge the liability, she issued a cheque, which was dishonoured and in spite of the serving of the legal notice by the petitioner, the respondent did not make the payment. Consequently, vide order dated 22.10.2003, the respondent was sentenced to undergo rigorous imprisonment for a period of six months and to pay a fine of Rs. 5,000/- and in default of payment of fine to further undergo rigorous imprisonment for one month.

The order of conviction and sentence was challenged by the respondent by filing appeal. The petitioner also filed a revision with a prayer to modify the order of sentence and to award compensation to him equivalent to double the amount of cheque. The learned Additional Sessions Judge, Sangrur, dismissed the appeal of the respondent as well as the revision filed by the petitioner vide judgment dated 24.3.2004. Aggrieved against the same, the petitioner has filed the instant petition.

Learned Counsel for the petitioner submits that both the Courts below have erred in law while not granting suitable compensation to the petitioner by invoking the provision of Section 357(3) of the Code, keeping in view the fact that the petitioner has suffered a loss by the criminal act of the respondent, for which she has been sentenced. He further submits that the said provision has been incorporated in the statute, so that the Magistrate in suitable cases can alleviate the grievance of the complaint by making resort to this sub-section, as u/s 29 of the Code, the Judicial Magistrate, 1st Class has the limitation to impose fine upto Rs. 5,000/-. He cannot impose a fine, which may exceed Rs. 5,000/-, but he can impose the compensation u/s 357(3) of the Code where there is no limitation. Learned Counsel submits that u/s 138 of the Act, an accused can be punished with imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of cheque or with both, but as per the limitation contained in Section 29(2) of the Code regarding imposing of the fine, a Magistrate cannot impose fine of more than Rs. 5,000/-. For such a situation, the legislation (legislature?) has made provisions for awarding compensation u/s 357(3) of the Code. That is why, no limit has been provided u/s 357(3). In support of his contention, learned Counsel for the petitioner relied upon the following observations made by the Hon''ble Supreme Court in Hari Kishan Vs. Sukhbir Singh and Others, :

Sub-section (1) of Section 357 provides power to award compensation to victims of the offence out of the sentence of fine imposed on accused. In this case, we are not concerned with Sub-section (1). We are concerned only with Sub-section (3). It is an important provision but Courts have seldom invoked it. Perhaps due to ignorance of the object of it. It empowers the Court to award compensation to victims while passing judgment of conviction. In addition to conviction, the Court may order the accused to pay some amount by way of compensation to victim who has suffered by the action of accused. It may be noted that this power of Courts to award compensation is not ancillary to other sentences but it is in addition thereto. This power was intended to do something to reassure the victim that he or she is not forgotten in the criminal justice system. It is a measure of responding appropriately to crime as well of reconciling the victim with the offender. It is, to some extent, a constructive approach to crimes. It is indeed a step forward in our criminal justice system. We, therefore, recommend to all Courts to exercise this power liberally so as to meet the ends of justice in a better way.

Learned Counsel further relied upon the decisions of the Hon''ble Supreme Court in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, and Suganthi Suresh Kumar Vs. Jagdeeshan, .

In the light of the principle laid down in the aforesaid cases and the newly developed concept of "victimology", learned Counsel for the petitioner submits that in the instant case, taking of the loan by the respondent and issuance of the cheque in question in discharge of the said liability, though denied by her, have been established by the petitioner before the Trial Court. The respondent has been found guilty and convicted. Her conviction has been affirmed in appeal, which has not been challenged further by her. Learned Counsel submits that only flea-bite sentence has been imposed upon the respondent, who has gained illegally and wrongfully by causing wrongful and illegal loss to the petitioner. The respondent has illegally gained unjust enrichment. On the other hand, the petition economically gained nothing from the flea-bite sentence imposed upon the respondent. Therefore, the petitioner should be awarded suitable compensation by invoking the provisions of Section 357(2) of the Code.

On the other hand, learned Counsel for the respondent submits that in this case, the Trial Court has exercised its discretion, while awarding sentence, and the revision petition filed by the petitioner has been dismissed, therefore, at this stage, no interference is required in the order of sentence. He contends that for the dishonouring of the cheque for an amount of Rs. 1.50 lacs, the respondent has already been punished to 6 months rigorous imprisonment and to pay a fine of Rs. 5,000/-. The sentence of imprisonment has already been undergone by the respondent and fine has also been deposited. In these circumstances, this Court should not interfere in this case at this stage. Learned Counsel for the respondent further submits that the matter regarding awarding compensation can only be considered by the Trial Court and in case, this Court finds that the matter requires consideration in this regard, then the matter has to be remitted to the Trial Court for consideration in this regard.

After hearing the arguments of learned Counsel for the parties and taking into consideration the facts and circumstances of the case as well as the law cited before me, I am of the opinion that petition deserves to be allowed.

According to Section 142(c) of the Act, the offence u/s 138 is triable by the Judicial Magistrate, 1st Class. Section 143 of the Act further provides that all the offences under Chapter XVII shall be tried summarily in accordance with the provisions of Sections 262 to 265 of the Code. Provided that in case of any conviction in a summary trial under this section, it shall be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding one year and an amount of fine exceeding five thousand rupees. u/s 138 of the Act, if an accused is convicted, he can be punished "with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both". But the Judicial Magistrate, 1st Class cannot impose fine beyond five thousand rupees, the limitation prescribed in Section 29(2) of the Code which reads thus:

The Court of a Magistrate of the first class may pass a sentence of imprisonment for a term not exceeding three years, or of fine not exceeding five thousand rupees, or of both.

Since the trial in the instant case was held before a Magistrate of the first class, therefore, fine exceeding Rs. 5,000/- besides imprisonment, could not have been imposed upon the accused. Even though Section 138 of the Act provides punishment with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both, the Magistrate in a summary trial cannot impose a sentence beyond one year and a fine beyond Rs. five thousand. Even if a Magistrate orders the payment of fine lo the complainant from out of the fine realized, the complainant will be loser when the cheque amount exceeded the said limit. In such a case, a complainant will get only the maximum amount of Rs. 5,000/-. In such a situation, the Magistrate can alleviate grievance of the complainant by making resort to Section 357(3) of the Code. The Hon''ble Supreme Court in Hari Kishan''s case (supra) has emphasized the need for making liberal use of the said provision. It was observed that Section 357(3) of the Code is an important provision which was enacted with an object to provide compensation to the victims, but the Courts have seldom invoked it, perhaps due to ignorance of its object. Section 357(3) of the Code empowers the Court to award compensation to victims while passing judgment of conviction. In addition to conviction, the Court may order the accused to pay some amount by way of compensation to victim who has suffered by the action of the accused. This power of the Court is not ancillary to other sentences but it is in addition thereto. This power has been given with an object to do something lo re-assure the victim that he or she is not forgotten in the criminal justice system. With the advent of Industrial revolution, a renaissance and French Revolution Criminologist focussed their attention towards the thinking of relationship of victim and criminal. Victimology is basically the study of crime from victim''s point of view. It is a science which makes victim the centre of study and this study examines the ways and means to protect the victim from commission of crime and reparation of damages caused to him by perpetration of crime. It is a modern concept in criminal jurisprudence, but in ancient India, Manu Smriti made provision for payment of compensation to the victim. Even the tribal criminal justice system in India also had the provision for compensation in their uncodified laws. The compensation means something given in recompense i.e. equivalently rendered. The object of compensation is not to give punishment for the wrong inflicted. It is neither a reward, nor a punishment. The sole purpose is to make good the loss sustained by the victim. Section 357(3) of the Code has been enacted with the object to provide suitable compensation to the victim. Under this provision, the criminal Court can pass the sentence and fine and the Court can give any portion of this fine amount to the victim as compensation, but under this section, the Criminal Court can award unlimited amount of compensation to the victim. The Hon''ble Supreme Court in Suganthi Suresh Kumar''s case (supra), while considering the flea-bite sentence awarded u/s 138 of the Act and where the provision of Section 357(3) of the Code for awarding suitable compensation to the complainant was not invoked, has observed that where the amount covered by the cheque remained unpaid, there is no justification for imposing the flea-bite sentence on the accused. The Magistrate should award proper sentence to the accused as to give proper effect to the object of the legislation. No drawer of the cheque can be allowed to take dishonour of the cheque issued by him light-heartedly. The very object of enactment of provisions like Section 138 of the Act would stand defeated if the flea-bile sentence is imposed by the trial Magistrate. In such situation, the Magistrate should invoke Section 357(3) of the Code and can alleviate the grievance of the complainant by awarding suitable compensation.

In the instant case, the petitioner has established before the Trial Court that the respondent had taken a loan of Rs. 1.50 lacs, who in discharge of said liability issued the cheque, which was dishonoured and subsequently, in spite of the notice, the payment was not made. The respondent was found guilty and has been convicted. Undisputedly, the amount of cheque has remained unpaid. A specific prayer was made by the petitioner in the complaint for grant of compensation u/s 357(3) of the Code. In spite of that specific prayer, the Trial Court has sentenced the respondent to undergo rigorous imprisonment for a period of six months and to pay a fine of Rs. 5,000/-, but no compensation has been awarded to the petitioner. Even if the said amount of fine is ordered to be paid to the petitioner as compensation, the loss suffered by him will not be alleviated. In the revision, the Additional Sessions Judge has rejected the prayer of the petitioner on the ground that no such prayer was made by him in the complaint and the said point was not argued before the Judicial Magistrate. In my opinion, there is no justification for not awarding the suitable compensation to the petitioner, particularly when the amount of cheque remained unpaid. I also do not find any force in the contention of learned Counsel for the respondent that in this petition, at this stage, this Court should not modify the sentence by awarding compensation to the petitioner and for that purpose the matter has to be remitted to the Trial Court. The power u/s 357(3) of the Code can certainly be invoked by an Appellate or Revisional Court and a default sentence can be prescribed to enforce compliance with a direction for payment of compensation. Sub-section (4) of Section 357 of the Code provides that an order under this section may also be made by an Appellate Court or by the High Court or the Court of Session when exercising its powers of revision. Depending on the facts and circumstances of the case, the Appellate or Revisional Court will certainly justify in issuing direction u/s 357(3) of the Code and modifying the direction already issued. It is well settled that in summons case, no separate opportunity of hearing is required to be given to the accused on the question of sentence. An accused is expected to adduce all relevant evidence in the course of trial. Thus, a separate opportunity to adduce evidence and a hearing regarding sentence is not necessary. In these circumstances, I do not find any merit in the contention of Counsel for the respondent that the matter regarding awarding of compensation should be remitted to the Trial Court. The fact that such course has been adopted by the Supreme Court in Suganthi Suresh Kumar''s case (supra) is no reason for this Court to remand the matter. The situation in that case was entirely different.

Keeping in view the facts and circumstances of this case and the fact that an amount of Rs. 1.50 lacs covered by the cheque in question still remains unpaid, this petition is allowed. The order of sentence is modified and a compensation to the tune of Rs. 75,000/- is awarded to the petitioner u/s 357(3) of the Code, to be paid by the respondent to the petitioner. In case of default of payment of compensation amount the respondent shall undergo rigorous imprisonment for a period of three months.