Hyfric Shoes Exports (P) Ltd. and another vs M.M.T.C. Ltd.

Heard Mr.T.Sudanthiram, learned counsel appearing for the revision petitioners and Mr.Santhanaraman, learned counsel appearing for the

respondent. The petitioners are the accused in Calender Case No.4601 of 1994 on the file of VII Metropolitan Magistrate, Chennai, and the

respondent is the complainant therein. The case was taken on file on a complaint u/s 138 of the Negotiable Instruments Act. There are two

cheques, one dated 6-8-1994 and the other dated 20.8. 1994 for a sum of Rs.6,00,000 and Rs.6,82,000 respectively, admittedly given by the

accused in favour of the, complainant. Those two cheques are marked as Exs.P-1 and P-2. On presentation, those cheques were dishonoured.

Followed by the statutory notice and giving the accused the time prescribed by the Act to meet the demand and on his failure to make the

payment, the complaint had come to be lodged.

On the side of prosecution, two witnesses were examined as P.Ws.1 and 2. The second accused examined himself as DW-1 and marked

Exs.D-1 and D-2 on his side. Even in his evidence, the accused had not denied their liability in respect of the offence for which the complaint came

to be filed. DW.1 also appears to have admitted the issuance of the cheque and the dishonour of the same. The prosecution had also established

all the ingredients of Section 138 of the Negotiable Instruments Act. Therefore, holding the accused guilty for the offence referred to above earlier,

the learned trial Judge sentenced the accused to undergo rigorous imprisonment for six months and also to pay a fine of Rs.12,85,000 carrying a

default sentence. From the fine amount so imposed, a sum of Rs.12,82,000 was directed to be paid as compensation to the complainant u/s 357

of the Code of Criminal Procedure. The appeal filed by the accused was also dismissed. It is the correctness of the orders referred to above, that

is being challenged in this revision.

Mr.T.Sudanthiram, learned counsel appearing for the revision petitioner, fairly stated that on the facts noticed by the learned trial Magistrate, it

cannot be contended that the accused is not guilty of the offence for which he was tried and convicted and therefore, he is not advancing any

contention on merits. Despite that submission, I went through the records and I find from the materials placed before the learned trial Magistrate,

an offence falling u/s 138 of the Negotiable Instruments Act stands fully established and there cannot be two opinions about the same. Therefore

the conviction of guilt rendered by the trial Magistrate and affirmed by the appellate Judge cannot be assailed at all either on facts or by law.

Accordingly the finding of guilt rendered by the learned trial Magistrate and affirmed by the learned appellate Judge is confirmed by this Court as

well.

However a substantial question of law is argued by the learned counsel for the revision petitioners and that is the competency of the trial

Magistrate to impose a fine in excess of Rs.5,000 and the compensation directed to be paid by him from that fine amount. This question namely the

competancy of Magistrate to impose a fine amount in excess of Rs.5,000 is no longer res Integra and it has been decided by the highest Court of

this land in the judgment reported in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, that he cannot. The Hon''ble Judges, in that

judgment, categorically laid down that a Magistrate, trying an offence falling u/s 138 of the Negotiable Instruments Act has no power to impose a

fine in excess of Rs.5,000. That judgment clearly governs the issue in this case and therefore there is a clear illegality on the part of the learned trial

Magistrate in imposing a fine of Rs.12,85,000 which is far in excess of the permissible upper limit of Rs.5,000. Under these circumstances, I have

no difficulty at all in setting aside the Order of the learned trial Court; confirmed by the appellate Court as indicated earlier and challenged before

this Court so for as it relates to the imposition of fine amount alone is concerned.

However it is contended by Mr.M.Santhanaraman, learned counsel for the respondent that since the Magistrate had directed payment of a sum

of Rs.12,82,000 as compensation to the complainant from and out of the fine amount of Rs.12,85,000, it cannot be said that the Magistrate had

committed any illegality at all as pointed out by the learned counsel for the revision petitioner. Though this argument appears to be attractive on the

face of it, yet by a deeper reading of Section 357 of the Code of Criminal Procedure, it can be seen that this argument cannot the sustained. In my

opinion, Section 357 of the Code of Criminal Procedure contemplates two different situations at the end of trial and depending upon the situation,

the Court can pass appropriate orders for compensation. The first situation is governed by Section 356(1) of the Code of Criminal Procedure and

the second situation is governed by Section 357(3) of the Code of Criminal Procedure. u/s 357(4) of the Code even when the trial Court fails to

exercise the power as provided u/s 357(1) of the Code or u/s 357(3) of the Code, yet the said power can be exercised by the appellate Court or

by the High Court or by the Court of Sessions while exercising the power of revision. Therefore there cannot be any difficulty at all in this Court

also exercising such a power. But however as stated earlier the powers of the Court are limited. Under the first category when a Court imposes a

sentence of fine or a sentence of which a fine forms part, then the Court is given the power to order compensation. What is covered under''

Section 357(1) is either where the Court imposes a sentence of fine alone, compensation can be awarded or when a Court imposes a sentence, of

which fine forms a part, then also the Court can order compensation. For Section 357(1) of the Code to be attracted the fine to be imposed by the

Court, on the accused being found guilty, should be a fine which it can legally impose. The Apex Court in its judgment referred to supra had

categorically held that the Magistrate has no power to impose fine in excess of Rs.5,000. In the case on hand the learned trial Magistrate had

imposed a fine of Rs.12,85,000. Therefore that order of the learned trial Magistrate, as affirmed by the appellate Court imposing a fine in excess of

Rs.5,000 is definitely illegal. If that is so, the compensation payable u/s 357(1) of the Code contemplates recovery of fine and from which payment

of compensation would follow. To recover a fine, the fine amount should have been imposed lawfully and within the powers of the Court. If the fine

amount had been imposed in excess of the limit of power available to a Magistrate then it cannot be said that the fine amount was lawfully imposed

which can be legally recovered. In this case the learned trial Magistrate had directed payment of compensation of a sum of Rs.12,82,000 from and

out of the fine amount only and therefore it is not possible to sustain the act of the Magistrate in imposing a fine of Rs.12,85,000 and directing

payment of Rs.12,82,000 as compensation out of it to the complainant as such a situation is not covered u/s 357(1) of the Code of Criminal

Procedure. What Section 357(1) of the Code of Criminal Procedure is as follows:

(a) fine which a Magistrate can legally impose;

(b) the said fine to be recovered;

(c) from the fine amount recovered, directions regarding the disbursement as contemplated in that Section can be ordered.

The second situation under which a Court can order compensation is provided u/s 357(3) of the Code of Criminal Procedure. The Section is

very clear in its implication. This section would be attracted only when a Court imposes a sentence of which fine does not form a part. In other

words, only when not fine at all, then the Court can fall back upon Section 357(3) of the Code to order the accused to pay by way of

compensation such amount as may be specified in the order. In the case on hand the Magistrate has not imposed sentence of imprisonment alone.

The sentence includes not only imprisonment but also fine. Therefore Section 357(3) of the Code would have no application at all to the facts of

the case.

The argument advanced by the learned counsel for the respondent that the fine amount can be sustained falling back on Section 357(3) of the

Code is definitely due to misreading of the judgment of the Apex Court referred to earlier K. Bhaskaran Vs. Sankaran Vaidhyan Balan and

Another, . The Apex Court in that judgment had only recognised the power of the Court to award compensation u/s 357(3) of the Code of

Criminal Procedure and did not lay down law as contended by the learned counsel for the respondent.

On the facts of this case I am also also not inclined to remit the case for the Magistrate to exercise his powers u/s 357(1) of the Code of

Criminal Procedure on the facts noticed hereunder:

Towards the debt covered under the two cheques, it is not in dispute that the debtor/accused had given immovable properties as securities to the

complainant. The complainant is a Government of India Undertaking. To recover the debt on the basis of securities so furnished by the accused,

the complainant had already filed a civil suit which is pending. In the civil suit, interim injunction had been granted in favour of the plaintiff and

against the defendant retraining the defendant from alienating the properties furnished as securities. However, the learned counsel for the

respondent would contend that despite the order of injunction, the accused had sold the property which statement is disputed by the teamed

counsel for the revision petitioner. Whatever it is, when an immovable property is given as a security for due return of loan the creditor can trace

the property in the hands of any third party to recover the money due to him, if ultimately the civil Court grants a decree in his favour. Further since

the lower Court had imposed a sentence of imprisonment as well as fine, Section 357(3) of the Code would have no application at all.

Under these circumstances, I am inclined to set aside the judgment of the learned trial Magistrate and as affirmed by the appellate Court and

challenged in this revision so far as the sentence of fine alone is concerned. Accordingly a sentence of fine of Rs.5,000 is alone imposed on the

accused instead of the fine of Rs.12,85,000 as imposed by the learned trial Magistrate in addition to the sentence of imprisonment already

imposed. As far as the sentence of imprisonment is concerned, I find that after the judgment of the trial Court, the accused not being in a position

to pay the fine amount, was not let out. The judgment of the trial Court is dated 29.7.1997. The appellate Court was also not inclined to suspend

the payment of fine amount which resulted in the accused continuing in jail. The accused approached this Court in Crl.O.P.10709 of 1997 and on

merits, a learned Judge of this Court passed Orders on 4.8.1997 suspending the sentence of, payment of fine and only thereafter, the accused had

come out of jail, It therefore means that the accused would have been in jail for sometime from the date of trial Court judgment till the payment of

fine amount was suspended by this Court as stated earlier. The judgment of the appellate Court is dated 4.11.1998 and the sentence of

imprisonment as ordered by the trial Court was suspended by this Court''s Order dated 11.11.1998 in Criminal M.P.No.9343 of 1998. This

means the accused would have been in jail for a further period of 10 days after the appellate Court''s judgment. Taking note of all the facts noticed

in this Order I am inclined to hold that interest of justice would be met, if the sentence of imprisonment imposed on the accused by the trial Court,

as affirmed by the appellate Court, is reduced to period already undergone. With this modification in sentence of imprisonment as well as in

sentence of fine, this Revision Petition is partly allowed. The accused will have 30 days time from today to pay the fine amount of Rs.5,000 as

imposed by this Court from the date of receipt of Steno Copy.