Parameswaran vs State Of Kerala

C. S. Dias, J

The revision petition is filed challenging the inadequacy of sentence imposed by the Court of the Additional Sessions Judge-I, Mavelikara (Appellate Court), in Crl.A. No.459/2009 while convicting and sentencing the second respondent for the offence under Section 138 of the Negotiable Instruments Act, 1881 (for brevity, ‘N.I. Act’). The revision petitioner was the complainant and the second respondent was the accused in C.C.No.366/2007 of the Court of the Judicial First Class Magistrate, Kayamkulam (Trial Court), out of which the Crl. Appeal arose. For the sake of convenience, the parties are referred to as per the status before the Trial Court.

The complainant had filed the complaint against the accused alleging that Ext P1 cheque issued by the accused, in discharge of a legally enforceable debt, got dishonoured on presentation to the bank for collection due to ‘insufficient funds’ in the accused’s bank account. Even though the complainant had issued Ext P4 statutory lawyer notice, the accused refused to pay the demanded amount. Hence, he committed the above offence.

The learned Magistrate, after analysing the materials placed on record, found the accused guilty of the offences under Section 138 of the N.I. Act and convicted and sentenced him to undergo simple imprisonment for a period of three months and to pay a compensation of Rs.52,500/- to the complainant under Section 357(3) of the Code of Criminal Procedure, 1973(in short,‘Code’), and in default to undergo simple imprisonment for a further period of one month.

Aggrieved by the said judgment, the accused preferred Crl.A.No.459/2009 before the Appellate Court.

The Appellate Court, after re-appreciating the materials placed on record, by the impugned judgment, partly allowed the appeal by upholding the conviction; but modified the sentence by reducing the substantive sentence to one day(till the rising of the Court) and directing the accused to pay the compensation amount as fixed by the Trial Court to the complainant under Section 357(3) of the Code. However, the Appellate Court omitted to order the default sentence.

It is assailing the inadequacy of sentence, the present revision petition is filed.

Heard; Sri. M.V. Thamban, the learned counsel appearing for the revision petitioner; Smt. Seetha. S, the learned Senior Public Prosecutor appearing for the respondent – State and Sri. Vincent Joseph, the learned counsel appearing for the second respondent.

Is the sentence imposed by the Appellate Court inadequate?

Sentencing is a matter of discretion and is an arduous challenge for a judge. The discretion of sentencing needs to be exercised judiciously, especially when it is not guided by any statute. Sentencing is that stage of the criminal delivery system where the judge decides the punishment of the convict. It is said that justice knows no friends and has no foes, but the law is to be administered with a hard hand, and justice cannot be diluted for sympathy.

Chapter XVII was inserted in the Negotiable Instruments Act 1881 by the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1998) w.e.f. 01.04.1989. Subsequently, by Amending Act 55 of 2002, Section 138 was further amended and now reads as under:

“138.Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, 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:

Provided that nothing contained in this section shall apply unless—

(a)the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b)the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque,[within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c)the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.”

Thus, a person convicted for the offence under Section 138 of the Act is liable to be sentenced with imprisonment for a term which may be extended up to two years or with a fine which may extend to twice the amount of the cheque, or with both.

After the 2002 amendment to the Act, the Honourable Supreme Court in Damodar S. Prabhu v. Sayed Babalal H [(2010) 5 SCC 663] observed in the following lines:

“17. In a recently published commentary, the following observations have been made with regard to the offence punishable under Section 138 of the Act [cited from: Arun Mohan, Some thoughts towards law reforms on the topic of Section 138, Negotiable Instruments Act—Tackling an avalanche of cases (New Delhi: Universal Law Publishing Co. Pvt. Ltd., 2009) at p. 5]:

“… Unlike that for other forms of crime, the punishment here (insofar as the complainant is concerned) is not a means of seeking retribution, but is more a means to ensure payment of money. The complainant's interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail. The threat of jail is only a mode to ensure recovery. As against the accused who is willing to undergo a jail term, there is little available as remedy for the holder of the cheque.

If we were to examine the number of complaints filed which were ‘compromised’ or ‘settled’ before the final judgment on one side and the cases which proceeded to judgment and conviction on the other, we will find that the bulk was settled and only a miniscule number continued.”

It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect.

xxx xxx”

(emphasised)

Again in R. Vijayan v. Baby [(2012) 1 SCC 260], the Honourable Supreme Court held as under:

“17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation under Section 357(1) (b) of the Code. Though a complaint under Section 138 of the Act is in regard to criminal liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged under Section 138 of the Act, a civil suit is seldom filed to recover the amount of the cheque. This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque, under Section 357(1)(b) of the Code and the provision for compounding the offences under Section 138 of the Act. Most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary.

Having reached that stage, if some Magistrates go by the traditional view that the criminal proceedings are for imposing punishment on the accused, either imprisonment or fine or both, and there is no need to compensate the complainant, particularly if the complainant is not a “victim” in the real sense, but is a well-to-do financier or financing institution, difficulties and complications arise. In those cases where the discretion to direct payment of compensation is not exercised, it causes considerable difficulty to the complainant, as invariably, by the time the criminal case is decided, the limitation for filing civil cases would have expired. As the provisions of Chapter XVII of the Act strongly lean towards grant of reimbursement of the loss by way of compensation, the courts should, unless there are special circumstances, in all cases of conviction, uniformly exercise the power to levy fine up to twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation. Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic, which would mean not only the payment of the cheque amount but interest thereon at a reasonable rate. Uniformity and consistency in deciding similar cases by different courts, not only increase the credibility of cheque as a negotiable instrument, but also the credibility of courts of justice”.

A reading of Chapter XVII of the Act, the laudable object sought to be achieved by the legislation and its interpretation on the point of sentencing, leaves no room for any doubt that the criminal court while sentencing an accused for the offence under Section 138 of the Act has to keep the compensatory part in mind, which has to be commensurate to the cheque amount and not to exceed twice the amount, so that it can be appropriated towards the compensation payable to the complainant under Section 357 of the Code.

In the case at hand, although the learned Magistrate convicted and sentenced the accused to undergo simple imprisonment for a period of three months for committing the offence under Section 138 of the N.I. Act and directing the accused to pay a compensation of Rs.52,500/- to the complainant under Section 357(3) of the Code, and in default to undergo simple imprisonment for a further period of one month, the Appellate Court, by the impugned judgment, modified the substantive sentence to imprisonment for a day and confirmed the order of compensation passed by the learned Magistrate; but, omitted to pass a default sentence, in case of failure of the accused to pay the compensation.

In the light of the law laid down in the afore-cited decisions, it is neigh well-settled that the sentence under Section 138 of the N.I. Act is not a means of seeking retribution, but is more of a means to ensure payment of the money.

A reading of the judgment of the Appellate Court shows that the Appellate Court has not kept the compensatory part in mind by failing to impose a default sentence. Therefore, I am of the view that sentence of the Appellate Court is flee-bite, and a default sentence is to be ordered, which would meet the ends of justice.

When the revision petition came up for consideration on 12.10.2023, this Court had called for a report from the learned Magistrate to ascertain as to whether the second respondent/accused has remitted the compensation amount.

The learned Magistrate, by communication dated 13.10.2023, has informed this Court that the accused has not deposited the compensation amount till date.

On a conspectus of the facts and the law, this Court holds that the compensation ordered by the Appellate Court is inadequate. Therefore, I allow the revision petition.

In the result,

(i) The revision petition is allowed;

(ii) The compensation imposed by the Appellate Court is modified as follows;

(a)The second respondent is sentenced to undergo simple imprisonment for one day (till the rising of the Court) and deposit Rs.60,000/-(Rupees sixty thousand only) as compensation under Section 357(3) of the Code;

(b)If the second respondent has already deposited any amount, pursuant to the orders of the courts below, only the balance amount need be deposited;

(c)The second respondent is permitted to deposit the compensation amount within a period of two months from today;

(d)If the second respondent fails to deposit the compensation, he is sentenced to undergo simple imprisonment for a further period of three months;

(e)The second respondent is directed to appear before the Trial Court on 17.12.2023, to undergo the sentence for a day and to pay the compensation amount;

(f) If the second respondent fails to appear before the Trial Court, the learned Magistrate shall execute the sentence and recover the compensation amount from the second respondent, in accordance with law;

(g)If the compensation amount is recovered, the same shall be paid to the revision petitioner/complainant, in accordance with law.

(iii) The Registry is directed to forward a copy of the order to the Trial Court for compliance.