Recently, the Delhi High Court held that an amount recovered in connected civil proceedings can be adjusted against the compensation imposed in a criminal case under Section 138 of the Negotiable Instruments Act, while hearing an appeal concerning cheque dishonour. In doing so, the Court made a crucial observation that there is no legal bar to applying a reverse analogy under Section 357(5) CrPC, allowing civil recovery to offset criminal compensation.
Brief Facts:
The matter arose from a cheque dishonour dispute in which the appellant had been convicted under Section 138 NI Act. The Trial Court imposed a short sentence along with compensation. Later, the Sessions Court enhanced the imprisonment and the default sentence while affirming the compensation. Parallelly, the complainant had pursued a civil suit based on the same cheque transaction and recovered a portion of the amount through execution proceedings. After undergoing the substantive sentence, the appellant sought adjustment of the sum recovered in civil proceedings against the outstanding criminal compensation.
Contentions:
Counsel for the appellant submitted that the amount recovered by the respondent in the civil execution proceedings pertained to the same cheque and same transaction. Therefore, it ought to be adjusted towards the compensation imposed under the criminal proceedings.
He relied on the decision of the Punjab & Haryana High Court in Vivek Sahni v. Kotak Mahindra Bank, arguing that courts are empowered to permit such adjustments to prevent double recovery. He further contended that upon adjustment, Section 69 IPC would entitle the appellant to immediate release as he had already undergone the proportionate default sentence.
Whereas, the respondent opposed the request, arguing that the appeal itself was delayed by several hundred days and that the conduct of the appellant did not warrant any discretionary relief.
Observations of the Court:
The Court began by examining the statutory foundation for awarding and enforcing compensation. Referring to Section 357(3) CrPC, the Court noted that compensation may be imposed even where no fine is prescribed.
It then explained that enforcement of such compensation is made possible through Section 431 CrPC, which provides that any money payable under the Code is recoverable as a fine. Read with Section 64 IPC, a default sentence may accompany non-payment of compensation. The Court relied on the Supreme Court’s ruling in Vijayan v. Sadanandan K., which held, “The provisions of Sections 357(3) and 431 CrPC, when read with Section 64 IPC, empower the Court… to also include a default sentence in case of non-payment.”
The Bench further referred to the Punjab & Haryana High Court’s judgment in Vivek Sahni, which clarified that where the cheque amount and the civil recovery relate to the same transaction, courts may order adjustment.
Importantly, the Court held that since Section 357(5) CrPC requires adjustment of criminal compensation in subsequent civil proceedings, the reverse analogy also stands justified, “There is no bar in applying the reverse analogy and adjusting any amount earlier received in a civil suit pertaining to the same matter in subsequent criminal proceedings.” Accordingly, the recovered amount of ₹33,10,000 was ordered to be adjusted against the compensation of ₹1.5 crore.
The Court also applied Section 69 IPC, which mandates proportional reduction of the default sentence when partial payment of fine or compensation is made. In this case, the proportionate reduction exceeded the remaining default sentence.
The decision of the Court:
Taking note that the appellant had fully undergone the substantive sentence and, after applying the statutory adjustment and proportional deduction, had also completed the reduced default sentence, the Court directed that he be released forthwith, if not required in any other matter. The application was allowed, and the appeal was disposed of accordingly.
Case Title: Mohd Umar vs. State of Nct of Delhi & Anr
Case No.: Crl.A. 90/2025
Coram: Justice Manoj Kumar Ohri
Advocate for Petitioner: Adv. Alok Tripathi, Amitosh Chaturvedi, Saurabh Mishra
Advocate for Respondent: Adv. Hitesh Vali (APP for State), Jitendra Bakshi
Read Judgment @Latestlaws.com
Picture Source :
