Madhya Pradesh High Court
Sitaram vs Kanhaiyalal on 19 April, 2022
Author: Deepak Kumar Agarwal
1
Criminal Revision No.741/2010
THE HIGH COURT OF MADHYA PRADESH
BENCH AT GWALIOR
(SINGLE BENCH)
(Hon'ble Shri Justice Deepak Kumar Agarwal)
Criminal Revision No.741/2010
Sitaram
Vs.
Kanhaiyalal
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Shri Siddharth Sharma, learned counsel for the petitioner.
Shri A.V.Bhardwaj, learned counsel for the respondent.
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ORDER
(19.04.2022)
Petitioner has filed this criminal revision being aggrieved by
the judgment passed by the Appellate Court in Criminal Appeal
No.78/2008 on 26.8.2010 by which the Appellate Court has modified
the judgment passed by the learned JMFC, Sironj, in Criminal Case
No.580/2006 on 10.3.2008 and converted the fine into compensation
under Section 357(3) of Cr.P.C.
2. Brief facts of the case necessary for disposal of this revision
are that respondent Kanhaiyalal and petitioner Seetaram are relatives.
Respondent performs the work of goldsmith. Petitioner contacted
him to purchase gold ornaments and assured that he will pay the
price of aforesaid ornaments in three months. Relying upon his
Criminal Revision No.741/2010
assurance, respondent gave him gold ornaments. The petitioner gave
him cheque No.1111024 dated 6.7.2005 of Rs.2,87,500/- and cheque
No.1111025 dated 21.7.2005 of Rs.2,87,500 of State Bank of India,
Branch Sironj. The respondent presented the said cheque on
10.8.2005 in State Bank of India, Branch Sironj. The bank informed
that as said account has been closed, it could not be encashed.
Thereafter respondent gave registered notice on 27.8.2005 and
demanded money within fifteen days. The petitioner on 31.8.2005
denied to take the said notice. The respondent then also sent under
postal certificate on the permanent address of the petitioner.
Thereafter, respondent filed a complaint under Section 138 of the
Negotiable Instruments Act against the petitioner.
3. After service, petitioner appeared before the learned
Magistrate and trial conducted. After completion of trial, the
petitioner was convicted under Section 138 of the Negotiable
Instruments Act and directed to pay a fine of Rs.6,00,000/-, out of
which, Rs.5,90,000/- was directed to be paid to the respondent as
compensation. Against this, petitioner filed an appeal before the
Court of learned Additional Sessions Judge, Sironj. Learned
Additional Sessions Judge vide judgment dated 26.8.2010 found that
trial of the case was conducted like summons trial and due to Section
29 of Cr.P.C. Judicial Magistrate First Class cannot impose fine of
Criminal Revision No.741/2010
more than 10,000/- and converted the fine of Rs.6,00,000/- into
compensation under Section 357(3). Aggrieved by the aforesaid
judgment, petitioner filed this revision.
4. Heard learned counsel for the parties and perused the record.
5. In Negotiable Instruments Act, 1881, there is no separate
provision for compensation and for compensation in criminal cases
provisions of Section 357 of Cr.P.C. will be attracted. Section 357 of
Cr.P.C. reads as under :-
"357. Order to pay compensation.
(1)When a Court imposes a sentence of fine or a
sentence (including a sentence of death) of which fine
forms a part, the Court may, when passing judgment,
order the whole or any part of the fine recovered to be
applied-
(a) in defraying the expenses properly incurred in the
prosecution;
(b) in the payment to any person of compensation for any
loss or injury caused by the offence, when compensation
is, in the opinion of the Court, recoverable by such
person in a Civil Court;
(c)when any person is convicted of any offence for
having caused the death of another person or of having
abetted the commission of such an offence, in paying
compensation to the persons who are, under the Fatal
Accidents Act, 1855 (13 of 1855), entitled to recover
damages from the person sentenced for the loss resulting
to them from such death;
(d) when any person is convicted of any offence which
includes theft, criminal misappropriation, criminal
breach of trust, or cheating, or of having dishonestly
received or retained, or of having voluntarily assisted in
disposing of, stolen property knowing or having reason
to believe the same to be stolen, in compensating any
bona fide purchaser of such property for the loss of the
same if such property is restored to the possession of the
Criminal Revision No.741/2010
person entitled thereto.
(2) If the fine is imposed in a case which is subject to
appeal, no such payment shall be made before the period
allowed for presenting the appeal has elapsed, or, if an
appeal be presented, before the decision of the appeal.
(3)When a Court imposes a sentence, of which fine does
not form a part, the Court may, when passing judgment
order the accused person to pay, by way of
compensation, such amount as may be specified in the
order to the person who has suffered any loss or injury
by reason of the act for which the accused person has
been so sentenced.
(4)An order under this section may also be made by an
Appellate Court or by the High Court or Court of Session
when exercising its powers of revision.
(5)At the time of awarding compensation in any
subsequent civil suit relating to the same matter, the
Court shall take into account any sum paid or recovered
as compensation under this section."
The trial Court vide judgment dated 10.3.2008 on conviction has not
sentenced the petitioner. The trial Court has only imposed fine of
Rs.6,00,000/-. Hence, provisions of Section 357(1)(b) will be
attracted.
6. As far as conversion of that fine into compensation under
Section 357(3) of Cr.P.C. is concerned, it is illegal because provision
of Section 357(3) of Cr.P.C. will come into force only when Court
imposes a sentence of which fine does not form a part, but learned
Magistrate has not convicted the petitioner for any sentence.
7. In Negotiable Instruments Act, as per provision of Section 138,
a Magistrate can punish the accused with imprisonment for a term
Criminal Revision No.741/2010
which may extend to two years or with fine which may extend to
twice the amount of the cheque or with both. It is true that as per
provisions of Section 29 of Cr.P.C. Judicial Magistrate First Class
cannot impose fine of more than Rs.10,000/-, but in this context
amendment of Section 143 dated 6.2.2003 is pertinent by which a
provision has been made that in case of any conviction in a
summary trial, 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. In this regard, judgment
pronounced by Hon'ble Supreme Court in the case of R.Vijayan vs.
Baby and another, (2012) 1 SCC 260 is helpful. Relevant portion of
the aforesaid judgment is reproduced hereinbelow:-
"13......In view of conferment of such special power and
jurisdiction upon the First Class Magistrate, the ceiling as
to the amount of fine stipulated in section 29(2) of the
Code is removed. Consequently, in regard to any
prosecution for offences punishable under section 138 of
the Act, a First Class Magistrate may impose a fine
exceeding Rs.5000/-, the ceiling being twice the amount
of the cheque."
8. It is true that in Section 143(1) of the Negotiable Instruments
Act another proviso has been added that if summary trial is not
possible, accused will be tried by way of summons trial and
Magistrate will rehear the case in the manner provided by said Code.
But in aforesaid provision, there is no bar that if trial is conducted in
Criminal Revision No.741/2010
summons manner, Magistrate cannot impose the fine twice the
cheque amount. In this regard, the order of Chhattisgarh High Court
in Atharva Agro Chemical Pvt. Ltd. vs. Gopal Chand Barik &
Anr. decided on 4.2.2021 in Criminal Misc. Petition No.357/2013 is
relevant, whereby Chhattisgarh High Court relying on the judgment
of the Apex Court in the case of R.Vijayan (supra) has held as
under :-
"17. In the matter of R. Vijayan v. Baby and another,
(2012)1 SCC 260 their Lordships of the Supreme Court culled
out the following principle contained in the provisions of
Chapter-XVII of the Act, which states as under:-
"(i) The provision for levy of fine which is linked to the
cheque amount and may extent to twice the amount of the
cheque (Section 138) thereby rendering Section 357(3)
virtually infructuous insofar as cheque dishonour cases are
concerned."
Their Lordships in the later part of judgment while
considering the intention of legislature for enacting Section
138 of the NI Act, have 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
Criminal Revision No.741/2010
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.
18. 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
Criminal Revision No.741/2010
19. We are conscious of the fact that proceedings under
Section 138 of the Act cannot be treated as civil suits for
recovery of the cheque amount with interest. We are also
conscious of the fact that compensation awarded under
Section 357(1)(b) is not intended to be an elaborate
exercise taking note of interest, etc. Our observations are
necessitated due to the need to have uniformity and
consistency in decision making. In same type of cheque
dishonour cases, after convicting the accused, if some
courts grant compensation and if some other courts do not
grant compensation, the inconsistency, though perfectly
acceptable in the eye of the law, will give rise to certain
amount of uncertainty in the minds of litigants about the
functioning of courts. Citizens will not be able to arrange
or regulate their affairs in a proper manner as they will not
know whether they should simultaneously file a civil suit
or not. The problem is aggravated having regard to the fact
that in spite of Section 143(3) of the Act requiring the
complaints in regard to cheque dishonour cases under
Section 138 of the Act to be concluded within six months
from the date of the filing of the complaint, such cases
seldom reach finality before three or four years let alone
six months. These cases give rise to complications where
civil suits have not been filed within three years on
account of the pendency of the criminal cases. While it is
not the duty of criminal courts to ensure that successful
complainants get the cheque amount also, it is their duty to
have uniformity and consistency with other courts dealing
with similar cases."
18. In the matter of Bir Singh v. Mukesh Kumar, (2019) 4
SCC 197, the Supreme Court following the principle of law
laid down in R. Vijayan (supra), held that Section 138 of the
NI Act is both punitive as well as compensatory and
restitutive, and also provides for enforcement of civil liability
for realisation of cheque amount. It was held as under: -
"25. In R. Vijayan v. Baby, (2012) 1 SCC 260 this Court
observed that the object of Chapter XVII of the Negotiable
Instruments Act is both punitive as also compensatory and
restitutive. It provides a single forum and single
proceeding for enforcement of criminal liability by reason
of dishonour of cheque and for enforcement of the civil
liability for realisation of the cheque amount, thereby
obviating the need for the creditor to move two different
Criminal Revision No.741/2010
fora for relief. This Court expressed its anguish that some
Magistrates went by the traditional view, that the criminal
proceedings were for imposing punishment and did not
exercise discretion to direct payment of compensation,
causing considerable difficulty to the complainant, as
invariably the limitation for filing civil cases would expire
by the time the criminal case was decided."
Thereafter, while granting appeal and confirming conviction
of the respondent therein, their Lordships of the Supreme
Court sentenced him only to fine, which was enhanced to ₹ 16
lakhs and further directed the same to be paid as
compensation to the complainant. It was held as under: -
"40. The appeals are allowed. The judgment and order of
the High Court is set aside. The conviction of the
respondent under Section 138 of the Negotiable
Instruments Act is confirmed. However, the respondent-
accused is sentenced only to fine, which is enhanced to Rs
16 lakhs and shall be paid as compensation to the
appellant complainant. The fine shall be deposited in the
trial court within eight weeks from the date, failing which
the sentence of imprisonment of one year as imposed by
the trial court shall revive. There shall be no order as to
costs."
19. Thus, 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."
9. In view of the aforesaid discussion and law laid down by the
Hon'ble Supreme Court, it is clear that in cases under Section 138 of
the Negotiable Instruments Act, compensation can be granted only
under Section 357 (1)(b) of Cr.P.C. and not under Section 357(3) of
Criminal Revision No.741/2010
Cr.P.C.
10. In view of the aforesaid and amendment in Section 143 of the
Negotiable Instruments Act, conversion of fine into compensation
under Section 357(3) of Cr.P.C. is illegal and beyond jurisdiction.
Accordingly, the judgment of appellate Court dated 26.8.2010 is set
aside and judgment of trial Court dated 10.3.2008 is restored.
With the aforesaid, revision stands disposed of.
(Deepak Kumar Agarwal)
Judge
ms/-
MADHU
SOODAN
PRASAD
2022.04.20
10:05:47 +05'00'
