Case Note & Summary
The complainants filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that the accused had issued a cheque for Rs. 80,000/- in discharge of a liability, which was dishonoured upon presentation. The trial court convicted the accused and sentenced him to simple imprisonment for three months and a fine of Rs. 2,000/-, with a default sentence of 15 days' simple imprisonment, but did not award any compensation. The complainants, aggrieved by the omission of compensation, preferred a criminal revision before the High Court of Bombay, Nagpur Bench. The sole issue was whether the trial court was required to award compensation under Section 357 of the Code of Criminal Procedure, 1973, and whether the object of the Negotiable Instruments Act demanded that the payee be compensated with the cheque amount. The applicants argued that mere imprisonment does not serve the legislative purpose, and relied on the decision of the High Court in Ramchandra s/o Raju Gaud Vs. Vishal s/o Ambadas Deshmukh. The respondent-accused did not appear. The Court examined Section 138 of the NI Act and Section 357 CrPC, and observed that the statute's primary aim is to ensure that the person entitled to the money receives it promptly. The trial court and the first appellate court had failed to consider the provisions of Section 357 CrPC. The High Court held that discretion under Section 357 must be exercised judiciously to award compensation in cheque dishonour cases. Consequently, the revision was partly allowed; the conviction was maintained, but the operative part of the order was modified. The accused was directed to pay Rs. 80,000/- as compensation to the complainants within 15 days, failing which he would undergo imprisonment for one month. The High Court thus reinforced that the object of the NI Act is better achieved by compensating the complainant rather than merely sending the accused to jail.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Compensation and Sentence Modification - Sections 138, 357 Code of Criminal Procedure, 1973 and Section 138 Negotiable Instruments Act, 1881 - Trial court convicted accused under Section 138 NI Act but imposed only imprisonment and fine without compensation. On revision, High Court held that the object of the Act is to ensure the payee recovers the cheque amount and mere incarceration does not serve that purpose. Relying on Ramchandra s/o Raju Gaud Vs. Vishal s/o Ambadas Deshmukh, the Court directed the accused to pay Rs. 80,000/- as compensation under Section 357 CrPC within 15 days, else undergo one month's imprisonment. Held that courts must exercise discretion to award compensation suitably under Section 357 CrPC to achieve the statute's intent (Paras 5-6).
Issue of Consideration
Whether the trial court, while convicting the accused under Section 138 of the Negotiable Instruments Act, was justified in not awarding compensation to the complainants, and whether the sentence should be modified to include compensation under Section 357 of the Code of Criminal Procedure.
Final Decision
Revision partly allowed. Conviction under Section 138 NI Act upheld. Operative part of the trial court's order modified to direct the accused to pay compensation of Rs. 80,000/- to the complainants within 15 days, failing which he shall undergo imprisonment for one month.
Law Points
- Purpose of Negotiable Instruments Act is recovery of money
- not just punishment
- discretion under Section 357 CrPC must be used judiciously to award compensation in cheque dishonour cases
