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Thursday, October 10, 2013

Sec.138 of Negotiable Instrument Act - court can convert sentence into fine but at the same time no fine should be exceed twice the cheque amount ; Sec.357(3) has no application SOMNATH SARKAR Vs. UTPAL BASU MALLICK & ANR. published in judis.nic.in/supremecourt/filename=40873

    As per sec.138 of  the Negotiable instrument Act - a penalty should be imposed twice the cheque amount but not more than that. Section 357(3), Cr.P.C no application in cheque bounce case. Court can impose sentence or fine or both. Appellant/ Revision court  has got jurisdiction to convert the sentence into fine =
The lower court sentenced 6 months imprisonment and also fine of Rs. 80,000/-; District court confirmed the same. But
the High Court of Calcutta which was pleased  to  substitute  the  six  months’ sentence by an  additional  payment  of  Rs.69,500/-.  

Accordingly, as against the  cheque
      amount of Rs.69,500/-  the  Appellant  is  liable  to  the  extent  of
      Rs.1,49,500/-.  
Faced with the prospects of  jail  the  Appellant  had
      earlier agreed to payment of the additional sum of Rs.80,000/- and for
      these reasons his plea for reduction thereto was turned  down  by  the
      High Court in the impugned order.  
The Appellant was directed to pay a
      sum of Rs.19,500/- by May 31, 2011 and the balance of  Rs.50,000/-  in
      five equal instalments thereafter.  
Unfortunately,  despite  repeated
      readings of the Orders and related documents, the total  liability  of
      the Appellant is not clear as also the payments made till date.

A  reading
      of the impugned order appears to indicate that the payment of  further
      sum of Rs.69,500/-, in the instalments indicated in that  order  would
      be over and above the said sum of  Rs.80,000/-.   
This  would  violate
      Section 138 of the N.I. Act inasmuch as it would exceed the double  of
      the cheque amount.  
This leads us to conclude that  the  intention  of
      the High Court was that upon deposit/payment of  the  further  sum  of
      Rs.69,500/- (in addition to  the  earlier  sum  of  Rs.80,000/-),  the
      sentence  of  imprisonment  for  six  months  would  stand  withdrawn.-

   We think that with the  receipt  of  Rs.80,000/-,
      the complainant has received compensation for the  dishonoured  cheque
      as per the adjudication of the Trial Court.
 In  these  circumstances,
      any further payment would be in the nature of fine.  
Accordingly,  we
      clarify that the Appellant must pay a sum of Rs.80,000/- receivable by
      the complainant within four weeks from today,  if  not  already  paid.
     
The Appellant is also sentenced to payment of a fine  of  Rs.20,000/-,
      payable within eight weeks from today, and on the failure to make this
      payment, would be liable for imprisonment for six months.  The  Appeal
      is allowed in these terms.
whether the additional  amount  which  the
High Court has directed the appellant to pay could be levied in lieu of  the
sentence of imprisonment, 
we must keep  two  significant  aspects  in  view.
First and foremost is the fact that the power to levy fine is  circumscribed
under the statute to twice the cheque amount.  
Even  in  a  case  where  the
Court may be taking a lenient view in favour of the accused by  not  sending
him to prison, it cannot impose a fine more than twice  the  cheque  amount.
That statutory limit is inviolable and must be  respected.  
The  High  Court
has, in the case at hand, obviously overlooked the statutory  limitation  on
its power to levy a fine. 

                                                              REPORTABLE


                        IN THE SUPREME COURT OF INDIA


                       CRIMINAL APPELLATE JURISDICTION


                     CRIMINAL APPEAL NO.   1651  OF 2013
                [Arising out of S.L.P.(Crl.)No.6191 of 2011]




      Somnath Sarkar                           ..Appellant


            Versus


      Utpal Basu Mallick & Anr.                ....Respondents








                               J U D G M E N T




      VIKRAMAJIT SEN, J.




      1.    Leave granted.
The Appellant before us makes what is essentially
      a mercy plea – to reduce the sum of Rs.80,000/- imposed on him by  way
      of compensation in lieu of the six months  sentence  of  incarceration
      imposed by the Metropolitan Magistrate, Calcutta.
The  Appellant  has
      admittedly  issued  a  cheque  in  favour  of  the  Respondent   No.1-
      complainant for a sum of Rs.69,500/-, which cheque on presentation was
      dishonourned with the endorsement  ‘insufficient  funds’.
 After  due
      compliance with the statutory provisions contained in  the  Negotiable
      Instruments  Act,  1881  (for  short,  ‘N.I.  Act’)  prosecution   was
      commenced and the aforementioned punishment under Section 138  thereof
      came  to  be  passed.  
The  payment  of  compensation  amounting   to
      Rs.80,000/- has admittedly been  received  by  the  complainant.  
 The
      Appellant preferred an appeal to the Additional  District  &  Sessions
      Judge, Calcutta who by judgment dated 5.7.2004  dismissed  the  appeal
      and ordered the Appellant to  surrender  within  15  days.  
In  these circumstances, Criminal Revision Record No.2447 of 2004 was  filed  in the High Court of Calcutta which was pleased  to  substitute  the  six  months’ sentence by an  additional  payment  of  Rs.69,500/-.
 C.R.R.
      No.2447 of 2004 was heard and decided along  with  C.R.R.  No.2865  of
      2004 also filed by the Appellant.
Accordingly, as against the  cheque
      amount of Rs.69,500/-  the  Appellant  is  liable  to  the  extent  of
      Rs.1,49,500/-.  
Faced with the prospects of  jail  the  Appellant  had
      earlier agreed to payment of the additional sum of Rs.80,000/- and for
      these reasons his plea for reduction thereto was turned  down  by  the
      High Court in the impugned order.
The Appellant was directed to pay a
      sum of Rs.19,500/- by May 31, 2011 and the balance of  Rs.50,000/-  in
      five equal instalments thereafter.  
Unfortunately,  despite  repeated
      readings of the Orders and related documents, the total  liability  of
      the Appellant is not clear as also the payments made till date.
      2.    Although the learned counsel for the  complainant  has  appeared
      before us and has endeavoured to persuade us to  uphold  the  impugned
      order, we find it unnecessary to hear him since  the  complainant  has
      indubitably already  received  the  sum  of  the  dishonourned  cheque
      alongwith the compensation thereon aggregating Rupees Eighty Thousand.


      3.    It seems to us  that  since  the  Appellant  has  already  faced
      prosecution in the Magistracy  in  which  he  presented  virtually  no
      defence, and has thereafter filed an appeal before the Sessions Court,
      and subsequently two Revisions before the  High  Court,  the  ends  of
      justice will be met, were he be directed to pay a sum  of  Rs.20,000/-
      only, in  default,  of  which  he  would  be  liable  to  undergo  the
      punishment of simple imprisonment for a term of six months as  imposed
      by the aforementioned Magistrate.  The said  payment  should  be  made
      within eight weeks.
       4.   As already expressed, the language employed by the High Court in
      the impugned order raises a doubt as to the  total  liability  of  the
      Appellant.
A perusal of the sentence passed by  the  Trial  Court  as
      well as the Sessions Judge while dismissing the Appeal also  does  not
      completely clarify the position.  
The cheque amount is Rs.69,500/- and
      in this  regard  a  sum  of  Rs.80,000/-  has  been  directed  towards
      compensation which, by virtue of  Section  357(3),  Code  of  Criminal
      Procedure (Cr.P.C.)  would  be  receivable  by  the  complainant.  
 It
      appears that  this  sum  of  Rs.80,000/-  has  been  received  by  the
      complainant.  
The use of the word, ‘additional sum’  in  the  impugned
      order has led to considerable confusion.  
To put the matter finally at
      rest, we hold that the total compensation payable under Section 138 of
      the N.I. Act read with Section 357(3), Cr.P.C. is  Rs.80,000/-.  i.e.,
      the cheque amount of Rs.69,500/- together with Rs.10,500/-  which  may
      be seen as constituting interest on the dishonoured  cheque.  
 In  the
      arguments addressed before us there appears to be no controversy  that
      this sum has been duly paid to the Respondent-complainant. 
 A  reading
      of the impugned order appears to indicate that the payment of  further
      sum of Rs.69,500/-, in the instalments indicated in that  order  would
      be over and above the said sum of  Rs.80,000/-.   
This  would  violate
      Section 138 of the N.I. Act inasmuch as it would exceed the double  of
      the cheque amount.  
This leads us to conclude that  the  intention  of
      the High Court was that upon deposit/payment of  the  further  sum  of
      Rs.69,500/- (in addition to  the  earlier  sum  of  Rs.80,000/-),  the
      sentence  of  imprisonment  for  six  months  would  stand  withdrawn.
   
 Learned counsel for the Appellant has  fervently  submitted  that  the
      Appellant is a man of limited financial means and  this  position  has
      not been controverted.  Palpably, the convict has  filed  appeals  all
      the way to the Apex Court which would have entailed  further  expenses
      of no mean measure.
We think that with the  receipt  of  Rs.80,000/-,
      the complainant has received compensation for the  dishonoured  cheque
      as per the adjudication of the Trial Court.
 In  these  circumstances,
      any further payment would be in the nature of fine.  
Accordingly,  we
      clarify that the Appellant must pay a sum of Rs.80,000/- receivable by
      the complainant within four weeks from today,  if  not  already  paid.
     
The Appellant is also sentenced to payment of a fine  of  Rs.20,000/-,
      payable within eight weeks from today, and on the failure to make this
      payment, would be liable for imprisonment for six months.  The  Appeal
      is allowed in these terms.



                             .................................J.
                                             [T.S. THAKUR]




                                              ………………….…J.
                                              [VIKRAMAJIT SEN]
      New Delhi
      October 07, 2013

                                                              NON-REPORTABLE
                         IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION
                    CRIMINAL APPEAL NO.   1651    OF 2013
               (Arising out of S.L.P. (Crl.) No.6191 of 2011)

Somnath Sarkar                                      …Appellant

           Versus
Utpal Basu Mallick & Anr.                          …Respondents
                               J U D G M E N T
T.S. THAKUR, J.
      I have had the advantage of going through the  order  proposed  by  my
esteemed Brother Vikramajit Sen, J. While I entirely agree  that  the  order
passed by the High Court directing payment of a sum of Rs.69,500/- over  and
above Rs.80,000/- already  paid  under  the  orders  of  the  Court  to  the
complainant towards compensation needs to be modified to bring the  same  in
tune with Section 138 of Negotiable Instruments Act, 1881, I would  like  to
add a few words of my own in support of that view. Before I do that,  I  may
briefly set out the factual backdrop in  which  the  appellant  came  to  be
prosecuted and convicted under the provision mentioned above.
      The appellant, who is the proprietor of  M/s  Tarama  Medical  Centre,
Tarakeswar,   Hooghly,    issued    a    cheque    in    favour    of    the
respondent/complainant bearing no.419415 dated 6th September, 1999 drawn  on
SBI,  Tarakeswar  Branch  for  Rs.69,500/-  towards  discharge  of  existing
liabilities. When the cheque was presented by the  complainant  through  his
banker on 6th September, 1999 it was dishonoured for  “insufficient  funds”,
which dishonour was communicated to the complainant on  7th  October,  1999.
The complainant respondent issued a demand notice,  which  was  received  by
the accused appellant within  the  prescribed  limitation  period.  However,
since the accused failed to repay the amount within  time,  the  complainant
filed a complaint under Section 138 of the Negotiable Instruments Act,  1881
on 9th December, 1999.
       The  Metropolitan  Magistrate,  6th  Court,  Calcutta  convicted  the
appellant for the offence under Section 138, Negotiable Instruments Act  and
sentenced him to six months simple imprisonment and to pay  compensation  of
Rs.80,000/- under Section 357(3) CrPC vide order dated 10th  December,  2003
in Case No.C-4490/99. Both the conviction and sentence were  upheld  by  the
Additional District & Sessions Judge of the Fast Track Court in appeal  vide
order dated 5th July, 2004. In a revision petition filed  against  the  said
two orders, the High Court upheld the conviction, but imposed an  additional
fine  of  Rs.69,500/-  (cheque  amount)  in  lieu  of   six  months   simple
imprisonment awarded by the Metropolitan  Magistrate.   That  the  appellant
has  paid  the  compensation  amount  of  Rs.80,000/-  in   instalments   of
Rs.30,000/- and Rs.50,000/- is not disputed before us and  is  evidenced  by
an affidavit dated 20th November, 2006 filed in CRR No.2447 of  2004  before
the Calcutta  High  Court  besides  a  receipt  dated  14th  February,  2008
respectively, which are on record.
      The only question that  falls  for  our  determination  in  the  above
backdrop is
whether the High Court was justified in directing payment of  an
additional fine of Rs.69,500/- which happens to be the cheque  amount  also,
having regard to the fact that the appellant has already  paid  the  sum  of
Rs.80,000/- to the complainant towards  compensation  in  obedience  to  the
order made by the Metropolitan Magistrate.
There is no gainsaying  that  the
High Court could have sentenced the appellant to imprisonment  extending  up
to two years and/or to payment  of  fine  equivalent  to  twice  the  cheque
amount.
This is evident from the provisions of Section 138  which  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  provision  of  this  Act,  
be punished with imprisonment for a term which may  extend  to  one year, 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 fifteen 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. Explanation.- For  the  purposes  of
           this  section,"  debt  or  other  liability"  means  a   legally
           enforceable       debt        or        other        liability.”
           (emphasis supplied)



      In as much as the High Court set aside  the  sentence  of  six  months
simple imprisonment awarded to the appellant there is  no  quarrel  nor  any
challenge mounted before us. That part of the order  could  be  assailed  by
the complainant who has not chosen to do so.
Whether or not the  High  Court
was justified in setting aside the sentence of imprisonment awarded  to  the
appellant is, therefore, a non-issue before us.
Having said  that  we  have
no hesitation in adding that the High Court may have indeed  been  justified
in setting aside the sentence of imprisonment awarded to  the  appellant  in
the facts and circumstances of the case. We say so having regard to a three-
Judge Bench decision of this Court
in Damodar S. Prabhu v. Syed  Babalal  H.
(2010) 5 SCC 663 
where this Court briefly examined the object sought  to  be
achieved by the provisions of Section 138 and  the  purpose  underlying  the
punishment provided therein.
This Court has held that unlike  other  crimes,
punishment in Section 138 cases is meant more to  ensure  payment  of  money
rather than to seek retribution. The Court said:
           “17....Unlike that for other forms of crime, the punishment here
           (in so far 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.”

                                          (emphasis supplied)


      This Court also took note of the number of cases involving dishonor of
cheques choking the criminal justice system of this country,  especially  at
the level of the Magisterial Courts, and held that dishonor of cheque  being
a regulatory offence,  aimed  at  ensuring  the  reliability  of  negotiable
instruments, the provision for imprisonment extending up to  two  years  was
only intended to ensure quick recovery  of  the  amount  payable  under  the
instrument. The following passages from the  decision  are  in  this  regard
apposite:
           “4...It is quite evident that  the  legislative  intent  was  to
           provide  a  strong  criminal  remedy  in  order  to  deter   the
           worryingly high incidence of dishonour  of  cheques.  While  the
           possibility of imprisonment up to two years provides a remedy of
           a punitive nature, the provision for imposing a `fine which  may
           extent to twice the amount of the cheque' serves a  compensatory
           purpose. What must be remembered is  that  the  dishonour  of  a
           cheque can be best described as a regulatory  offence  that  has
           been created to  serve  the  public  interest  in  ensuring  the
           reliability of these instruments. The impact of this offence  is
           usually confined to the private parties involved  in  commercial
           transactions.
           5. Invariably, the provision of a  strong  criminal  remedy  has
           encouraged the institution of a large number of cases  that  are
           relatable to the offence contemplated by Section 138 of the Act.
           So much so, that at present a disproportionately large number of
           cases involving the dishonour of cheques is choking our criminal
           justice system, especially at the level of Magistrates'  Courts.
           As per the 213th Report of the Law  Commission  of  India,  more
           than 38 lakh cheque bouncing cases were pending  before  various
           courts in the country as of October 2008.  This  is  putting  an
           unprecedented strain on our judicial system.”
                                                (emphasis supplied)


      We do not consider it necessary to examine or  exhaustively  enumerate
situations in which Courts may remain content  with  imposition  of  a  fine
without  any  sentence  of  imprisonment.
 There  is  considerable  judicial
authority for the proposition that the  Courts  can  reduce  the  period  of
imprisonment depending upon the nature of the transaction,  the  bona  fides
of the accused, the contumacy of his  conduct,  the  period  for  which  the
prosecution goes on, the amount of the cheque involved,  the  social  strata
to which the parties belong, so on and so forth. Some of these  factors  may
indeed make out a case where the Court may impose only a  sentence  of  fine
upon the defaulting  drawer  of  the  cheque.
There  is  for  that  purpose
considerable discretion vested in the Court concerned which  can  and  ought
to be exercised in appropriate cases for good and valid reasons.
Suffice  it
to say that the High Court was competent on a plain reading of  Section  138
to impose a sentence of fine only upon the appellant.  
In  as  much  as  the
High Court did so, it committed no jurisdictional error. 
In the  absence  of
a challenge to the order passed by the High Court deleting the  sentence  of
imprisonment awarded to the appellant, we do not consider  it  necessary  or
proper to say anything further at this stage.
      Coming then to the question
whether the additional  amount  which  the
High Court has directed the appellant to pay could be levied in lieu of  the
sentence of imprisonment, 
we must keep  two  significant  aspects  in  view.
First and foremost is the fact that the power to levy fine is  circumscribed
under the statute to twice the cheque amount.  
Even  in  a  case  where  the
Court may be taking a lenient view in favour of the accused by  not  sending
him to prison, it cannot impose a fine more than twice  the  cheque  amount.
That statutory limit is inviolable and must be  respected.  
The  High  Court
has, in the case at hand, obviously overlooked the statutory  limitation  on
its power to levy a fine. 
It appears to  have  proceeded  on  the  basis  as
though payment of compensation under Section 357 of CrPC is  different  from the power to levy fine under Section 138, which assumption is not correct.
      The second aspect relates precisely to the need for appreciating  that the power to award compensation  is  not  available  under  Section  138  of Negotiable Instruments Act. 
It is only when the  Court  has  determined  the
amount of fine that the question of paying  compensation  out  of  the  same
would arise. 
This implies that the process  comprises  two  stages.
 First,
when the Court determines the amount of fine and levies the same subject  to
the outer limit, if any, as is the position in the instant case. 
The  second
stage comprises invocation of the power to award  compensation  out  of  the
amount so levied. 
The High Court does  not  appear  to  have  followed  that
process. 
It has taken payment of Rs.80,000/- as compensation to be  distinct
from the amount of fine it is imposing equivalent to the  cheque  amount  of
Rs.69,500/-. 
That was  not  the  correct  way  of  looking  at  the  matter.
Logically, the High Court should have determined the fine amount to be  paid
by the appellant, which in no case could go beyond twice the cheque  amount,
and directed payment of compensation to the complainant  out  of  the  same.
Viewed thus, the direction of the High Court that the appellant shall pay  a
further sum of Rs.69,500/- does not appear  to  be  legally  sustainable  as
rightly observed by my erudite Brother  Vikramajit  Sen,  J.  
I,  therefore,
entirely agree with my Brother’s view that  payment  of  a  further  sum  of
Rs.20,000/- towards fine, making a total fine of Rs.1,00,000/-  (Rupees  one
lac) out of which Rs.80,000/- has already been paid as compensation  to  the
complainant, should  suffice.  The  amount  of  Rs.20,000/-  (Rupees  twenty
thousand) now directed to be paid shall not go to the  complainant  who  is,
in our view, suitably compensated by the amount  already  received  by  him.
In the event of failure to pay the  additional  amount  of  Rs.20,000/-  the
appellant shall undergo imprisonment for a period of six months. With  these
words, I concur with the order proposed by Brother Vikramajit Sen, J.


                                                          ………………….……….…..…J.
                                                            (T.S. Thakur)
New Delhi
October 7, 2013
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