Himachal Pradesh High Court
Goldy Fruit Company And Another vs Sunil Kumar on 17 October, 2024
( 2024:HHC:9881 )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Revision No.307 of 2023
Reserved on 27.08.2024.
Decided on 17.10.2024
Goldy Fruit Company and another .........Petitioners
Versus
Sunil Kumar .......Respondent
Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge.
Whether approved for reporting?1 Yes.
For the Petitioners : M/s A.S. Rana and Kamlesh
Kumari, Advocates.
For the Respondent : Mr. K.B. Khajuria, Advocate, for the
respondent.
Rakesh Kainthla, Judge (oral)
The present revision is directed against the judgment dated 18.04.2023 passed by learned Additional Sessions Judge, (CBI Court), Shimla, H.P. (learned Appellate Court) vide which the appeal filed by the petitioner (accused before learned Trial Court) was dismissed and the judgment dated 03.09.2022 and order dated 05.09.2022 passed by learned 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Trial Court were upheld. (The parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience).
2. Briefly stated, the facts giving rise to the present petition are that the complainant filed a complaint before the learned Trial Court against the accused for committing an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). It was asserted that the complainant is a horticulturist and owner in possession of an apple orchard. The accused deals in the sale and purchase of the apple. The accused runs his business in the name and style of Goldy Fruit Company, Fruit & Vegetable Commission Agent at Parwanoo, District Solan, H.P. The complainant sent apple boxes to the accused worth ₹13,90,238/-. The accused paid ₹7,00,000/-. An amount of ₹6,90,238/- remained payable. The accused issued a multi-city cheque of ₹4,00,000/- on 01.01.2019 to discharge his legal liability. The complainant presented the cheque before his bank, but it was dishonoured with the remarks of 'funds insufficient'. The complainant sent a legal notice to the accused asking him to pay the amount within 15 days from the receipt of 3 the notice; however, no amount was paid. Hence, the complainant filed a complaint against the accused before the learned Trial Court.
3. The learned Trial Court found sufficient reasons to summon the accused when the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which the accused pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW-1) to prove his case.
5. The accused in his statement recorded under Section 313 of Cr.P.C. admitted that the complainant has an apple orchard and he had supplied apples worth ₹13,90,238/- in 2017. He stated that the cheque belonged to him but the cheque did not bear his signatures. He had not handed over any cheque to the complainant. He was not aware that the cheque was dishonoured due to 'insufficient funds'. He had paid all the dues to the complainant by online transfer. The cheque was never handed over to the complainant. Statement of Rohit (DW-1) was recorded in defence.
4
6. Learned Trial Court held that the accused took contradictory pleas in his cross-examination that Arun Kumar was the proprietor of Goldy Fruit Company and the cheque belonged to the accused. The plea of the accused that the cheque did not bear his signatures was not proved on the balance of probability. There was no evidence regarding the payment of ₹6,90,238/-. The accused claimed that the money was paid by online transfer but no details of the payment were proved on record. Consequently, the learned Trial Court convicted the accused of committing an offence punishable under Section 138 of the NI Act, sentenced him to undergo simple imprisonment for two years and pay a compensation of ₹6,00,000/- and in default of payment of compensation amount to further undergo simple imprisonment for one year.
7. Being aggrieved from the judgment and order passed by the learned Trial Court, the accused filed an appeal, which was decided by the learned Additional Sessions Judge (CBI Court), Shimla (learned Appellate Court). Learned Appellate Court held that the cheque carries with it a presumption of consideration and the complainant was not supposed to prove 5 the revenue papers in support of his case. The accused admitted that apples were supplied by the complainant and claimed that the amount was paid by him. It was suggested to the complainant that Goldy Fruit Company was owned by Goldy Zirta and the plea that it was owned by Arun Kumar was not acceptable. The accused was the owner of the Goldy Fruit Company and his name was mentioned in all the challans proved on the record. His plea that the signatures were not put by him was not sufficient to absolve him. There was no infirmity in the judgment and order passed by the learned Trial Court; hence, the appeal was dismissed.
8. Being aggrieved from the judgment and order passed by learned Courts below, the accused has filed the present revision asserting that learned Courts below erred in convicting the accused. The complainant had failed to prove his case beyond reasonable doubt. He had not produced the revenue record of the land owned by him and failed to mention the number of apple boxes supplied by him to the accused. He had not given the details of the driver of the vehicle in which the apple crop was transported. The statement of Rohit (DW-1) 6 showed that Arun Kumar was the proprietor of Goldy Fruit Company. Goldy Zirta had no connection with Goldy Fruit Company. Therefore, it was prayed that the present revision be allowed and the judgment and order passed by learned Courts below be set aside.
9. I have heard Mr A.S. Rana and Ms Kamlesh Kumari, learned counsel for the petitioners/accused and Mr K.B. Khajuria, learned respondent/counsel for the complainant.
10. Mr A.S. Rana, learned counsel for the petitioners/accused submitted that the learned Courts below erred in convicting and sentencing the accused. It was duly proved by the statement of Rohit (DW-1) that Arun Kumar is the proprietor of Goldy Fruit Company. The cheque was dishonoured with an endorsement of signature mismatch and the requirements of Section 138 of the NI Act were not satisfied. Therefore, he prayed that the present revision be allowed and the judgments and order passed by the learned Courts below be set aside.
11. Mr. K.B. Khajuria, learned counsel for the complainant supported the judgments and the order passed by 7 the learned Courts below and submitted that no interference is required with them.
12. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
13. It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204:
(2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional court is not an appellate jurisdiction and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed on page 207: -
"10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like to the appellate court and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short "CrPC") vests jurisdiction for the purpose of satisfying itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well- founded error which is to be determined on the merits of 8 individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.
14. This position was reiterated in State of Gujarat v. Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294 wherein it was observed:
"13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C. which vests the court with the power to call for and examine records of an inferior court is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460 where the scope of Section 397 has been considered and succinctly explained as under:
"12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bear a token of careful consideration and appear to be in accordance with the law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding 9 recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes but are merely indicative. Each case would have to be determined on its own merits.
13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex- facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much-advanced stage in the proceedings under the CrPC."
15. The present revision has to be decided as per the parameters laid down by the Hon'ble Supreme Court.
16. Rohit (DW-1) stated that the cheque (Exhibit CW- 1/B) was issued by the bank. Goldy Fruit Company had an account in the Bank in which the name of the proprietor was mentioned as Arun Kumar. The cheque was drawn on his account. The signatures mismatched on the cheque leading to its dishonour. Arun Kumar sent a legal notice to the bank regarding the signature mismatch. He stated in his cross- 10 examination that the account was maintained in the name of Goldy Fruit Company. There was no money in the account and the cheque was dishonoured due to 'insufficient funds'.
17. Complainant Sunil Kumar (CW-1) stated in his cross-examination that he was not aware of the person to whom he had sold the apple crop. He volunteered to say that he had sold the crop to a person located in the U.P. He did not know the number of apple boxes supplied to Goldy Fruit Company. These were sent by him through a vehicle. He went to Goldy Fruit Company ten-fifteen days after the sale of the apple crop. The cheque was handed over by the accused himself in his village in the year 2018. The cheque was filled and signed before it was handed over to him. He did not make any effort to know about the owner of Goldy Fruit Company. He was not aware that Arun Kumar was the proprietor of Goldy Fruit Company. He had not sold any apples to Arun Kumar. He was not aware that Goldy Zirta had no concern with Goldy Fruit Company.
18. The learned Trial Court held that the accused admitted that he had purchased apple boxes from the complainant in the year 2017. He also admitted that the cheque 11 belonged to him and it was drawn upon his account. He claimed that he had not handed over the cheque to the complainant. It was further held that the legal notice sent by Arun Kumar to the bank was insufficient to conclude that the cheque did not bear his signatures. The accused had put his signatures in his statement recorded under Section 313 Cr.P.C. as Arun which shows that Goldy Zirta and Arun Kumar are the same persons.
19. The learned Appellate Court concurred with these findings and held that the accused admitted the receipt of the apple and that the cheque was drawn on his account. Mere differences in the signatures will not assist the accused because the accused altered the signatures to cheat the complainant.
20. A perusal of the record of the learned Trial Court shows that the accused had described himself as Arun Kumar alias Goldy Zirta in an application for exemption filed by him on 13.11.2019. He signed as Arun Kumar in the application for exemption dated 27.07.2019. He signed as Goldy in the application for exemption dated 28.12.2019. He furnished the bail bonds before the learned Trial Court on 09.06.2022 in which he described himself as Arun Kumar son of Ram Lal. He filed a 12 copy of his Aadhaar Card showing himself to be Arun Kumar. He filed an application under Section 145(2) seeking prayer to cross-examine the complainant and Manager of ICICI Bank and signed it as Arun Kumar. He filed an affidavit in support of the application in which he described himself as Goldy Zirta @ Arun son of Ram Lal. He furnished a personal bond describing himself as Arun proprietor of Goldy Fruit Company, Sabzi Mandi, Parwanoo. He had also signed the notice of the accusation and the statement recorded under Section 313 of Cr.P.C. as Arun. These facts show that the accused had described himself as Goldy or Arun Kumar before the learned Trial Court. He had not taken any plea before the learned Trial Court that Arun Kumar and Goldy Zirta were two different persons. Therefore, it is not permissible for him to submit before this Court that Goldy Fruit Company was owned by Arun Kumar, who is a different person from Goldy Zirta. Hence, the submission that the cheque was issued by Arun Kumar the proprietor of Goldy Fruit Company and the petitioner has no concern with it is not acceptable.
13
21. It was submitted that the dishonour of the cheque on the ground of the difference in the signature does not attract the provisions of Section 138 of the NI Act. This submission is not acceptable. It was laid down by the Hon'ble Supreme Court in Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375: (2012) 4 SCC (Cri) 283: 2012 SCC OnLine SC 970, that the dishonour of cheque with an endorsement of signature mismatch attracts the provisions of Section 138 of N.I. Act. It was observed at page 388:
-
16. The above line of decisions leaves no room for holding that the two contingencies envisaged under Section 138 of the Act must be interpreted strictly or literally. We find ourselves in respectful agreement with the decision in the Magma case [(1999) 4 SCC 253: 1999 SCC (Cri) 524] that the expression "amount of money ...
is insufficient" appearing in Section 138 of the Act is a genus and dishonour for reasons such "as account closed", "payment stopped", "referred to the drawer"
are only species of that genus. Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138, so also dishonour on the ground that the "signatures do not match" or that the "image is not found", which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act."
(Emphasis supplied) 14
22. Karnataka High Court held in Peeranbi v. Hajimalang, 2013 SCC OnLine Kar 10420: (2013) 2 Kant LJ 569 :
(2013) 3 KCCR 2223 : (2014) 1 AIR Kant R 405 : (2013) 3 BC 532 :
(2014) 5 RCR (Cri) 757 that the dishonour of the cheque due to signature mismatch will attract penal liability under Section 138 of the NI Act. It was observed:
"9. In the facts and circumstances, as rightly contended by the learned Counsel for the appellant, the cheque having been drawn on the account of the respondent, is not in dispute. However, it is the defence set up that there was a business relationship between the appellant and the respondent, and the appellant could have accessed a cheque leaf belonging to the respondent, which is sought to be misused. In this regard, there is no positive evidence put forward by the respondent. In other words, in terms of Section 139, the presumption is in favour of the holder of the cheque of the same having been issued by the account holder in discharge of a legal liability. It is for the person issuing the cheque to prove otherwise. This, the Apex Court has held in the case of Rangappa v. Sri Mohan. [AIR 2010 SC 1898 : (2010) 11 SCC 441 : (2011) 1 SCC (Cri) 184: 2010 Cri. L.J. 2871 (SC)] That, not only is it possible for the accused to establish this by leading positive evidence, he could also place reliance on the evidence tendered by the complainant himself to discharge that burden. Hence, if it was the contention of the respondent that there were cheque leaves misplaced by him and which were sought to be misused by the appellant, it was for the respondent to have tendered evidence of the approximate date when there was a dissolution of the partnership business between the appellant and the 15 respondent, and the respondent having operated his Bank Account thereafter using other cheque leaves and that the cheque leaves which were left behind upon such dissolution having fallen into disuse over a period of time, sought to be forged and fabricated at a later date by the appellant, was clearly on the respondent. There is no such evidence forthcoming except the self- serving evidence of the respondent. Further, in the event that any such cheque leaves were misused, a duty was cast on the respondent to inform his banker to stop payment, against such cheques which were lost or misplaced. There is no such evidence forthcoming. Nor is it the case of the respondent that the cheques being misplaced, he had reported to the nearest Police Station of such loss. There was no demand made on the appellant to return such cheque leaves left behind. Therefore, the evidence of the respondent was clearly self-serving and it was a burden cast on the respondent to establish the fact that there were cheque leaves which were left behind and it was possible for the appellant to misuse the same. If once it is apparent that the cheque had been issued on the account held by the respondent, the presumption under Section 139 is clearly in favour of the appellant to establish that it was forged by the accused. The burden is clearly on the respondent and it not for the appellant to establish that the respondent had deliberately changed his signature in order that it would be dishonoured by his Bank. This may indeed have been the intention in changing his signature at the time of issuing of the cheque. As already stated, the burden to establish that it was lost and it has been misused by the appellant, was clearly on the respondent. The Court below has also committed an error in holding that the liability in respect of which the cheque had been issued was required to be proved by the appellant. The proceedings were not in the nature of a suit for recovery of money but for prosecution of an offence punishable under 16 Section 138 of the NI Act. The limited scope of those proceedings is whether there was dishonour of the cheque issued by the accused. That aspect of the matter has been established on the face of it. Therefore, the Court below has clearly committed an error in addressing the case of the complainant and in dismissing the complaint. Consequently, the appeal is allowed. The complainant has established his case beyond all reasonable doubt. The respondent therefore is liable for punishment. Accordingly, he shall pay a fine of Rs. 3,50,000/- in default of which, the respondent shall suffer simple imprisonment for a period of six months. The fine amount shall be paid forthwith, in any event, within a period of 15 days. Out of the fine amount, a sum of Rs. 3,40,000/- shall be paid as compensation to the appellant."
23. Madras High Court also held in R. Manimehalai v. Banumathi, 2018 SCC OnLine Mad 13802 that the dishonour of a cheque due to signature mismatch attracts the provisions of Section 138 of NI Act. It was observed:
"10.... It is true that the impugned cheque was returned on two grounds, namely, (a) insufficient funds, and (b) the signature of the drawer differs. On receipt of, the statutory notice, dated 31.12.2013, [EX-P3] from the complainant, the accused, has sent a belated reply notice, dated 17.3.2014, [EX-P5], in which also the accused, did not take the plea that her signature has been forged in the cheque. She has taken, a plea that the impugned cheque was issued by her for a different debt. The accused took pains to examine Ganeshamoorthy, Senior Manager of Syndicate Bank, in which the accused has an account, to say that the signature in the cheque differed from the specimen signature with the Bank. This only shows that the accused had deliberately put 17 her signature differently in the impugned cheque with the intention of cheating the complainant. However, a charge of cheating has not been framed against the accused. This conduct of the accused in giving the cheque by affixing her signature differently is relevant under Section 8 of the Indian Evidence Act, 1872. The presumption under. Section 139 of the Negotiable Instruments Act, 1881, comes into force, when once the cheque has been issued by the accused for the debt in question. Of course, this is a rebuttable presumption and the same can be dislodged by the accused by preponderance of probabilities and not by proof beyond reasonable doubt, as held by the Supreme Court in Rangappa v. Sri Mohan, (2010) 2 BC 693 (SC): II (2010) CCR 433 (SC) : (2010) 4 SLT 56 : (2010) 2 DLT (Cri) 699 (SC) : (2010) 11 SCC 441. In this case, the accused has failed to discharge her burden even by a preponderance of probabilities. She was trying to take advantage of the difference in signature in order to wriggle out of the prosecution....."
24. Thus, even if the cheque is dishonoured with the endorsement signature differs, it will attract the provisions of Section 138 of the NI Act.
25. The accused admitted in his statement recorded under Section 313 of Cr.P.C., that the complainant had supplied the apple boxes worth ₹13,90,238/ to him-, hence the transaction between the parties was not in dispute. Therefore, the submission that the complainant had not produced the 18 revenue papers to show the extent of land owned by him will not assist the accused.
26. The accused admitted in the statement recorded under Section 313 of Cr.P.C. that the cheque belonged to him and was drawn on his account. He claimed that the cheque did not bear his signatures. Therefore, the issuance of a cheque and the fact that the cheque was drawn on the account of the accused were also not in dispute. As far as the difference in signatures is concerned, the same will not help the accused in view of the judgment of the Hon'ble Supreme Court.
27. The accused claimed that he had paid the money to the complainant by online transfer to his account. It was very easy for the accused to produce the record of the online transfers of the amount to the complainant. He even examined the Branch Manager of ICICI Bank. However, he was not asked any questions regarding the transfer of money to the complainant. Hence, in these circumstances learned Courts below had rightly held that the plea of the accused that he had paid the money to the complainant was not established. 19
28. The accused had not led any evidence to rebut the presumption of consideration attached to the cheque. As already stated, the accused has not disputed his liability to pay the amount. He had failed to establish that money was paid to the complainant.
29. Therefore, in these circumstances, the learned Courts below had rightly held that the cheque was issued in discharge of the legal liability. The cheque was dishonoured with an endorsement of 'funds insufficient'. The defence witness Rohit (DW1) admitted in his cross-examination that there were insufficient funds in the account of the Goldy Fruit Company to honour the cheque, which shows that the cheque was dishonoured with an endorsement of insufficient funds. Hence, the requirement that the cheque was dishonoured due to insufficient funds was also fulfilled.
30. The complainant stated that he served a legal notice upon the accused. The notices were served upon the accused at the address mentioned in the complaint, the statement under Section 313 of Cr.P.C. and the notice of accusation. The notices were returned undelivered with the report unclaimed. It was laid 20 down by the Hon'ble Supreme Court of India in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555 that when a notice is returned unclaimed, it is deemed to be served. It was observed:
"8. Since in Bhaskaran's case (supra), the notice issued in terms of Clause (b) had been returned unclaimed and not as refused, the Court, posed the question: "Will there be any significant difference between the two so far as the presumption of service is concerned?" It was observed that though Section 138 of the Act does not require that the notice should be given only by "post", yet in a case where the sender has dispatched the notice by post with the correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 (for short 'G.C. Act') could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sendee unless he proves that it was not really served and that he was not responsible for such non-service."
31. This position was reiterated in Priyanka Kumari vs. Shailendra Kumar (13.10.2023- SC Order): MANU/ SCOR/ 133284/ 2023 wherein it was observed:
"As it was held by the Hon'ble Supreme Court in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, (1999) 7 Supreme Court Cases 510 that when notice is returned as 'unclaimed', it shall be deemed to be duly served upon the addressee and it is a proper service of notice. In the case of Ajeet Seeds Limited Vs. K. Gopala Krishnaiah (2014) 12 SCC 685 (2014), the Hon'ble Court while interpreting Section 27 of General Clauses Act 1897 and also Section 114 of Evidence Act 1872 held as under: -21
"Section 114 of the Evidence Act, 1872 enables the court to presume that in the common course of natural events, the communication sent by post would have been delivered at the address of the addressee. Further, Section 27 of the General Clauses Act, 1897 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business."
32. In the present case, the accused has not proved that he was not responsible for non-service; therefore, the learned Courts below had rightly held that the notice was duly served upon the accused.
33. In any case, it was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555 that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. It was observed:
"It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of 22 Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of the complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."
(Emphasis supplied)
34. The accused has not paid any money to the complainant, and it was duly proved that the accused had failed to pay the money despite the deemed receipt of the notice.
35. The learned Trial Court had sentenced the accused to undergo simple imprisonment for two years. The legislature had introduced the offence of dishonour of cheques to instil confidence in the public about the transactions carried with the cheque. It was laid down by the Hon'ble Supreme Court in Bir 23 Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40 :
(2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provisions of Section 138 is a deterrent in nature. It was observed at page 203:
"6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same."
36. The offence punishable under Section 138 of the NI Act can be punished with a maximum imprisonment of two years. Learned Trial Court had imposed the maximum imprisonment and has not given any reason for doing so. Hence, the quantum of imprisonment is to be reduced. In the absence of any special consideration, the sentence is reduced to one year from two years.
37. Learned Trial Court had imposed a compensation of ₹6,00,000/-. The cheque was issued on 01.01.2019, the sentence was imposed on 05.09.2022 after the lapse of more than three 24 years. The complainant lost interest on the amount and he had to pay the litigation expenses for filing the complaint. He was entitled to be compensated for the same. It was laid down by the Hon'ble Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555:
2021 SCC OnLine SC 75 that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. It was observed at page 291: -
19. As regards the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for the dishonour of a cheque as well as civil liability for the realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the courts should uniformly levy fines up to twice the cheque amount along with simple interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]"
38. Therefore, the amount of ₹6,00,000/- is not excessive.
39. The learned Trial Court had also imposed a sentence of one year in default of payment of compensation. It was submitted that the learned Trial Court erred in imposing the 25 sentence of imprisonment in case of default in the payment of compensation. This submission cannot be accepted. It was laid down by the Hon'ble Supreme Court in K.A. Abbas v. Sabu Joseph, (2010) 6 SCC 230: (2010) 3 SCC (Civ) 744: (2010) 3 SCC (Cri) 127:
2010 SCC OnLine SC 612 that the Courts can impose sentence of imprisonment in default of payment of compensation. It was observed at page 237:
"20. Moving over to the question, whether a default sentence can be imposed on default of payment of compensation, this Court in Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127] and in Balraj v. State of U.P. [(1994) 4 SCC 29: 1994 SCC (Cri) 823: AIR 1995 SC 1935], has held that it was open to all the courts in India to impose a sentence on default of payment of compensation under sub-section (3) of Section 357. In Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127], this Court has noticed certain factors which required to be taken into consideration while passing an order under the section: (SCC p. 558, para 11) "11. The payment by way of compensation must, however, be reasonable. What is reasonable, may depend upon the facts and circumstances of each case. The quantum of compensation may be determined by taking into account the nature of the crime, the justness of claim by the victim and the ability of the accused to pay. If there is more than one accused, they may be asked to pay on equal terms unless their capacity to pay varies considerably. The payment may also vary depending upon the acts of each accused. A reasonable period 26 for payment of compensation, if necessary, by instalments, may also be given. The court may enforce the order by imposing sentence in default."
21. This position also finds support in R. v. Oliver John Huis [(1985) 7 Cri App R (S) 272]. The Lord Justice Croom Johnson speaking for the Bench has observed:
"When compensation orders may possibly be made the most careful examination is required. Documents should be obtained and evidence either on affidavit or orally should be given. The proceedings should, if necessary, be adjourned, in order to arrive at the true state of the defendant's affairs.
Very often a compensation order is made and a very light sentence of imprisonment is imposed, because the court recognizes that if the defendant is to have an opportunity of paying the compensation he must be enabled to earn the money with which to do so. The result is therefore an extremely light sentence of imprisonment. If the compensation order turns out to be virtually worthless, the defendant has got off with a very light sentence of imprisonment as well as no order of compensation. In other words, generally speaking, he has got off with everything."
22. The law laid down in Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127] was reiterated by this Court in Suganthi Suresh Kumar v. Jagdeeshan [(2002) 2 SCC 420: 2002 SCC (Cri) 344]. The Court observed: (SCC pp. 424,25, paras 5 & 10) "5. In the said decision this Court reminded all concerned that it is well to remember the emphasis laid on the need for making liberal use of Section 357(3) of the Code. This was observed by reference to a decision of this Court in Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127]. In the said decision this Court held as follows: (SCC p. 558, para 11) 27 '11. ... The quantum of compensation may be determined by taking into account the nature of the crime, the justness of claim by the victim and the ability of the accused to pay. If there is more than one accused, they may be asked to pay on equal terms unless their capacity to pay varies considerably. The payment may also vary depending upon the acts of each accused. A reasonable period for payment of compensation, if necessary, by instalments, may also be given. The court may enforce the order by imposing sentence in default.' (emphasis in original) ***
10. That apart, Section 431 of the Code has only prescribed that any money (other than fine) payable by virtue of an order made under the Code shall be recoverable 'as if it were a fine'. Two modes of recovery of the fine have been indicated in Section 421(1) of the Code. The proviso to the sub-section says that if the sentence directs that in default of payment of the fine, the offender shall be imprisoned, and if such offender has undergone the whole of such imprisonment in default, no court shall issue such warrant for the levy of the amount."
The Court further held: (Jagdeeshan case [(2002) 2 SCC 420: 2002 SCC (Cri) 344], SCC p. 425, para 11) "11. When this Court pronounced in Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127] that a court may enforce an order to pay compensation 'by imposing a sentence in default' it is open to all courts in India to follow the said course. The said legal position would continue to hold good until it is overruled by a larger Bench of this Court. 28 Hence learned Single Judge of the High Court of Kerala has committed an impropriety by expressing that the said legal direction of this Court should not be followed by the subordinate courts in Kerala. We express our disapproval of the course adopted by the said Judge in Rajendran v. Jose [(2001) 3 KLT 431]. It is unfortunate that when the Sessions Judge has correctly done a course in accordance with the discipline the Single Judge of the High Court has incorrectly reversed it."
23. In order to set at rest the divergent opinion expressed in Ahammedkutty case [(2009) 6 SCC 660 : (2009) 3 SCC (Cri) 302], this Court in Vijayan v. Sadanandan K. [(2009) 6 SCC 652 : (2009) 3 SCC (Cri) 296], after noticing the provision of Sections 421 and 431 CrPC, which dealt with mode of recovery of fine and Section 64 IPC, which empowered the courts to provide for a sentence of imprisonment on default of payment of fine, the Court stated: (Vijayan case [(2009) 6 SCC 652 : (2009) 3 SCC (Cri) 296], SCC p. 658, para 24) "24. We have carefully considered the submissions made on behalf of the respective parties. Since a decision on the question raised in this petition is still in a nebulous state, there appear to be two views as to whether a default sentence of imprisonment can be imposed in cases where compensation is awarded to the complainant under Section 357(3) CrPC. As pointed out by Mr Basant in Dilip S. Dahanukar case [(2007) 6 SCC 528 : (2007) 3 SCC (Cri) 209], the distinction between a fine and compensation as understood under Section 357(1)(b) and Section 357(3) CrPC had been explained, but the question as to whether a default sentence clause could be made in respect of compensation payable under Section 357(3) CrPC, which is 29 central to the decision in this case, had not been considered."
The Court further held: (Vijayan case [(2009) 6 SCC 652:
(2009) 3 SCC (Cri) 296], SCC p. 659, paras 31-32) "31. The provisions of Sections 357(3) and 431 CrPC, when read with Section 64 IPC, empower the court, while making an order for payment of compensation, to also include a default sentence in case of non-payment of the same.
32. The observations made by this Court in Hari Singh case [(1988) 4 SCC 551: 1988 SCC (Cri) 984:
AIR 1988 SC 2127] are as important today as they were when they were made and if, as submitted by Dr. Pillay, recourse can only be had to Section 421 CrPC for enforcing the same, the very object of sub-section (3) of Section 357 would be frustrated and the relief contemplated therein would be rendered somewhat illusory."
24. In Shantilal v. State of M.P. [(2007) 11 SCC 243 : (2008) 1 SCC (Cri) 1], it is stated, that, the sentence of imprisonment for default in payment of a fine or compensation is different from a normal sentence of imprisonment. The Court also delved into the factors to be taken into consideration while passing an order under Section 357(3) CrPC. This Court stated: (SCC pp. 255-56, para 31) "31. ... The term of imprisonment in default of payment of a fine is not a sentence. It is a penalty which a person incurs on account of non-
payment of a fine. The sentence is something which an offender must undergo unless it is set aside or remitted in part or in whole either in appeal or in revision or other appropriate judicial proceedings or 'otherwise'. A term of imprisonment ordered in default of payment of a fine stands on a different footing. A person is 30 required to undergo imprisonment either because he is unable to pay the amount of fine or refuses to pay such amount. He, therefore, can always avoid to undergo imprisonment in default of payment of fine by paying such an amount. It is, therefore, not only the power but the duty of the court to keep in view the nature of the offence, circumstances under which it was committed, the position of the offender and other relevant considerations before ordering the offender to suffer imprisonment in default of payment of a fine."
(emphasis in original)
25. In Kuldip Kaur v. Surinder Singh [(1989) 1 SCC 405: 1989 SCC (Cri) 171: AIR 1989 SC 232] in the context of Section 125 CrPC observed that sentencing a person to jail is sometimes a mode of enforcement. In this regard, the Court stated: (SCC p. 409, para 6) "6. A distinction has to be drawn between a mode of enforcing recovery on the one hand and effecting actual recovery of the amount of monthly allowance which has fallen in arrears on the other. Sentencing a person to jail is a 'mode of enforcement'. It is not a 'mode of satisfaction' of the liability. The liability can be satisfied only by making actual payment of the arrears. The whole purpose of sending to jail is to oblige a person liable to pay the monthly allowance who refuses to comply with the order without sufficient cause, to obey the order and to make the payment. The purpose of sending him to jail is not to wipe out the liability which he has refused to discharge. Be it also realised that a person ordered to pay a monthly allowance can be sent to jail only if he fails to pay the monthly allowance 'without sufficient cause' to comply with the order. It would indeed be strange to 31 hold that a person who 'without reasonable cause' refuses to comply with the order of the court to maintain his neglected wife or child would be absolved of his liability merely because he prefers to go to jail. A sentence of jail is no substitute for the recovery of the amount of monthly allowance which has fallen in arrears."
26. From the above line of cases, it becomes very clear, that, a sentence of imprisonment can be granted for default in payment of compensation awarded under Section 357(3) CrPC. The whole purpose of the provision is to accommodate the interests of the victims in the criminal justice system. Sometimes the situation becomes such that there is no purpose served by keeping a person behind bars. Instead directing the accused to pay an amount of compensation to the victim or affected party can ensure delivery of total justice. Therefore, this grant of compensation is sometimes in lieu of sending a person behind bars or in addition to a very light sentence of imprisonment. Hence on default of payment of this compensation, there must be a just recourse. Not imposing a sentence of imprisonment would mean allowing the accused to get away without paying the compensation and imposing another fine would be impractical as it would mean imposing a fine upon another fine and therefore would not ensure proper enforcement of the order of compensation. While passing an order under Section 357(3), it is imperative for the courts to look at the ability and the capacity of the accused to pay the same amount as has been laid down by the cases above, otherwise, the very purpose of granting an order of compensation would stand defeated.
40. This position was reiterated in R. Mohan v. A.K. Vijaya Kumar, (2012) 8 SCC 721: (2012) 4 SCC (Civ) 585: (2012) 3 SCC (Cri) 32 1013: 2012 SCC OnLine SC 486 wherein it was observed at page 729:
29. The idea behind directing the accused to pay compensation to the complainant is to give him immediate relief so as to alleviate his grievance. In terms of Section 357(3), compensation is awarded for the loss or injury suffered by the person due to the act of the accused for which he is sentenced. If merely an order directing compensation is passed, it would be totally ineffective. It could be an order without any deterrence or apprehension of immediate adverse consequences in case of its non-
observance. The whole purpose of giving relief to the complainant under Section 357(3) of the Code would be frustrated if he is driven to take recourse to Section 421 of the Code. Order under Section 357(3) must have the potentiality to secure its observance. Deterrence can only be infused into the order by providing for a default sentence. If Section 421 of the Code puts compensation ordered to be paid by the court on a par with the fine so far as the mode of recovery is concerned, then there is no reason why the court cannot impose a sentence in default of payment of compensation as it can be done in case of default in payment of fine under Section 64 IPC. It is obvious that in view of this, in Vijayan [(2009) 6 SCC 652:
(2009) 3 SCC (Cri) 296], this Court stated that the abovementioned provisions enabled the court to impose a sentence in default of payment of compensation and rejected the submission that the recourse can only be had to Section 421 of the Code for enforcing the order of compensation. Pertinently, it was made clear that observations made by this Court in Hari Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984] are as important today as they were when they were made. The conclusion, therefore, is that the order to pay compensation may be enforced by awarding a sentence in default.33
30. In view of the above, we find no illegality in the order passed by the learned Magistrate and confirmed by the Sessions Court in awarding a sentence in default of payment of compensation. The High Court was in error in setting aside the sentence imposed in default of payment of compensation."
41. Thus, it was competent for the learned Trial Court to impose the sentence of imprisonment.
42. Section 30 of the Cr.P.C. provides that a Court of Magistrate may award such term of imprisonment in default of payment of fine as is authorized by law. Proviso reads that where the imprisonment has been awarded as a part of the substantive sentence, the term of imprisonment in default cannot exceed 1/4th of the term of the imprisonment which the Magistrate is competent to inflict as punishment for the offence.
43. In the present case, the learned Magistrate could have awarded imprisonment of two years for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act, which means that as per Section 30 proviso, he could have imposed an imprisonment of six months in default of payment of fine. Learned Magistrate exceeded his jurisdiction 34 in awarding the imprisonment of one year and the same is to be interfered with and to be reduced to six months.
44. No other point urged.
45. Therefore, the present petition is partly allowed and the order of sentence passed by the learned Trial Court is modified. It is ordered that the accused will undergo simple imprisonment for one year for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act. He will also pay a compensation of ₹6,00,000/- and in default of payment of compensation will further undergo simple imprisonment for six months. Subject to this modification, the rest of the judgment is upheld.
17th October, 2024 (Rakesh Kainthla) (manish) Judge