Karnataka High Court
B. Harikrishna vs Macro Links Private Limited, Bangalore ... on 7 March, 2000
Equivalent citations: [2001]106COMPCAS207(KAR), ILR2000KAR2855, 2000(2)KARLJ621
Author: S.R. Bannurmath
Bench: S.R. Bannurmath
ORDER
1. This petition is filed challenging the adequacy of the fine imposed by the XIII Additional Chief Metropolitan Magistrate, Bangalore, in C.C. No. 14102 of 1991.
2. The brief facts of the case are as follows:
In a private complaint filed by the petitioner under Section 200 of the Criminal Procedure Code complaining commission of offence under Section 138 of the Negotiable Instruments Act (for short, 'the NI Act') by the respondents on the ground that the petitioner had lent a sum of Rs. 50,000/- to the respondents and to discharge the same in part, the respondents had issued two cheques dated 30-6-1990 and 7-7-1990 for Rs. 10,000/- and Rs. 16,501/- respectively. When the said cheques were presented, the same were dishonoured by the Bank with an endorsement "Refer to drawer". Thereafter, as per the provisions of the NI Act, notice intimating dishonour of cheques and demanding the money was sent by the petitioner. In spite of complying with the mandatory requirements and waiting for the period as enunciated under Section 138 of the NI Act, as no payments were made, he petitioner filed the private complaint. After taking cognizance of the offence and recording sworn statement, the learned Magistrate issued process. The respondents appeared before the learned Magistrate and pleaded not guilty. Thereafter, after recording the evidence on behalf of the petitioner and after giving an opportunity to the respondents and hearing their respective arguments, by the judgment dated 23-6-1999, the learned Magistrate held that the petitioner has proved that the respondents have committed an offence under Section 138 of the NI Act and as such convicted them for the same and sentenced them to pay a fine of Rs. 10,000/- in default to suffer simple imprisonment for three months. Aggrieved by inadequacy of sentence, the petitioner has approached this Court in this revision petition.
3. Sri Ram Doraiswamy, learned Counsel for the petitioner, contended that the sentence imposed by the Trial Court is contrary to the provisions of the Act, that the Trial Court has imposed sentence which is not only unduly lenient and grossly inadequate, but manifestly illusory one. Elaborating the argument, the learned Counsel contended that under Section 138 of the NI Act, the punishment provided for dishonour of cheque is 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. It is contended that, when the law itself provides for maximum heavy sentence, especially keeping in view the aims and objects of the NI Act as well as the fact that the amount under the cheques was to the tune of Rs. 26,501/-; whereas the imposition of fine of Rs. 10,000/- that too without even specifying as to whom among the two accused should pay the fine whether jointly or individually and as such the same has resulted in passing of the sentence as mere illusory. It is also contended that, though the imposition of sentence/fine by the Court is discretionary; the discretion should have been used judiciously and with due considerations. Having failed to do so the Trial Court has acted contrary to the true letters and spirit of Section 138 of the NI Act and as such the fine has to he enhanced; that the Trial Court was in error in imposing a fine of Rs. 10,000/- even after holding "inconsistent stand adopted by the accused while recording his plea and statement under Section 313 of the Cr. P.C." which according to the learned Counsel is again violative of the spirit of the provisions and at any rate, it is contended, though the Court found both the respondents/accused guilty, imposition of fine without clarifying as to who of the respondents should pay the same is also erroneous and liable to be interfered with.
4. On the other hand, learned Counsel for the respondents contended that, though the respondents/accused have not challenged the imposition of fine of Rs. 10,000/-, but the same is illegal in view of the latest pronouncement of the Hon'ble Supreme Court in the case of K. Bhaskaran v Sankaran Vaidhyan Balan and Others. It is contended that in view of the aforesaid decision of the Hon"ble Supreme Court, the Trial Court had jurisdiction to impose fine upto Rs. 5,000/- only and as such the imposition of fine of Rs. 10,000/- is illegal and as such it is submitted that as held by the Hon'ble Supreme Court in the aforesaid case, the sentence is to be set aside and the matter has to be remitted back to the Trial Court for imposition of proper fine in terms of the pronouncement of the Apex Court.
5. At the outset, it is to be noted that the respondents have been found guilty of the offence under Section 138 of the NI Act and the Trial Court has convicted them and imposed a fine of Rs. 10,000/-. The order of the Trial Court so far as the respondents being found guilty of the offence is concerned is not challenged either before the Appellate Court or before this Court by the respondents and as such the same has become final. So, the only question which is to be considered by this Court is the adequacy or otherwise of the sentence/fine amount.
6. No doubt, imposing of sentence by the Court is discretionary. But, the discretion has to be judicious one. It is to be noted that the punishment is the sanction imposed on a person for the infringement of the rules of society. The punishment aims to protect society from mischievous elements, by deterring potential offenders, and preventing actual offenders from committing further offences, to eradicate evils and to reform criminals and turn them into law-abiding citizens. Punishment is primarily used as a method of protecting society by reducing the occurrence of criminal behaviour. The object of protecting society is sought to be achieved by (1) deterrence, (2) prevention, (3) retribution and (4) reformation. The Indian Penal Code has provided for graded system of punishment to suit different categories of crime. The Indian Penal Code does not, in general, provide for a minimum penalty to be imposed. A wide discretion has been given to the Courts to award any punishment within the maximum limits of punishment prescribed for an offence in each case on its merit. As such the Court while awarding sentence must take into consideration the nature of the offence, the circumstances in which it was committed, the degree of deliberation, the age, sex, character and antecedent of the criminal.
7. The present offence is not under the Indian Penal Code. It is the one under the new provision introduced under the Negotiable Instruments Act. As is clear from the aims and object, this penal provision was introduced to enhance the acceptability of cheque in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers. It is to be noted that prior to the introduction of this provision the drawer of a dishonoured cheque could be only prosecuted if it is shown that by issuing the cheque he cheated someone within the meaning of Sections 415 and 420 of the IPC as well as to initiate proceedings in Civil Court for recovery of the amount as well as damages.
8. Taking into consideration the fact that the civil proceedings take longer time and in the meanwhile the guilty/drawer of the cheque enjoys the money whereas the person who has lent money and received the cheque may suffer financially, Chapter XVII of the NI Act comprising Sections 138 to 142 was introduced by Section 4 of the Banking Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act No. 66 of 1988) under the nomenclature "of penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts". It is to be noted that at the time of introduction of the Bill it was declared in the Statement of Objects that the amendment was being made to achieve various objectives detailed therein. One of the objectives specified was:
"to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in face of bouncing of cheques due to insufficiency of funds in the accounts or for the reason that it exceeds the arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers".
A Division Bench of this Court in the case of Y. Krishnamurthy v Sha-ranappa, while considering the provisions under Chapter XVII of the NI Act, observed thus:
"It appears that the Chapter was substituted keeping in view the apprehended incalculable loss likely to be suffered in case the cheque was dishonoured. It was intended to provide a speedy remedy to avoid injury or inconvenience to the payee or endorsee in view of the fact that due to the latter's unexpected disappointment he will have to lick the dust while meeting his own future commitments made to others. The provision was made despite existence of the speedy remedy for the recovery of the amount payable under a negotiable instrument. To ensure promptitude in availing relief against the defaulters, the Legislature in its wisdom thought it fit to substitute the Chapter with the object of assigning credibility and dependability to the negotiable instruments (Cheque). Feeling that the civil remedy for recovery and compensation was not adequate to ensure the confidence sought to be achieved in favour of the payee or endorsee of Negotiable Instruments like cheque, the criminal prosecution was envisaged and provided in the larger interest of the persons and group of persons for whose benefit the Act had been enacted. The interest of honest and innocent drawer have been adequately protected by this Chapter. As the section is a departure from the usual remedies available in a Civil Court under the Act, the provisions are required to be strictly and punctually observed in the manner prescribed".
Thus it is clear that these provisions have been introduced as deterrent, preventive, retributive and reformative measures. Insofar as the construction of the statute or the provision is concerned, the Hon'ble Supreme Court in the case of Swantraj and Others v State of Maharashtra, while interpreting the statutory provision/rule dealing with penalty under the Drugs and Cosmetics Act, 1940, observed that every legislation is a social document and judicial construction seeks to decipher the statutory mission, language permitting, for suppression of evil and advancing the remedy and what must tilt the balance is the purpose of the statute, its potential frustration and judicial avoidance of the mischief by a construction whereby the means of licensing meet the ends of ensuring pure and potent remedies for the people.
9. Maxwell in his treatise 'Interpretation of Statutes' has observed thus:
There is no doubt that 'the office of the Judge is, to make such construction as will suppress the mischief, and advance the remedy, and to suppress all evasions for the continuance of the mischief. To carry out effectively the object of a statute, it must be so construed as to defeat all attempts to do, or avoid doing, to an indirect or circuitous manner that which it has prohibited or enjoyed: quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud".
The manner of construction has two aspects. One is that the Courts, mindful of the mischief rule, will not be astute to narrow the language of a statute so as to allow persons within its purview to escape its net. The other is that the statute may be applied to the substance rather than the mere form of transaction, thus defeating any shifts and contrivances which parties may have devised in the hope of thereby falling outside the Act. This benignant rule originated four hundred years ago in Hey-don's case, in which it is resolved thus:
"That for the sure and true interpretation of all statutes in general (be they penal or beneficial restrictive or enlarging of the common law) four things are to be discerned and considered: (1st) What was the common law before the making of the Act, (2nd) What was the mischief and defect for which the common law did not provide, (3rd) What remedy the Parliament had resolved and appointed to cure the disease of the commonwealth, and (4th) The true reason of the remedy; and then the office of all the Judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions "for continuance of the mischief, and pro-private commode, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico".
Even with regard to the penal provision which is also remedial one in the case of State of Tamil Nadu v M.K. Kandaswamy, the Hon'ble Supreme Court observed thus:
"In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book should be eschewed; if more than one construction is possible that which preserves its workability, and efficacy is to be preferred to the one which would render it otiose or sterile".
10. Taking into consideration these aspects I am of the view that, though there is wide discretion available to the Courts while imposing sentence under the provisions of the NI Act, the Courts must take into consideration all aspects of the case including the financial loss caused to the payee or holder in due course of the cheque, the quantum of the amount involved in the cheque, status of the accused as well as of the complainant, time and costs consumed in the litigation, etc.
11. At this stage itself it would be proper to refer to two provisions of the NI Act, viz., Section 30 and Section 117. Under Section 30, the drawer of a cheque is bound, in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received by, the drawer as provided under the NI Act. Section 117 prescribes rules as to compensation payable in case of dishonour of promissory note, bill of exchange or cheque, by any party liable to the holder or any indorsee. To determine the compensation the rules are:
(a) The holder is entitled to the amount due under the instrument together with the expenses properly incurred in presenting, noting and protesting it;
(b) When the person charged resides at a place different from that at which the instrument was payable, the holder is entitled to receive such sum at the current rate of exchange between the two places;
(c) An indorser who, being liable, has paid the amount due on the same is entitled to the amount so paid with interest at (eighteen per centum) per annum from the date of payment until tender or realisation thereof, together with all expenses caused by the dishonour and payment;
(d) When the person charged and such indorser resides at different places, the indorser is entitled to receive such sum at the current rate of exchange between the two places;
(e) The party entitled to compensation may draw a bill upon the party liable to compensate him, payable at sight or on demand, for the amount due to him, together with all expenses properly incurred by him. Such bill must be accompanied by the instrument dishonoured and the protest thereof (if any). If such bill is dishonoured, the party dishonouring the same is liable to make compensation thereof in the same manner as in the case of the original bill.
We are concerned herein mainly with clause (a) of Section 117 of the NI Act. By looking into this provision it is clear that the drawer of a cheque, is bound in case of dishonour of the cheque, to compensate the holder in accordance with the rule under Section 117 at least to the tune of cheque amount and expenses or costs.
12. Keeping in view these aspects as well as the aims and objects of the NI Act, especially Chapter XVII thereof, I am of the view that the sentence of fine, if imposed, ought to be the minimum equivalent to the amount of the cheque and proportionate costs incurred by the payee or holder in due course with outer limit of twice the cheque amount. In this regard, the learned Counsel for the respondents has relied upon the judgment of the Apex Court in the case of K. Bhaskaran, supra, to submit that, as per the dictum laid down by the Hon'ble Supreme Court, the Magistrate cannot impose a fine exceeding Rs. 5,000/-. It is to be noted that the Hon'ble Supreme Court, while considering the case, found that the impugned fine imposed in that case was by the Magistrate First Class. Taking into consideration Section 29 of the Cr. P.C. where under the power and jurisdiction of the Magistrate First Class for awarding fine is restricted and limited to Rs. 5,000/- only, the Hon'ble Supreme Court held that the Magistrate cannot impose a fine exceeding Rs. 5,000/-. It is also to be noted that taking into consideration the objects of the NI Act the Hon'ble Supreme Court has in the same decision clarified that, though the power and jurisdiction of imposing fine is limited to Rs. 5,000/-, it is open for the Magistrate to resort to Section 357 of the Cr. P.C., for awarding compensation even exceeding Rs. 5,000/- if the trial is before the Court of the Magistrate First Class. Thus, in my view, the Hon'ble Supreme Court too felt the necessity of awarding compensation in the cases coming under Chapter XVII of the NI Act.
13. So far as the present case is concerned, the same is tried by the Additional Chief Metropolitan Magistrate, Bangalore. It is to be noted that under sub-section (4) of Section 29 of the Cr. P.C., the Court of the Chief Metropolitan Magistrate shall have the power of the Court of the Chief Judicial Magistrate and under sub-section (1) of Section 29 of the Cr. P.C., the Chief Judicial Magistrate may pass any sentence authorised by law except the sentence of death or of imprisonment for life or of imprisonment for a term exceeding seven years. Thus, there is no pecuniary limitation to the Chief Metropolitan Magistrate or Additional Chief Metropolitan Magistrate so far as imposing of fine is concerned. As such, the dictum laid down by the Apex Court in the Bhaskaran's case, supra, in my view, is not applicable to the present case. Even otherwise, as laid down in various decisions, it is open for the Magistrate to award compensation exceeding Rs. 5,000/- if the case is decided by the Court of Magistrate First Class.
14. Thus, on analysing the aims and objects of the NI Act, especially of Chapter XVII, the various dicta of the Apex Court, in my view, on finding the accused guilty for the offence under Section 138 of the NI Act, taking into consideration the amount of cheque, time consumed in the proceedings, status of the parties, the falsity of defence, etc., the Trial Court may impose heavier fine along with compensation. As observed by the Apex Court, if the trial and conviction are by the Court of Magistrate First Class, he can impose a fine upto Rs. 5,000/- and compensation of minimum equivalent to the amount of cheque involved in the case and in case of Chief or Additional Chief Metropolitan Magistrate, he can impose a fine of minimum of the amount of cheque involved with proportionate costs taking into consideration the length of the prosecution and trial, the amount of cheque, status of the parties as well as the fact whether the complainant has invoked the civil jurisdiction for recovery of the amount or not etc. and as per Bhaskaran's case, supra, award it as compensation to the complainant.
15. In the present case, it is to be noted that the two cheques were issued in the year 1990. Almost 10 years have lapsed. The complainant must have suffered, financially due to the non-availability of the amount due to the conduct of the respondent in issuing cheques dishonoured. It is also to be noted that the respondents are the Company and its Managing Director and the amount involved is Rs. 26,501/- and I am of the view that the Court below was in error in imposing a meagre fine of Rs. 10,000/- for the problems created and the loss suffered by the complainant. Taking into consideration all these aspects the same is liable to be enhanced to Rs. 31,500/-.
16. In the result, this revision petition succeeds and the fine imposed by the XIII Additional Chief Metropolitan Magistrate, Bangalore, in C.C. No. 14102 of 1991 is modified and enhanced from Rs. 10,000/- to Rs. 31,500/- with default clause to undergo simple imprisonment for four months in case of non-payment of fine. Time to deposit or pay the fine is fixed as four months from today. It is further ordered that in case of payment of fine the same shall be paid to the petitioner as compensation under Section 357 of the Cr. P.C.