Kerala High Court: Courts Should Compensate Complainant In Cheque Dishonor Case

Kerala High Court: Courts Should Compensate Complainant In Cheque Dishonor Case

Cites the decision of the Supreme Court and other courts in similar matters

The Kerala High Court has held that while convicting an accused in a proceeding under Section 138 of the Negotiable Instruments Act, 1881 for cheque dishonor, the criminal courts should also consider the importance of compensating the complainant.

The bench of Justice C.S. Dias thus enhanced the fine imposed upon the accused to provide compensation to the complainant under Section 357 of CrPC.

The court ruled, “A reading of Chapter XVII of the Act and the object to be achieved by the legislation and its interpretation on the point of sentencing, leaves no room for doubt that the criminal court while sentencing an accused for the offence under Section 138, must keep the compensatory part in mind. It must be commensurate to the cheque amount and not exceed twice the amount so that it can be appropriated towards the compensation payable to the complainant under Section 357 of CrPC.”

The revision petitioner had approached the court citing the inadequacy of the sentence imposed upon the first respondent who committed the offence of cheque dishonor. The magistrate convicted and sentenced the first respondent to undergo one month of simple imprisonment and pay a fine of Rs.25,000 as compensation to the complainant.

However, on appeal, the Additional Sessions Court upheld the conviction but reduced the sentence to simple imprisonment for one day and compensation of Rs.25,000.

Justice Dias, while relying on the judgment of the Supreme Court in the Soman v State of Kerala (2013) case, noted that there were no legislative or judicially laid sentencing guidelines to assist the trial court whilst imposing punishment on an accused. He remarked that sentencing was a matter of discretion and a task for the judge and it had to be exercised judiciously.

The court held, “It is said that justice knows no friends and has no foes, but the law is to be administered with a hard hand, and justice cannot be diluted for sympathy.”

The bench noted that Section 138 of the NI Act was added in 1988. It was, subsequently, amended in 2002. Thus, a convicted person was liable to be sentenced to imprisonment for a term that could be extended up to two years or with a fine, extending to twice the amount of the cheque, or both.

The judge also highlighted the importance of compensating the complainant. He cited the decision in the Anil Kumar v Shammy (2002) case, wherein guidelines were laid to deal with compensation payment under Sec.357 of CrPC. It was held, “Normally in a successful prosecution under Section 138 of the NI Act, a direction under Section 357 must follow.”

The court also relied on the Damodar S. Prabhu v. Sayed Babalal H (2010), R. Vijayan v. Baby (2011) case. It was said that in a cheque dishonor case, the compensatory aspect of the remedy was given priority over the punitive aspect. The intention of prosecuting was not just to punish the offender but also to compensate the complainant. Once a criminal complaint was lodged, a civil suit was seldom filed to recover the amount. Under Section 138, the proceeding was now viewed to recover the cheque amount.

The bench noted that the sentence passed by the lower courts in the case was on misplaced sympathy and inadequate. Thus, it enhanced the penalty, directing the accused to pay a fine of Rs.1,10,000 and undergo a one-day simple imprisonment.