Compensatory aspect of remedy under NI Act cannot be ignored: High Court

Registrar General asked to circulate judgment to all Judicial Magistrates
Compensatory aspect of remedy under NI Act cannot be ignored: High Court
File photo of J&K High CourtMubashir Khan/ GK

Srinagar: Underscoring that the compensatory aspect of remedy under Negotiable Instruments (NI) Act cannot be ignored, High Court of J&K and Ladakh has remanded a check bounce case to a trial court for considering it afresh.

Allowing an appeal against a trial court order by virtue of which an accused was convicted and sentenced to six months simple imprisonment and Rs 2 lakh fine was imposed on him against the bounced cheque amounting to Rs 10 lakhs, a bench of Justice Sanjeev Kumar said: “ It is abundantly clear that the Criminal Court while convicting an accused for commission of offence under Section 138 of N.I. Act, cannot ignore the compensatory aspect of remedy”.

“The compensatory aspect can only be given due regard if the sentence imposed is at least commensurate to the amount of cheque, if not more, so that this fine, once imposed, can be appropriated towards payment of compensation to the complainant by having resort to Section 357 of Cr.P.C,” Court said. In the instant case, the bench said, the trial Court has miserably failed to take all these aspects into consideration and has awarded Rs 2 lakh, to be paid as compensation to the complainant when admittedly the cheque amount was to the tune of Rs 10 lakh.

The legislature, the court said, has indisputably given discretion to the Magistrate to impose a sentence of fine which may extend to double the amount of cheque.

“ And, therefore, the sentence of fine whenever imposed by the Criminal Court upon conviction of accused under Section 138 of N.I. Act must be sufficient enough to adequately compensate the complainant”.

The court said the amount of cheque and the date from which the amount under the cheque has become payable along with payment of reasonable interest may serve as good guide in this regard. “To be consistent and uniform, it is always advisable to impose a fine equivalent to the amount of cheque plus at least 6% interest per annum from the date of cheque till the date of judgment of conviction,” it said.

The court however said before inflicting such fine the trial Magistrate must eschew the amount of interim compensation, if any, paid under Section 143A of N.I. Act or such other sum which the accused might have paid during the trial or otherwise towards discharge of liability.

“It may or may not accompany the sentence of simple imprisonment. It is purely in the discretion of the trial Magistrate but having regard to the object of legislation, it shall be appropriate if the sentence of imprisonment imposed is kept at the minimum unless, of course, the conduct of accused demands otherwise.”

While setting aside the order of the trial court to the extent it imposed the sentence upon the accused-convict, the court said: "The matter is remanded back to the trial Court for considering the imposition of sentence upon the respondent (accused-convict) de novo (afresh) in the light of legal position and the observations made”. “The trial Court shall proceed to consider the matter afresh only after putting the petitioner (appellant) as well as the respondent (accused-convict) on notice”.

The court also directed its Registrar General to circulate the judgment it passed to all the Judicial Magistrates within the court’s jurisdiction so that uniformity and consistency in the matter of imposing sentence of fine having regard to the compensatory aspect of remedy under Section 138 of N.I. Act is ensured.

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