Punjab & Haryana High Court: Sentence Of Fine Imposed In Cheque Bounce Cases Must Be Sufficient To Adequately Compensate Complainant
The Punjab and Haryana High Court held that the fine imposed must be equivalent to the amount of the cheque plus at least 6% interest per annum.
The Punjab and Haryana High Court held that whenever the sentence of fine is imposed by a Criminal Court upon conviction of accused under Section 138 of the NI Act, it must be sufficient enough to adequately compensate the complainant.
The Court set aside the sentence imposed in a cheque dishonor case and remanded the matter back to the Trial Court for fresh consideration on the quantum of sentence and compensation. The Court stated that the Criminal Courts should bear in mind “the laudable object” of engrafting Chapter XVII containing Section 138 to 142 of the Negotiable Instruments Act, 1881 Act (NI Act) and give priority to the “compensatory aspect of remedy.”
A Single Bench of Justice NS Shekhawat held, “Indisputably, the Legislature has 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 the Act must be sufficient enough to adequately compensate the complainant. 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.”
Senior Advocate A.P.S. Deol appeared for the Petitioner, while Advocate J.S. Mehndiratta represented the Respondent.
Brief Facts
The complainant alleged that the Petitioner had borrowed a sum for business purposes and had issued a post-dated cheque, which when presented for encashment, was dishonored with the remark ‘Account Closed’. A complaint under Section 138 of the NI Act was subsequently filed.
The Judicial Magistrate convicted the Petitioner, sentencing her to two years of rigorous imprisonment and imposing a fine. However, the Trial Court did not award any compensation to the complainant. The conviction was later upheld by the Additional Sessions Court.
Court’s Reasoning
The High Court reiterated that “Criminal Court while convicting an accused for commission of offence under Section 138 of the Act, cannot ignore the compensatory aspect of remedy and 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.”
The Court referred to the decision of the Supreme Court in Damoder S. Prabhu v. Sayed Babalal H. (2010), wherein it was held that “with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect.”
Therefore, the Bench held that its 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.
“However, before inflicting such fine, the trial Magistrate must eschew the amount of interim compensation, if any, paid under Section 143A of the 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 regarding 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,” it remarked.
Consequently, the Court remanded the matter back to the Trial Court, directing it to reconsider the quantum of sentence and compensation. It also granted interim bail to the Petitioner, until the Trial Court passes a fresh order. The Court also ordered, “I deem it appropriate to direct the Registrar General of this Court to circulate this judgment to all the judicial officers, subject to the jurisdiction of this Court, so that the uniformity and inconsistency in the matter of imposing the sentence of fine having regard to the compensatory aspect of the remedy under Section 138 of the Act is ensured.”
Accordingly, the High Court allowed the Revision.
Cause Title: Jugjit Kaur v. Rajwinder Singh (Neutral Citation: 2025:PHHC:033187)
Appearance:
Petitioner: Senior Advocate A.P.S. Deol; Advocate Himmat Singh Deol
Respondent: Advocates J.S. Mehndiratta and P.K.S. Phoolka
