S.138 NI Act | Courts Should Grant Compensation To Complainant "Commensurate To Cheque Amount" While Sentencing Accused: Kerala High Court

Justice C.S. Dias enhanced the fine imposed upon the accused, so as to provide compensation to the complainant under Section 357 of CrPC. The Court stated that the fine imposed under Section 138 of the Act should be proportional to the cheque amount, and it must not exceed twice the cheque amount.

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

The revision petitioner approached the High Court citing inadequacy of sentence imposed upon the first respondent who committed the offence of cheque dishonour under Section 138 of the Negotiable Instruments Act. The Magistrate convicted and sentenced the first respondent to undergo one month simple imprisonment and to pay a fine of twenty five thousand rupees as compensation to be paid to the complainant. On appeal, the Additional Sessions Court upheld the conviction, but reduced the sentence to simple imprisonment for one day and compensation of twenty five thousand rupees.

The Court relied upon the Apex Court decision in Soman v State of Kerala (2013) and noted that there were no sentencing guidelines in judicial system. It stated that there were no legislative or judicially laid down guidelines to assist the trial court whilst imposing punishment on an accused.

The Court further stated sentencing was a matter of discretion and a task for the judge which has to be exercised judiciously. The Court stated that when a statute does not lay down the procedure or guidelines regarding sentencing, then the Court has to decide the punishment to be imposed upon the accused. It noted thus:

The discretion of sentencing needs to be exercised judiciously, especially when it is not guided by any statute. Sentencing is that stage of the criminal delivery system where the judge decides the punishment of the convict. 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 Court noted that Section 138 of the Negotiable Instruments Act, 1881 was added in 1988 and subsequently, it was amended in 2002. As per Section 138, a convicted person was liable to be sentenced with imprisonment for a term which may be extended up to two years or with a fine which may extend to twice the amount of the cheque, or with both.

The Court highlighted the importance of compensating the complainant in cheque dishonour cases. It relied upon the decision in Anilkumar v Shammy (2002) which laid down guidelines to deal with payment of compensation under Sec.357 of CrPC and held thus:

“ I am in these circumstances of the opinion that normally in a successful prosecution under Section 138 of the Negotiable Instruments Act a direction under Section 357 must follow.”

The Court further relied upon Damodar S. Prabhu v. Sayed Babalal H (2010), R. Vijayan v. Baby (2011) and stated that in cheque dishonour cases, the compensatory aspect of the remedy was given priority over the punitive aspect. It noted that the intention of prosecuting was not just to punish the offender but also to compensate the complainant. It noted that once a criminal complaint was lodged under Section 138 for the offence of dishonouring the cheque, then a civil suit is seldom filed to recover the amount of the cheque. It noted that the proceeding under Section 138 was now viewed as s a proceeding for the recovery of the cheque amount. Thus, the Court held that criminal courts have to keep in mind the aspect of compensating the complainant under Section 357 of CrPC while sentencing an accused for the offence under Section 138 of the Act.

The Court noted that the sentence passed by the lower Courts was based on misplaced sympathy and was inadequate. It thus enhanced the fine amount and directed the accused to pay a fine of rupees one lakh ten thousand rupees and to undergo simple imprisonment for one day.

Counsel for the Petitioner: Advocate B Pramod

Counsel for the respondents: Senior Public Prosecutor Pushpalatha M K

Citation: 2023 LiveLaw (Ker) 567

Case title: Sasikumar V Ushadevi

Case number: CRL.REV.PET NO. 844 OF 2011

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