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Andhra High Court · body

2011 DIGILAW 307 (AP)

T. K. Krishna v. A. Venkatapathi Raju

2011-04-01

GOPALA KRISHNA TAMADA

body2011
JUDGMENT: Since common point is involved in all these revisions, all the revisions are being disposed of by this common order. 2. In all these cases the complainants are aggrieved of the judgments of the trial Courts for letting off the accused with a meager fine amount of Rs.5,000/- only for the offence punishable under Section 138 of the Negotiable Instruments Act (for brevity “the Act”), particularly when the cheque amounts are in lakhs of rupees. 3. For the sake of convenience, the parties to these proceedings would hereinafter be referred as they are arrayed in the trial Courts. 4. In these cases cheques were issued by the accused on different dates for different amounts ranging from Rs.9,000/- to Rs.5,00,000/- towards discharge of legally enforceable debts due to the complainants and when the cheques were presented in banks, they were bounced back for want of funds or closure of accounts. As the same is an offence attracting the provisions of Section 138 of the Act, after following the procedure provided for under Sections 138 and 142 of the Act i.e., issuance of notices, waiting till the statutory period etc., the complainants filed the complaints, within the time prescribed for, before the trial Courts and the same were taken on file asC.C.Nos.684 of 1998, 190 of 1999, 631 of 1997, 571 of 2000, 286 of 2000, 201 of 2001, 9 of 2000, 392 of 1999, 391 of 1999 and 143 of 2001 respectively. 5. During the course of trial, in order to substantiate that there was a legally enforceable debt, cheques have been issued by the accused persons and on presentation they were bounced etc., the complainants examined themselves as Prosecution Witnesses, besides examining the bank officials and other witnesses. Similarly, documentary evidence was also produced as exhibits. On a perusal of the entire evidence, both oral and documentary, the trial Courts found all the accused in these cases guilty of the offence punishable under Section 138 of the Negotiable Instruments Act. Thereafter, after questioning the accused persons, the trial Courts convicted and sentenced them to pay a fine ranging from Rs.5,000/- to Rs.10,000/-. Not satisfied with the said convictions and sentences, the present revisions are filed. 6. Thereafter, after questioning the accused persons, the trial Courts convicted and sentenced them to pay a fine ranging from Rs.5,000/- to Rs.10,000/-. Not satisfied with the said convictions and sentences, the present revisions are filed. 6. The main contention of the learned Counsel for the petitioners-complainants is that the trial Courts having held that the accused have committed the offence punishable under Section 138 of the N.I. Act, should have awarded maximum sentence of two years imprisonment and also awarded compensation which is at least equivalent to cheque amount and the impugned sentence of fine would not justify the policy of enactment under Section 138 of the N.I. Act. 7. Learned Counsel for the respondents/accused, while supporting the judgments of the trial Courts, submit that the trial Courts could even pass sentence of fine and it is not necessary that it should pass sentence of imprisonment as well and that there are no grounds to interfere with the judgments of the trial Courts. 8. Heard both sides. 9. The point that arises for consideration in these revisions is as to whether the trial Courts are justified in sentencing the accused to pay fine only for the offence punishable under Section 138 of the N.I. Act without imposing any imprisonment or awarding compensation. 10. The facts in these cases are not disputed and there is also not much arguments advanced before me challenging the finding of guilt arrived at by the trial Courts, as no appeals were preferred by the accused against the conviction and sentences. Arguments were addressed only with reference to the sentence. 11. For brevity and better understanding of the matter it is apt to extract Section 138 of the N.I. Act, which reads as under: 138. Arguments were addressed only with reference to the sentence. 11. For brevity and better understanding of the matter it is apt to extract Section 138 of the N.I. Act, which reads as under: 138. Dishonour of cheque for insufficiency, etc., of funds in the account- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this Section shall apply unless--- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.” 12. Section 4 of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 has inserted Chapter XVII in the Negotiable Instruments Act, 1881. Section 4 of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 has inserted Chapter XVII in the Negotiable Instruments Act, 1881. The statement of objects and reasons appended to the Bill explaining the provisions of the new chapter read as follows: “This clause (clause (4) of the Bill) inserts a new Chapter XVII in the Negotiable Instruments Act, 1881. The provisions contained in the new chapter provide that where any cheque drawn by a person for the discharge of any liability is returned by the bank unpaid for the reason of the insufficiency of the amount of money standing to the credit of the account on which the cheque was drawn or for the reason that it exceeds the arrangements made by the drawer of the cheque with the bankers for that account, the drawer of such cheque shall be deemed to have committed an offence. In that case, the drawer, without prejudice to the other provisions of the said Act, shall be punishable with 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. The provisions have also been made that to constitute the said offence---- (a) such cheque should have been presented to the bank within a period of six months of the date of its drawal or within the period of its validity, whichever is earlier; and (b) the payee or holder in due course of such cheque should have made a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque within fifteen days of the receipt of the information by him from the bank regarding the return of the cheque unpaid; and (c) the drawer of such cheque should have failed to make the payment of the said amount of money to the payee or the holder in due course of the cheque within fifteen days of the receipt of the said notice. It has also been provided that it shall be presumed, unless the contrary is proved, that the holder of such cheque received the cheque in the discharge of a liability. Defences, which may or may not be allowed in any prosecution for such offence have also been provided to make the provisions effective. It has also been provided that it shall be presumed, unless the contrary is proved, that the holder of such cheque received the cheque in the discharge of a liability. Defences, which may or may not be allowed in any prosecution for such offence have also been provided to make the provisions effective. Usual provision relating to offences by companies has also been included in the said new chapter. In order to ensure that genuine and honest bank customers are not harassed or put to inconvenience, sufficient safeguards have also been provided in the proposed new Chapters”. 13. There was widespread criticism that the provisions of Negotiable Instruments Act, 1881 as were originally enacted became teethless in dealing with the cases filed for dishonour of cheques. It was felt that not only the field of punishment but also the procedure that was prescribed therefor was inappropriate and inadequate and the procedure was further found to be cumbersome. As a result, the Courts were not being able to dispose of such cases expeditiously in a time bound manner. Further it was found that the culture of issuing cheques without sufficient funds in banks has become a fashion of the day. In order to curb the said menace and with a view to sharpen the provisions of the Act with more effectiveness, an amendment was introduced in the year 1988 through which a new Chapter XVII was introduced to deal with the offences falling under Section 138 of the Negotiable Instruments Act exhaustively. Again there was further amendment in the Act by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (Act No.55 of 2002) with effect from 6.2.2003. As per the said Amendment Act 55 of 2002, the punishment as prescribed under the Act has been increased from one year to two years and the period of issuance of notice by the payee to the drawer was also increased from 15 days to 30 days. 14. After trial and appreciating the entire oral and documentary evidence available on record, if the trial Court is convinced that the said material clinchingly establish the guilt of the accused, it can safely convict him for the offence punishable under Section 138 of the Act. 14. After trial and appreciating the entire oral and documentary evidence available on record, if the trial Court is convinced that the said material clinchingly establish the guilt of the accused, it can safely convict him for the offence punishable under Section 138 of the Act. The next part of it is as to whether the trial Court can take a lenient view by imposing only a sentence of fine of Rs.5,000/- or Rs.10,000/- without imposing any imprisonment. 15. From a perusal of the provisions of Section 138 of the Negotiable Instruments Act, it is clear that the trial Court may impose imprisonment for a term, which may be extended to two years or with fine, which may extend to twice the amount of the cheque or with both. From this provision of law, it is clear that it is not as though the trial Courts have to let the accused off by imposing a meager punishment of payment of fine of Rs.5,000/-or Rs.10,000/-. In the original Act of the year 1881 or in the Amendment Act 1988, the provision “with fine which may extend to twice the amount of the cheque” was not in existence and as such if the trial Court ultimately wanted to take a lenient view, it was competent to impose a meager punishment of payment of fine of Rs.5,000/- and also invoke the provisions of Section 357 of Cr.P.C. which provided for payment of compensation. In the light of the said amendment, in my considered view, there is no need or necessity for the trial Courts to impose a meager fine of Rs.5,000/- or resort to the provisions of Section 357 of Cr.P.C. It can straightaway sentence the accused persons to pay the cheque amount or twice the amount of the cheque. Probably the Amendment Act 55 of 2002 was introduced keeping in view the said meager sentences which are being imposed by the trial Courts. 16. When the cheque amounts are running in lakhs of rupees and the complainants approached the Courts below stating that the accused have committed the offence punishable under Section 138 of Negotiable Instruments Act and when once the trial Courts after thorough trial come to the conclusion that the accused are guilty of the said offence, I do not understand as to why the trial Courts impose only meagre fine of Rs.5,000/- or Rs.10,000/- against the accused. If the trial Courts do not want to send the accused persons to jail, it must properly compensate the complainants by resorting to the second limb of punishment part i.e., imposition of fine, which may extend to twice the amount of the cheque. No doubt there is no minimum fine amount in the Act, but it does not mean that the trial Courts can exercise its discretion and impose a fine of Rs.5,000/- or Rs.10,000/- particularly when the said cheque amounts are running in lakhs of rupees. The discretion, which has been conferred on the trial Courts, has to be exercised judiciously but not in an arbitrary manner which is advantageous to the accused persons. As stated supra in respect of the offence of dishonour of cheques which are issued for huge amounts, if the trial Court imposes a sentence of fine of Rs.5,000/- or Rs.10,000/-, the accused persons gladly pay the said fine amount and leave the Court with a smiling face. In my view, imposition of fine in such cases is too meager. 17. In SUGANTHI SURESH KUMAR Vs. JAGDEESHAN 2002 (1) ALT (Crl) 250 (SC)the accused was found guilty of the offence under Section 138 of the N.I Act and he was convicted and sentenced to undergo imprisonment till rising of the Court and to pay a fine of Rs.5,000/- in both cases by the trial Magistrates and the same was confirmed by the High Court of Madras. When the matter was carried to the Supreme Court, the Supreme Court at para-12 and 14 of its judgment held as under: “The total amount covered by the cheques involved in the present two cases was Rs.4,50,000/-. There is no case for the respondent that the said amount had been paid either during the pendency of the cases before the trial Court or revision before the High Court or this Court. If the amounts had been paid to the complaint there perhaps would have been justification for imposing a flee-bite sentence as had been chosen by the trial Court. But in a case where the amount covered by the cheque remained unpaid it should be the look out of the trial Magistrates that the sentence for the offence under Section 138 should be of such a nature as to given proper effect to the object of the legislation. But in a case where the amount covered by the cheque remained unpaid it should be the look out of the trial Magistrates that the sentence for the offence under Section 138 should be of such a nature as to given proper effect to the object of the legislation. No drawer of the cheque can be allowed to take dishonour of the cheque issued by him light heartedly. The very object of enactment of provisions like 138 of the Act would stand defeated if the sentence is of the nature passed by the trial Magistrate. It is a different matter if the accused paid the amount atleast during the pendency of the case. As we propose to remit the case back to the trial Court, we do not wish to indicate what exactly should be the limit of proper sentence to be passed. The trial Magistrate shall hear both sides once again in the matter of sentence and pass a sentence which is condign. We, therefore, set aside the sentence passed on the respondent and remit the case back to the trial Magistrate for passing appropriate sentence on the respondent after hearing both sides”. 18. In GOA PLAST (P) LTD Vs. CHICO URSULA D’SOUZA (2004) 2 SCC 235,the Supreme Court held as under: “Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Cheques were issued for payment of admitted liability but the drawer used to dishonour the said liability by issuing instructions to the bank for stop payment. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. To avoid the aforesaid and to create an element of credibility and dependability, Sections 138 and 139 were enacted which provide a criminal remedy of penalty if the ingredients of the sections are satisfied. To avoid the aforesaid and to create an element of credibility and dependability, Sections 138 and 139 were enacted which provide a criminal remedy of penalty if the ingredients of the sections are satisfied. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee”. 19. Considering the aforesaid decisions, I am of the view that the very object of enactment of provisions like Section 138 of the Act would stand defeated if the sentence is of the nature passed by the trial Courts. Therefore, it is expedient to remit all the Calendar Cases back to the respective trial Courts for passing appropriate sentence on the accused after hearing both sides. 20. In the result, all the Criminal Revision Cases are allowed, the impugned sentences are set aside and the matters are remitted to trial Courts for passing appropriate sentences and compensation only after giving an opportunity of hearing to both sides. However, if the accused come forward and expresses his willingness to pay the cheque amounts, the trial Courts may take lenient view in the matter of sentence, as the offence with which the accused were found guilty is compoundable. However, the trial Courts shall follow the judgment of the apex Court in DAMODAR S. PRABHU Vs. SAYED BABALAL H (2010) 5 SCC 663 while imposing costs on the accused.