Trial courts must prioritise compensation in cheque bounce cases: HC

The Punjab and Haryana High Court has made it clear that a criminal court – convicting an accused for cheque bounce under Section 138 of the Negotiable Instruments Act – cannot ignore the compensatory aspect of the remedy.

“It is abundantly clear that the criminal court while convicting an accused for commission of offence under Section 138 of the Act cannot ignore the compensatory aspect of remedy…,” Justice NS Shekhawat asserted. The ruling came on a revision petition against a conviction for cheque dishonour involving Rs 19 lakh. The trial court in the matter had imposed a meagre fine of Rs 10,000 without awarding compensation.

Justice Shekhawat observed Section 138 gave the courts the discretion to impose imprisonment up to two years, or a fine extending to twice the cheque amount, or both. The courts, while exercising the discretion, were required to keep in mind the object Negotiable Instruments Act. The prime object of enacting “Chapter XVII” inserted by way of an Act was to control and discourage the menace.

Relying on a Supreme Court judgment, the Bench noted that lower courts often adhered to the conventional approach of sentencing without considering compensation, which led to significant hardship for complainants. By the time the criminal proceedings concluded, limitation for filing civil suits often expired, leaving the complainant remediless.

The court added that compensation should be commensurate with the cheque amount. “To be consistent and uniform, it is always advisable to impose a fine equivalent to the amount of cheque plus at least 6 per cent interest per annum from the date of cheque till the date of judgment of conviction,” the Bench recommended.

Referring to the facts of the case in hand, the high court asserted that the trial court failed to consider these principles, leading to an inadequate fine and no compensation. “The respondent, who was the complainant before the trial court, had even been deprived of an amount of Rs 19 lakh, which had become payable to him on April 2, 2015,” the court added, while directing the trial court to hear the parties afresh, before imposing the sentence on the petitioner.

Before parting with the judgment, Justice Shekhawat placed on record its deep appreciation for amicus curiae JS Mehndiratta for rendering “able assistance” to the court. “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,” Justice Shekhawat concluded.