Trial courts must prioritise compensation in cheque-bounce cases, says high court

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

“It is clear that the 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 filed against a conviction for cheque dishonour case 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 Negotiable Instruments Act, he said, and added that 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 judgement, 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 clueless.

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 bounce till the date of judgment,” 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 inadequate fine and no compensation. “The respondent, who was the complainant before the trial court, had been deprived of Rs19 lakh, which had become payable to him on April 2, 2015, about 10 years ago,” 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, he 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 judicial officers for uniformity and consistency in the matter of imposing sentence of fine,” Justice Shekhawat concluded.