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Issues: (i) Whether the cheque was issued in discharge of a legally recoverable debt so as to sustain conviction under Section 138 of the Negotiable Instruments Act, 1881; (ii) whether the appellate court could sustain fine and award compensation independently under Section 357 of the Code of Criminal Procedure, 1973, including a default sentence for non-payment of compensation.
Issue (i): Whether the cheque was issued in discharge of a legally recoverable debt so as to sustain conviction under Section 138 of the Negotiable Instruments Act, 1881.
Analysis: The evidence adduced by the complainant and the surrounding circumstances supported the finding that the accused had taken a loan and had issued the cheque towards repayment of a legally recoverable liability. The defence that the cheque was only a security cheque was not substantiated by any contemporaneous complaint or other convincing material. The distinction sought to be drawn on the basis of the cited precedent was not accepted on facts.
Conclusion: The conviction under Section 138 of the Negotiable Instruments Act, 1881 was upheld.
Issue (ii): Whether the appellate court could sustain fine and award compensation independently under Section 357 of the Code of Criminal Procedure, 1973, including a default sentence for non-payment of compensation.
Analysis: Compensation may be awarded out of fine under Section 357(1) of the Code of Criminal Procedure, 1973, and where fine is not part of the sentence compensation may be awarded independently under Section 357(3) of the Code. The power to award compensation is in addition to other sentences, and a default sentence for non-payment of compensation is permissible. However, fine and independent compensation cannot be simultaneously sustained in a manner contrary to the statutory scheme. Applying these principles, the fine imposed by the appellate court could not stand alongside the compensation awarded under Section 357(3).
Conclusion: The fine and default sentence attached to the fine were set aside, while the compensation of Rs. 5 lakhs with default sentence for non-payment was affirmed.
Final Conclusion: The conviction and compensation order were substantially maintained, but the fine component was quashed and the complainant's prayer for enhancement was rejected.
Ratio Decidendi: Compensation under Section 357(3) of the Code of Criminal Procedure, 1973 is an independent power distinct from fine, and a court may impose a default sentence for non-payment of such compensation, but fine and independent compensation cannot be sustained in a manner inconsistent with the statutory scheme.
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