Section 138 NI Act prosecution: conviction sustained despite arraignment objection, while sentence was reduced through probation and custody already undergone.

A Delhi HC decision on a Section 138 NI Act prosecution addressed whether conviction should be disturbed because the company was not properly arraigned and the Section 251 CrPC notice was issued only to the petitioner individually. The Court accepted that the cheque was issued by the petitioner as the company's signatory and noted the objection to the framing of the proceedings, but it declined to interfere with the conviction. On sentence, the Court considered the compensation already paid, the 23 days of custody undergone, the sentence being under two years, and the first-conviction position, and modified the sentence by granting the benefit of probation and custody already undergone while leaving the conviction intact.

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Issues: (i) Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 required interference on the ground that the company was not properly arraigned and the notice and notice under Section 251 of the Code of Criminal Procedure, 1973 were issued only to the petitioner in an individual capacity. (ii) Whether the sentence required modification in view of the payment of compensation, the custody already undergone, and the applicability of probation.

Issue (i): Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 required interference on the ground that the company was not properly arraigned and the notice and notice under Section 251 of the Code of Criminal Procedure, 1973 were issued only to the petitioner in an individual capacity.

Analysis: The complaint and the criminal process were challenged on the footing that the cheque was issued on behalf of the company, yet the proceedings were pursued against the petitioner individually. The record showed that the notice under Section 251 was framed against the petitioner and not in the name of the drawer entity. The Court accepted that the cheque was issued by the petitioner in the capacity of signatory of the company and not as an individual, and noted the force in the objection regarding the manner in which the proceedings were framed. Even so, the Court declined to disturb the conviction in the facts of the case.

Conclusion: The conviction was maintained and no interference was granted on this issue.

Issue (ii): Whether the sentence required modification in view of the payment of compensation, the custody already undergone, and the applicability of probation.

Analysis: The petitioner had deposited compensation of Rs. 2 lakhs against a cheque amount of Rs. 1 lakh, and had already undergone custody for 23 days. The Court also noted that the sentence awarded was less than two years and that it was the first conviction. In those circumstances, the Court considered it appropriate to release the petitioner on the sentence already undergone and extend the benefit of probation, so that no disqualification would attach to the conviction.

Conclusion: The sentence was modified in favour of the petitioner while the conviction remained undisturbed.

Final Conclusion: The revision succeeded only to the limited extent of sentence, with the conviction upheld and the petitioner granted the benefit of custody already undergone and probation.

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