2020 (9) TMI 110 - HC - Indian Laws

Court affirms power to impose compensation deposit conditions under NI Act, stresses credibility of negotiable instruments.

Lalit Kaushal And Another Versus Yadvinder Kaushal

Lalit Kaushal And Another Versus Yadvinder Kaushal - TMI Issues Involved:1. Jurisdiction and power of the Appellate Court under Section 389 of Cr.P.C. to direct deposit of compensation amount.2. Distinction between 'fine' and 'compensation' under Cr.P.C.3. Applicability and interpretation of Section 148 of the NI Act.4. Conditions for suspension of sentence in appeals under Section 138 of NI Act.5. Petitioner's request to deposit compensation in installments.Issue-wise Detailed Analysis:1. Jurisdiction and Power of the Appellate Court under Section 389 of Cr.P.C. to Direct Deposit of Compensation Amount:The petitioners argued that the Appellate Court does not have the jurisdiction to direct the deposit of compensation at the time of suspending the sentence under Section 389 of Cr.P.C. They contended that compensation does not form part of the fine imposed by the Magistrate and must be recovered through independent proceedings. The court, however, referenced prior judgments, including *Suganthi Suresh Kumar vs. Jagdeeshan* and *Stanny Felix Pinto vs. Jangid Builders Pvt. Ltd.*, which upheld the Appellate Court's authority to impose such conditions.2. Distinction Between 'Fine' and 'Compensation' Under Cr.P.C.:The petitioners emphasized that 'fine' and 'compensation' are distinct terms with different implications. They argued that while the Appellate Court can mandate the deposit of a fine, it cannot do the same for compensation. However, the court noted that under Section 357(3) Cr.P.C., the Magistrate can order compensation, and this can be enforced similarly to a fine. The court also highlighted that the compensation awarded under Section 357(3) Cr.P.C. can be recovered even if the convicted person opts to serve the default sentence.3. Applicability and Interpretation of Section 148 of the NI Act:Section 148 of the NI Act, effective from 1.9.2018, empowers the Appellate Court to direct the deposit of a minimum of 20% of the fine or compensation awarded by the trial court. Although the impugned order was passed before this amendment, the court cited the Supreme Court's decision in *Surender Singh Deswal vs. Virender Gandhi*, which held that Section 148 should be interpreted to serve the objectives of the NI Act and can be applied retrospectively.4. Conditions for Suspension of Sentence in Appeals Under Section 138 of NI Act:The court referenced several Supreme Court judgments, including *Dalmia Cement (Bharat) Ltd. vs. Galaxy Traders and Agencies Ltd.*, which emphasized the strict liability nature of Section 138 of the NI Act to ensure the sanctity of negotiable instruments. The court also cited *Dilip S. Dahanukar vs. Kotak Mahindra Co. Ltd.*, which recognized the Appellate Court's right to impose conditions at the time of suspending the sentence, provided they are reasonable and do not impair the statutory right to appeal.5. Petitioner's Request to Deposit Compensation in Installments:The petitioner requested to deposit the compensation amount in installments. The court noted that the condition to deposit 50% of the compensation amount was imposed five years ago, and thus, the request for installments had lost its force. However, the court granted the petitioner the liberty to make such a request before the Appellate Court, which should consider it based on the entire facts and circumstances without being influenced by the current observations.Conclusion:The petition was dismissed with directions for the parties to appear before the First Appellate Court on 27th July 2020. The court upheld the Appellate Court's authority to impose conditions for the deposit of compensation under both the pre-amendment provisions and the amended Section 148 of the NI Act, emphasizing the importance of interpreting the NI Act to maintain the credibility of negotiable instruments in commercial transactions.