2024 (7) TMI 1675 - HC - Indian Laws

Modified conviction: accused who paid cheque amount before trial ordered under Section 138 to pay Rs.50,000 compensation within two weeks

B. Srinivas Versus M/s. Ganesh Investments

HC modified conviction in a cheque-dishonour case where the accused had deposited the full cheque amount before trial. Finding the presumption under ... Dishonour of Cheque - insufficient funds - no witness was examined and no evidence was marked - failure to rebut the presumption provided under Section 138 of Negotiable Instruments Act - no explanation as to why the cheque was given - petitioner has deposited the cheque amount before the trial Court and a proof to that effect has also been filed before this Court, however, the respondent has not agreed for compounding the offence. HELD THAT:- Considering the nature of the offence committed by the petitioner and the fact that he has deposited the entire cheque amount of Rs.3,62,493/- before the trial Court, though the respondent is not willing for compounding the offence due to the difficulties caused to him, however, it should not be lost sight of that the penal consequence under Section 138 of Negotiable Instruments Act is only for person who do not show any remorse and in the case on hand, the petitioner having paid the entire amount, principles of natural justice warrant compounding of the offence, but at the same time, seeing to it that the respondent is also compensated for the difficulties. The conviction and sentence imposed on the revision petitioner/accused in C.C.No.3305 of 2012 on the file of the learned Metropolitan Magistrate, Fast Track Court No.III, Saidapet, which was confirmed in Criminal Appeal No.54 of 2017 by the learned VII Additional Sessions Judge, Chennai, is modified and the petitioner is directed to pay a sum of Rs.50,000/- as compensation to the respondent in lieu of sentence within a period of two weeks from the date of receipt of a copy of this order and submit a proof of payment before the learned Metropolitan Magistrate, Fast Track Court No.III, Saidapet, in default of payment, he shall undergo simple imprisonment for a period of three months. The Criminal Revision Case is disposed of. ISSUES PRESENTED AND CONSIDERED 1. Whether the presumption under Section 139 of the Negotiable Instruments Act was rebutted by the accused and whether conviction under Section 138 was sustainable on the evidence on record. 2. Whether payment of the cheque amount to the complainant during pendency of proceedings permits compounding or modification of the sentence under Section 138 of the Negotiable Instruments Act despite the complainant's objection. 3. What is the appropriate remedial order (compounding/compensation/alternative sentence) where the accused subsequently pays the cheque amount but the complainant resists compounding on account of delay and inconvenience. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of Section 139 presumption and sustenance of conviction under Section 138 Legal framework: Section 138 of the Negotiable Instruments Act criminalises issuance of a cheque dishonoured for insufficiency of funds; Section 139 creates a statutory presumption of consideration and that the cheque was issued for discharge of a debt or liability, placing initial onus on the accused to rebut. Precedent Treatment: No prior judicial authorities were invoked or relied upon in the reasoning; the Court proceeded on the statutory framework and the trial record. Interpretation and reasoning: The trial court accepted the complainant's evidence and documentary exhibits (promissory note, hire-purchase agreement, dishonour memorandum and statutory notice). The accused led no evidence at trial to explain issuance of the cheque or to discharge the statutory presumption under Section 139. The appellate court confirmed the trial court's findings on appreciation of material. On the record before the Court, the statutory presumption remained unrebutted and the ingredients of Section 138 were established. Ratio vs. Obiter: Ratio - where the accused does not discharge the presumption under Section 139 and offers no explanation, conviction under Section 138 is sustainable based on the charge-sheeted documents and oral testimony of the complainant. Obiter - none beyond this statutory application. Conclusions: Conviction under Section 138 was legally supportable on the evidence, as the accused failed to rebut the presumption under Section 139 and no exculpatory material was adduced. Issue 2 - Effect of subsequent payment of cheque amount on criminal liability and compounding Legal framework: Section 138 is a penal provision; courts may consider compounding or mitigation where payment is made and the aggrieved party consents; equitable principles and the object of the provision (to penalise moral turpitude and deter default, not to unnecessarily punish a remorseful debtor) inform remedial discretion. There is judicial practice of compounding or modifying sentence where restitution occurs, subject to court's satisfaction and consideration of prejudice to the complainant. Precedent Treatment: The Court did not cite specific precedents; it applied established principles that penal consequences are primarily for those who show no remorse and that restitution may warrant compounding or modification. Interpretation and reasoning: The accused deposited the full cheque amount before the trial court during the pendency of the revision. The respondent nevertheless refused compounding citing decade-long hardship. The Court balanced the respondent's grievance against the principle that penal consequence is aimed at unremorseful offenders. Considering restitution (full payment) and principles of natural justice, the Court concluded compounding/mitigation was warranted, but recognition of respondent's difficulties required compensation rather than outright quashing of conviction without any consequence. Ratio vs. Obiter: Ratio - Where the accused makes full restitution during pendency and the Court is satisfied of remorse, the Court may exercise discretion to modify sentence or compound the offence even if the complainant objects, subject to reasonable compensation to the complainant. Obiter - considerations of delay and inconvenience to the complainant are factors in fixing compensation but not determinative of the power to modify sentence. Conclusions: Full repayment by the accused justified exercise of judicial discretion to avoid enforcing the original custodial sentence, but required compensatory payment to the complainant in lieu of sentence given the respondent's objections and proven hardship. Issue 3 - Form and quantum of relief when conviction is modified in lieu of sentence Legal framework: Courts have discretion to commute sentence into payment of compensation or impose conditional alternatives (payment within time or face custodial sentence), balancing offender's repentance and victim's restitution and prejudice. Precedent Treatment: No authority was cited; the Court applied equitable and remedial principles inherent in criminal procedure and Section 138 jurisprudence. Interpretation and reasoning: Taking into account (a) that the cheque amount has been deposited (full restitution of principal due under the cheque), (b) respondent's objection based on delay and inconvenience, and (c) need to vindicate penal deterrence while compensating the victim, the Court modified the conviction's sentence into a directive: payment of a specified compensation sum within a fixed short period, failing which custodial sentence would follow. The chosen compensation (a portion of the cheque amount) was intended as just vindication of the respondent's hardship while acknowledging full restitution already made to the trial Court. Ratio vs. Obiter: Ratio - A court may substitute a monetary compensation payable within a time-limit in lieu of the custodial sentence for Section 138 offences where full restitution has been made, but an enforceable default clause (custody in default) must be retained to ensure compliance. Obiter - the specific quantum fixed is fact-sensitive and not a precedent for other cases. Conclusions: The conviction stands but the sentence is modified: accused to pay a specified compensation within two weeks; on failure, the custodial sentence as originally imposed is to be enforced for a shorter period. This balances restitution, victim compensation, remedial deterrence and the accused's demonstrated remorse. Cross-reference See Issue 1 (statutory presumption sustained) for the basis of conviction; see Issue 2 and Issue 3 for the Court's exercise of discretion post-repayment to mitigate penal consequences by imposing compensatory conditions despite the complainant's objection.