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2025 (7) TMI 406

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....the present revision are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act). It was asserted that the complainant is a Body Corporate constituted under the Regional Rural Bank Act, 1976. It is carrying on banking business throughout Himachal Pradesh. The accused approached the complainant for grant of a term loan for the purchase of a new truck/vehicle for Rs.21,15,000/-. The complainant agreed to the request made by the accused and advanced a sum of Rs.21,15,000/- on 12.6.2013. The accused executed the necessary documents. The loan was to be repaid in 72 equal monthly instalments plus a contractual rate of interest @13.25% per annum. The accused defaulted on the payment of the instalment. She issued a cheque of Rs.11,84,811.08 to discharge her liability. The complainant presented the cheque to its Bank, but it was dishonoured with an endorsement 'funds insufficient'. The complainant sent a notice to the accused asking her to repay the amount. The notice was duly served upon the accused, but the accused failed to repay the amount. Hence, th....

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.... served upon the accused. The accused failed to pay the amount to the complainant. Hence, she was rightly convicted by the learned Trial Court. However, the sentence of imprisonment of one year was held to be harsh and was reduced to imprisonment till rising of the Court. The compensation was adequate, and no interference was required with it. Therefore, the appeal filed by the accused was partly allowed, and the judgment and order passed by the learned Trial Court were partly modified. 8. Being aggrieved from the judgments and order passed by the learned Courts below, the accused has filed the present revision, asserting that the loan was insured under the CGTMSC Scheme. The bank had claimed the amount due under the Scheme; however, this fact was not disclosed in the complaint. The complainant failed to satisfy the ingredients of the commission of an offence punishable under Section 138 of the NI Act. The cheque was not filled by the accused, and there were material alterations. No legally enforceable liability existed towards the complainant. The complainant obtained an amount of Rs.7,24,786/- by filing the claim under the Credit Guarantee Fund Trust for Micro and Small Enterp....

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....ents of Ajeet Kumar Kurup v. State Bank of Travancore WP(C) No. 25332 of 2016 (N), Kiran Sharma Vs. Brinda Jewellers and another, 2024:HHC:7951, India Saree Museum Vs. P. Kapurchand & others 1989 SCC OnLine Kar 124, Jeet Ram Vs. HP Gramin Bank 2023:HHC:2849, Yashpal Singh Vs. Guman Singh 2024:HHC:9540, Balak Ram Vs. Ajay Kumar Sharma and another 2024:HHC:8601, B.R. Bhatia Vs. Amarjit Singh 2024:HHC:10249, Vee Kay Concast Pvt. Ltd. Vs. M/s Stanely Products and anr. 2025 NCPHHC 20038, Vee Kay Concast Private Limited Vs. M/s Stanley Products and another 2023:PHHC:028762 and ICICI Bank Ltd. Vs. Prafull Chandra and others ILR (2007) II Delhi 250 in support of her submission. 12. I have given considerable thought to the submissions made at the bar and have gone through the records carefully. 13. It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that a revisional court is not an appellate court and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed at page 207: - "10. Before adverting to the merits of the contentions, at the out....

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....urt, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes but are merely indicative. Each case would have to be determined on its own merits. 13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much-advanced stage in the proceedings under the CrPC." 15. It was....

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....or there is non-consideration of any relevant material, the order cannot be set aside merely on the ground that another view is possible. The following has been laid down in para 14: (SCC p. 135) "14. ... Unless the order passed by the Magistrate is perverse or the view taken by the court is wholly unreasonable or there is non-consideration of any relevant material or there is palpable misreading of records, the Revisional Court is not justified in setting aside the order, merely because another view is possible. The Revisional Court is not meant to act as an appellate court. The whole purpose of the revisional jurisdiction is to preserve the power in the court to do justice in accordance with the principles of criminal jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, t....

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.... K. Sada Vijay Kumar Beedi Leaves Merchant dated 30th September, 2009. 9. Mr. Tiwari submits that the legal position in an identically placed situation was indicated by this Court in the matter of Credential Finance Limited v. State of Maharashtra decided on 1st March, 2000, reported in (2000) 3 Mah LJ 544. The learned Single Judge of this Court giving reference to the provisions of Sections 7, 123, 124, 125 and 131 of the Negotiable Instrument Act, 1881 has held that there could not be any liability in terms of Section 138 of the Negotiable Instrument Act against the Payee of the cheque and the observations of the learned Additional Sessions Judge was disapproved." 19. The Bombay High Court held that the bank would be a holder in due course and entitled to file a complaint. It was observed: - 10. The same learned Single Judge in the matter of Ramesh Deshpande v. Panjab and Sind Bank, reported in (2000) 0 AIJ-MH 123889, by order dated 3rd April, 2000 explained the effect of drawee, drawer's cheque, bills of exchange, dishonor of cheque for insufficiency of fund in the account and placed reliance on the aforementioned Judgment of Credential Finance Limited L....

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....ence to his account where it was to be credited. The court has to presume a negotiable instrument to be for consideration unless the existence of consideration is disproved. Taking a survey of the above facts, the view expressed by the learned Single Judge of this Court, having not been approved by the Supreme Court as recorded hereinabove, I find no force in the contentions of the Applicant." (Emphasis supplied) 20. In the present case, the cheque was drawn in the account number mentioned on the cheque. The accused did not dispute in her statement recorded under Section 313 of Cr.P.C. that she had taken the loan from the complainant. It is not shown that the account number mentioned in the cheque is incorrect. Therefore, the cheque was drawn by the accused in the loan account in her name. Since the loan account was maintained by the complainant and the complainant was entitled to the money deposited in the loan account, therefore, the complainant was the holder in the due course and entitled to file the complaint. Hence, the submission that the cheque was not issued in the name of the complainant and the complaint filed by the complainant is not maintainable cannot be accepted.....

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....as reiterated in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 wherein it was held at page 289 : "14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such an approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law." 24. Similar is the judgment in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC 724, wherein it was observed: - "7.2. What is emerging from the material on record is that the issuance of a cheque by the accused and the signature of the accused on the said cheque are not disputed by the accused. The accused has also not disputed that there were transactions between the parties. Even as per the statement of the accused, which was recorded at the time of the frami....

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....s per Section 139 of the NI Act. It appears that both the learned trial court as well as the High Court have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evidence." 25. The presumption under Section 139 of the NI Act was explained by the Hon'ble Supreme Court in Triyambak S. Hegde v. Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ) 512: 2021 SCC OnLine SC 788 as under at page 747: "12. From the facts arising in this case and the nature of the rival contentions, the record would disclose that the signature on the documents at Exts. P-6 and P-2 are not disputed. Ext. P-2 is the dishonoured cheque based on which the complaint was filed. From the evidence tendered before the JM....

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....hat aspect." 15. The learned counsel for the respondent has, however, referred to the decision of this Court in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasa ppa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held as hereunder: (SCC pp. 432-33, paras 25-26) "25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner: 25.1. Once the execution of the cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption, and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on ....

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....dence, but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption. 17. On the position of law, the provisions referred to in Sections 118 and 139 of the NI Act, as also the enunciation of law as made by this Court, need no reiteration as there is no ambiguity whatsoever. In Basalingappav. Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571] relied on by the learned counsel for the respondent, though on facts the ultimate conclusion therein was against raising presumption, the facts and circumstances are entirely different as the transaction between the parties as claimed in the said case is peculiar to the facts of that case where the consideration claimed to have been paid did not find favour with the Court keeping in view the various transactions and extent of amount involved. However, the legal position relating to the presumption arising under Sections 118 and 139 of the NI Act on signature being admitted has been reiterated. Hence, whether there is a rebuttal or not would depend on the facts and circumstances of each case." 26. This position was reiterated in Tedhi Singh v. Na....

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....avour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary." 28. This position was reiterated in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275, wherein it was observed at page 161: 33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that "unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque for the discharge of, whole or part of any debt or liability". It will be seen that the "presumed fact" directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. [The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are hence not repeated-reference to one can be taken as reference to another] 34. Section 139 of the NI Act, which takes the form of a "shall presume" clause, is illustrative of a presumption of law. Because Section 139 requires ....

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....y to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule'." 39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond a reasonable doubt. The accused must meet the standard of "preponderance of probabilities", similar to a defendant in a civil proceeding. [Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR 2010 SC 1898]] 29. Thus, the Court has to start with a presumption that the cheque was issued by the accused for consideration, and the burden is upon the accused to rebut this presumption. 30. Harinder Kumar (CW1) stated in his cross- examination that the complainant had seized the vehicle and sold it. It was submitted that this amount was n....

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....facility availed by the second petitioner is covered by the CGTMSE Scheme. CGTMSE Scheme is an insurance scheme to protect the interest of the banks in the event of default by the borrowers, and the premium payable for the coverage of the loan under the scheme is debited from the account of the borrowers based on the terms of the agreements executed by the borrowers. The benefits of the Scheme are to be reimbursed by the banks after realising the dues from the borrowers concerned. If the contention of the petitioners is accepted, the borrowers will have no obligation to repay the loans/credit facilities availed." 32. A similar view was taken by this Court in Jeet Ram (supra), wherein it was observed:- "11. During proceedings of the case, Ms. Devyani Sharma, learned senior counsel appearing for the respondent- complainant/bank invited attention of this court to Credit Guarantee Fund Scheme for Micro and Small Enterprises, under which, some amount is alleged to have been recovered, to state that amount, if any, recovered under this scheme is liable to be repaid to the Central Government." 33. A similar view was taken in Indian Overseas Bank vs. Global Marine Products 2....

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.... that the accused issued one duly signed and filled cheque and handed it over to the complainant. It was not suggested to him that the bank had taken a blank signed security cheque from the accused. Therefore, his statement does not establish the plea taken in the memorandum of revision. 37. The accused stated in her statement recorded under Section 313 of Cr.P.C. that she had not issued any cheque; therefore, she has even denied the issuance of the cheque. There is no other evidence to show that post-dated blank signed security cheque was issued in favour of the petitioner. 38. Even if the cheque was issued as a security, the same would attract the provisions of the NI Act. It was laid down by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) HLJ 456, that even if the cheque was issued towards the security, the accused will be liable. It was observed: "9. Submission of learned Advocate appearing on behalf of the revisionist that the cheque in question was issued to the complainant as security and on this ground, criminal revision petition be accepted is rejected being devoid of any force for the reasons hereinafter mentioned. As per Section 138 of the Negotia....

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....ng liability. 12. Judgment in Indus Airways (supra) is clearly distinguishable. As already noted, it was held therein that liability arising out of a claim for breach of contract under Section 138, which arises on account of dishonour of a cheque issued, was not by itself at par with a criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of a cheque issued for discharge of a later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque, there was a debt/liability in praesenti in terms of the loan agreement, as against the case of Indus Airways (supra), where the purchase order had been cancelled and a cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as an advance for the purchase order, which was cancelled. Keeping in mind this fine, but the real distinction, the said judgment cannot be applied to a case of the present nature where the cheque was for repayment of a loan instalment which had fallen due, though such deposit of cheques towards repayment of instalm....

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....not be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form, and in that manner, if the amount of the loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be an understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque, which is issued as security, can never be presented by the drawee of the cheque. If such is the understanding, a cheque would also be reduced to an 'on-demand promissory note' and in all circumstances, it would only be civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security&#3....

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....etween the payee of a cheque and its drawer would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt." 43. This position was reiterated in Oriental Bank of Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089, wherein it was observed: "12. The submission, which has been urged on behalf of the appellant, is that even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer. xxxxxx 32. A drawer who signs a cheque and hands it over to the payee is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued....

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.... unless and until that fact was disproved. Section 147 makes the offences punishable under the Act compoundable. 48. In the present case, no evidence was produced to rebut the presumption, and the learned Courts below had rightly held that the cheque was dishonoured with an endorsement 'insufficient funds' 49. Harinder Kumar (CW1) stated that the notice (Ex.C4) was issued to the accused. This was sent to the address to which the accused was served. This is the same address which was mentioned by the accused when the notice of accusation was put to her, her statement was recorded under Section 313 of Cr.PC and the personal bond furnished by her. Therefore, notice was sent to the correct address and was deemed to be served. 50. It was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555 that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. It was observed: "It is also to be borne in mind that the requirement of giving of notice is a clear d....

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..... The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments, including cheques, and to encourage and promote the use of negotiable instruments, including cheques, in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same. " 54. Learned Appellate Court has already shown sympathy towards the accused and imposed sentence till the rise of the Court, and no interference is required with the sentence imposed by the learned Appellate Court. 55. Learned Trial Court ordered the payment of compensation of Rs.1,18,481/- being 10% of the cheque amount. The cheque was issued on 16.10.2015, and the sentence was imposed on 31.10.2020 after the lapse of five years. The complainant lost interest on the amount which it would have obtained by lending the amount to other persons. The complainant also paid the litigation expenses for filing the complaint. He was entitled to be compensated for the same. It was laid down by the Hon'b....

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....ich are required to be taken into consideration while passing an order under the section: (SCC p. 558, para 11) "11. The payment by way of compensation must, however, be reasonable. What is reasonable may depend upon the facts and circumstances of each case. The quantum of compensation may be determined by taking into account the nature of the crime, the justness of the claim by the victim and the ability of the accused to pay. If there is more than one accused, they may be asked to pay on equal terms unless their capacity to pay varies considerably. The payment may also vary depending on the acts of each accused. A reasonable period for payment of compensation, if necessary, by instalments, may also be given. The court may enforce the order by imposing a sentence in default." 21. This position also finds support in R. v. Oliver John Huish [(1985) 7 Cri App R (S) 272]. The Lord Justice Croom Johnson, speaking for the Bench, has observed: "When compensation orders may be made, the most careful examination is required. Documents should be obtained, and evidence, either on affidavit or orally, should be given. The proceedings should, if necessary, be adjourn....

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....efault, no court shall issue such warrant for the levy of the amount." The Court further held: (Jagdeeshan case [(2002) 2 SCC 420: 2002 SCC (Cri) 344], SCC p. 425, para 11) "11. When this Court pronounced in Hari Singh v. Sukhbir Singh [(1988) 4 SCC 551: 1988 SCC (Cri) 984: AIR 1988 SC 2127] that a court may enforce an order to pay compensation 'by imposing a sentence in default' it is open to all courts in India to follow the said course. The said legal position would continue to hold good until it is overruled by a larger Bench of this Court. Hence learned Single Judge of the High Court of Kerala has committed an impropriety by expressing that the said legal direction of this Court should not be followed by the subordinate courts in Kerala. We express our disapproval of the course adopted by the said Judge in Rajendran v. Jose [(2001) 3 KLT 431]. It is unfortunate that when the Sessions Judge has correctly done a course in accordance with the discipline, the Single Judge of the High Court has incorrectly reversed it." 23. In order to set at rest the divergent opinion expressed in Ahammedkutty case [(2009) 6 SCC 660 : (2009) 3 SCC (Cri) 302], this Court ....

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....... The term of imprisonment in default of payment of a fine is not a sentence. It is a penalty which a person incurs on account of non-payment of a fine. The sentence is something which an offender must undergo unless it is set aside or remitted in part or in whole, either in appeal or in revision or other appropriate judicial proceedings, or 'otherwise'. A term of imprisonment ordered in default of payment of a fine stands on a different footing. A person is required to undergo imprisonment either because he is unable to pay the amount of fine or refuses to pay such amount. He, therefore, can always avoid undergoing imprisonment in default of payment of the fine by paying such amount. It is, therefore, not only the power but the duty of the court to keep in view the nature of the offence, circumstances under which it was committed, the position of the offender and other relevant considerations before ordering the offender to suffer imprisonment in default of payment of a fine." (emphasis in original) 25. In Kuldip Kaur v. Surinder Singh [(1989) 1 SCC 405: 1989 SCC (Cri) 171: AIR 1989 SC 232], in the context of Section 125 CrPC observed that sentencing a person to jail is....

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....n. While passing an order under Section 357(3), it is imperative for the courts to look at the ability and the capacity of the accused to pay the same amount as has been laid down by the cases above; otherwise, the very purpose of granting an order of compensation would stand defeated. 58. This position was reiterated in R. Mohan v. A.K. Vijaya Kumar, (2012) 8 SCC 721: (2012) 4 SCC (Civ) 585: (2012) 3 SCC (Cri) 1013: 2012 SCC OnLine SC 486 wherein it was observed at page 729: 29. The idea behind directing the accused to pay compensation to the complainant is to give him immediate relief so as to alleviate his grievance. In terms of Section 357(3), compensation is awarded for the loss or injury suffered by the person due to the act of the accused for which he is sentenced. If merely an order directing compensation is passed, it would be totally ineffective. It could be an order without any deterrence or apprehension of immediate adverse consequences in case of its non- observance. The whole purpose of giving relief to the complainant under Section 357(3) of the Code would be frustrated if he is driven to take recourse to Section 421 of the Code. An order under Section 35....