Rashid Paul

Bounced Cheque: HC directs for adequate compensation, reconsideration

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Srinagar: In a bounced cheque case the High Court today expressed its regret at a subordinate court judgment for awarding insignificant compensation to a victim and directed its consideration de novo.

In a case titled Yasir Amin Khan vs. Abdul Rashid Ganie the Special Mobile Magistrate (Sub-Judge), Srinagar in 2020 had ordered compensation of only Rs two lakh to the complainant although he was entitled for at least Rs 10 lakh.

Justice Sanjeev Kumar who heard the case said the petitioner (Khan), has been deprived of a sum of Rs.10.00 lac which amount had become payable to him on the date of issuance of cheque on 10th of December 2018.

He set aside the order of the sub judge and directed him to consider the matter afresh.

“Indisputably, the Legislature has given discretion to the Magistrate to impose a sentence of fine which may extend to double the amount of cheque”, Justice Kumar said.

He made it clear that the sentence of fine whenever imposed by the criminal court upon conviction of accused under Section 138 of Negotiable Instruments Act (NI Act) must be sufficient enough to adequately compensate the complainant.

The amount of cheque and the date from which the amount under the cheque has become payable along with payment of reasonable interest may serve as good guide in this regard, he said.

“To be consistent and uniform, it is always advisable to impose a fine equivalent to the amount of cheque (Rs 10 lakh in this case) plus at least 6% interest per annum from the date of cheque till the date of judgment of conviction”, observed Justice  Kumar.

He directed “the matter is remanded back to the trial court for considering the imposition of sentence upon the respondent de novo in light of the NI Act and the observations made in this judgment”.

According to the case details, Khan, some years ago, had lended Rs 10 lakh to Ganie. On the stipulated date Ganie issued a cheque to Khan. But on presentation in the Bank, the cheque was returned for want of sufficient funds in the account of the Ganie.

Khan approached the court of sub judge which in 2020 directed Ganie to pay Khan Rs two lakh besides the actual amount. It also sentenced Ganie to six months imprisonment.

Aggrieved by this order Khan approached the High Court. The single judge bench of the High court extensively discussed the section 138 of N.I. Act.

The Act says a person issuing cheques to his lender with insufficient funds in his account is committing a crime.

Such person be punished with imprisonment for a term extending up to two years, or with fine which may extend to twice the amount of the cheque, or with both, says the NI Act.

Justice Kumar held that a bare reading of Section 138 of N. I. Act says the Criminal Court after convicting the accused, is empowered to impose punishment.

The trial Court is, thus, given the discretion to impose the sentence of imprisonment or fine or both.

Thus it cannot be contended that while imposing sentence the court cannot exercise its discretion in imposing fine.

the Criminal Court should give priority to the compensatory aspect of remedy, justice Kumar observed bankning on different judgments of the Supreme Court of India on matters akin to this one.

He directed the Registrar General of to circulate his judgment to all the Judicial Magistrates so that uniformity and consistency in the matter of imposing sentence of fine under Section 138 of N.I. Act is ensured.



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