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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.   1651  OF 2013 [Arising out of S.L.P.(Crl.)No.6191 of 2011]

Somnath Sarkar  ..Appellant

Versus

Utpal Basu Mallick & Anr.   ....Respondents

J U D G M E N T

VIKRAMAJIT SEN, J.

1. Leave  granted.  The  Appellant  before  us  makes  what  is  

essentially a mercy plea – to reduce the sum of Rs.80,000/- imposed  

on him by way of compensation in lieu of the six months sentence of  

incarceration  imposed  by  the  Metropolitan  Magistrate,  Calcutta.  

The  Appellant  has  admittedly  issued  a  cheque in  favour of  the  

Respondent  No.1-complainant  for  a  sum  of  Rs.69,500/-,  which  

cheque  on  presentation  was  dishonourned  with  the  endorsement  

‘insufficient  funds’.   After  due  compliance  with  the  statutory  

provisions contained in the Negotiable Instruments Act, 1881 (for  

short,  ‘N.I.  Act’)  prosecution  was  commenced  and  the  

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aforementioned punishment under Section 138 thereof came to be  

passed.   The payment of compensation amounting to Rs.80,000/-  

has admittedly been received by the complainant.  The Appellant  

preferred  an appeal  to  the Additional  District  & Sessions Judge,  

Calcutta who by judgment dated 5.7.2004 dismissed the appeal and  

ordered  the  Appellant  to  surrender  within  15  days.   In  these  

circumstances,  Criminal  Revision  Record  No.2447  of  2004  was  

filed in the High Court of Calcutta which was pleased to substitute  

the six months’ sentence by an additional payment of Rs.69,500/-.  

C.R.R. No.2447 of 2004 was heard and decided along with C.R.R.  

No.2865  of  2004  also  filed  by  the  Appellant.   Accordingly,  as  

against the cheque amount of Rs.69,500/- the Appellant is liable to  

the extent of Rs.1,49,500/-.   Faced with the prospects of jail the  

Appellant had earlier agreed to payment of the additional sum of  

Rs.80,000/- and for these reasons his plea for reduction thereto was  

turned  down  by  the  High  Court  in  the  impugned  order.   The  

Appellant was directed to pay a sum of Rs.19,500/- by May 31,  

2011  and  the  balance  of  Rs.50,000/-  in  five  equal  instalments  

thereafter.  Unfortunately, despite repeated readings of the Orders  

and related documents, the total liability of the Appellant is not clear  

as also the payments made till date.

2. Although  the  learned  counsel  for  the  complainant  has  

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appeared before us and has  endeavoured to persuade us to uphold  

the impugned order, we find it unnecessary to hear him since the  

complainant  has  indubitably  already  received  the  sum  of  the  

dishonourned  cheque alongwith  the  compensation  thereon  

aggregating Rupees Eighty Thousand.   

3. It  seems  to  us  that  since  the  Appellant  has  already  faced  

prosecution in the Magistracy in which he presented virtually no  

defence,  and  has  thereafter  filed  an  appeal  before  the  Sessions  

Court, and subsequently two Revisions before the High Court, the  

ends of justice will be met, were he be directed to pay a sum of  

Rs.20,000/- only, in default, of which he would be liable to undergo  

the punishment of simple imprisonment for a term of six months as  

imposed  by  the  aforementioned  Magistrate.   The  said  payment  

should be made within eight weeks.  

4. As already expressed,  the language employed by the High  

Court in the impugned order raises a doubt as to the total liability of  

the Appellant.  A perusal of the sentence passed by the Trial Court  

as well as the Sessions Judge while dismissing the Appeal also does  

not  completely  clarify  the  position.   The  cheque  amount  is  

Rs.69,500/-  and  in  this  regard  a  sum  of  Rs.80,000/-  has  been  

directed towards compensation which, by virtue of Section 357(3),  

Code of Criminal Procedure (Cr.P.C.) would be receivable by the  

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complainant.   It  appears  that  this  sum of  Rs.80,000/-  has  been  

received by the complainant.  The use of the word, ‘additional sum’  

in the impugned order has led to considerable confusion.  To put the  

matter finally at rest, we hold that the total compensation payable  

under Section 138 of the N.I. Act read with Section 357(3), Cr.P.C.  

is Rs.80,000/-. i.e., the cheque amount of Rs.69,500/- together with  

Rs.10,500/-  which  may  be  seen  as  constituting  interest  on  the  

dishonoured cheque.  In the arguments addressed before us there  

appears to be no controversy that this sum has been duly paid to the  

Respondent-complainant.  A reading of the impugned order appears  

to indicate that the payment of further sum of Rs.69,500/-, in the  

instalments indicated in that order would be over and above the said  

sum of Rs.80,000/-.  This would violate Section 138 of the N.I. Act  

inasmuch as it would exceed the double of the cheque amount.  This  

leads us to conclude that the intention of the High Court was that  

upon deposit/payment of the further sum of Rs.69,500/- (in addition  

to the earlier sum of Rs.80,000/-), the sentence of imprisonment for  

six  months  would  stand  withdrawn.   Learned  counsel  for  the  

Appellant has fervently submitted that  the Appellant  is  a man of  

limited financial means and this position has not been controverted.  

Palpably, the convict has filed appeals all the way to the Apex Court  

which would have entailed further expenses of no mean measure.  

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We think that with the receipt of Rs.80,000/-, the complainant has  

received  compensation  for  the  dishonoured  cheque  as  per  the  

adjudication of the Trial Court.  In these circumstances, any further  

payment would be in the nature of fine.  Accordingly, we clarify that  

the  Appellant  must  pay  a  sum of  Rs.80,000/-  receivable  by  the  

complainant within four weeks from today, if not already paid.  The  

Appellant is also sentenced to payment of a fine of Rs.20,000/-,  

payable within eight weeks from today, and on the failure to make  

this payment, would be liable for imprisonment for six months.  The  

Appeal is allowed in these terms.  

.................................J .

          [T.S. THAKUR]

………………….…J. [VIKRAMAJIT SEN]

New Delhi October 07, 2013

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NON-REPORTABLE

  IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.   1651    OF 2013 (Arising out of S.L.P. (Crl.) No.6191 of 2011)

Somnath Sarkar        … Appellant

Versus

Utpal Basu Mallick & Anr.       …Respondents J U D G M E N T

T.S. THAKUR, J.

I have had the advantage of going through the order  

proposed by my esteemed Brother Vikramajit Sen, J. While I  

entirely  agree  that  the  order  passed  by  the  High  Court  

directing payment of a sum of Rs.69,500/- over and above  

Rs.80,000/- already paid under the orders of the Court to  

the complainant towards compensation needs to be modified  

to bring the same in tune with Section 138 of Negotiable  

Instruments Act, 1881, I would like to add a few words of my  

own in support of that view. Before I do that, I may briefly  

set out the factual backdrop in which the appellant came to  

be prosecuted and convicted under the provision mentioned  

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above.

The  appellant,  who  is  the  proprietor  of  M/s  Tarama  

Medical  Centre,  Tarakeswar,  Hooghly,  issued  a  cheque  in  

favour  of  the  respondent/complainant  bearing  no.419415  

dated 6th September, 1999 drawn on SBI, Tarakeswar Branch  

for Rs.69,500/- towards discharge of existing liabilities. When  

the cheque was presented by the complainant through his  

banker  on  6th September,  1999  it  was  dishonoured  for  

“insufficient  funds”,  which dishonour was communicated to  

the  complainant  on  7th October,  1999.  The  complainant  

respondent issued a demand notice, which was received by  

the accused appellant within the prescribed limitation period.  

However, since the accused failed to repay the amount within  

time, the complainant filed a complaint under Section 138 of  

the  Negotiable  Instruments  Act,  1881  on  9th December,  

1999.  

The  Metropolitan  Magistrate,  6th Court,  Calcutta  

convicted the appellant for the offence under Section 138,  

Negotiable Instruments Act and sentenced him to six months  

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simple  imprisonment  and  to  pay  compensation  of  

Rs.80,000/- under Section 357(3) CrPC vide order dated 10th  

December, 2003 in Case No.C-4490/99. Both the conviction  

and  sentence  were  upheld  by  the  Additional  District  &  

Sessions Judge of the Fast Track Court in appeal vide order  

dated 5th July, 2004. In a revision petition filed against the  

said two orders, the High Court upheld the conviction, but  

imposed an additional fine of Rs.69,500/- (cheque amount)  

in lieu of  six months simple imprisonment awarded by the  

Metropolitan  Magistrate.   That  the  appellant  has  paid  the  

compensation  amount  of  Rs.80,000/-  in  instalments  of  

Rs.30,000/- and Rs.50,000/- is not disputed before us and is  

evidenced by an affidavit dated 20th November, 2006 filed in  

CRR No.2447 of 2004 before the Calcutta High Court besides  

a receipt dated 14th February, 2008 respectively, which are  

on record.

The only question that falls for our determination in the  

above backdrop is whether the High Court was justified in  

directing payment of an additional fine of Rs.69,500/- which  

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happens to be the cheque amount also, having regard to the  

fact  that  the  appellant  has  already  paid  the  sum  of  

Rs.80,000/-  to  the  complainant  towards  compensation  in  

obedience to the order made by the Metropolitan Magistrate.  

There  is  no  gainsaying  that  the  High  Court  could  have  

sentenced  the  appellant  to  imprisonment  extending  up  to  

two years and/or to payment of fine equivalent to twice the  

cheque  amount.  This  is  evident  from  the  provisions  of  

Section 138 which reads as under:

“138.  Dishonour  of  cheque  for  insufficiency,   etc., of funds in the account. Where any cheque  drawn by a person on an account maintained by him   with a banker for payment of any amount of money   to another person from out of that account for the   discharge, in whole or in part, of any debt or other   liability,  is  returned  by  the  bank  unpaid.  either   because of  the amount of  money standing to  the   credit of that account is insufficient to honour the   cheque or that it exceeds the amount arranged to be  paid from that account by an agreement made with   that  bank,  such  person  shall  be  deemed  to  have   committed an offence and shall, without prejudice.   to any other provision of this Act, be punished with  imprisonment for a term which may extend to one  year,  or with  fine which may extend to twice the   amount of the cheque, or with both: Provided that  nothing contained in this section shall apply unless-

(a) the  cheque  has  been,  presented  to  the  bank  within a period of six months from the date on which   it  is  drawn  or  within  the  period  of  its  validity,   whichever is earlier; (b) the payee or the holder in due course. of  the   

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cheque as the case may be, makes a demand for   the payment of the said amount of money by giving   a notice, in  writing,  to the drawer of  the cheque,   within fifteen days of the receipt of information by   him  from  the  bank  regarding  the  return  of  the   cheque as unpaid; and (c) the  drawer  of  such  cheque  fails  to  make  the   payment of the said amount of money to the payee   or, as the case may be, to the holder in due course   of the cheque, within fifteen days of the receipt of   the  said  notice.  Explanation.-  For the  purposes of   this section," debt or other liability" means a legally   enforceable  debt  or  other  liability.”   (emphasis supplied)

In as much as the High Court set aside the sentence of  

six months simple imprisonment awarded to the appellant  

there is no quarrel  nor any challenge mounted before us.  

That part of the order could be assailed by the complainant  

who has not chosen to do so. Whether or not the High Court  

was justified in setting aside the sentence of imprisonment  

awarded to the appellant is, therefore, a non-issue before us.  

Having said that we have no hesitation in adding that the  

High Court may have indeed been justified in setting aside  

the sentence of imprisonment awarded to the appellant in  

the facts and circumstances of the case. We say so having  

regard  to  a  three-Judge  Bench  decision  of  this  Court  in  

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Damodar S. Prabhu v. Syed Babalal H. (2010) 5 SCC  

663 where this Court briefly examined the object sought to  

be  achieved  by  the  provisions  of  Section  138  and  the  

purpose  underlying  the  punishment  provided therein.  This  

Court  has  held  that  unlike  other  crimes,  punishment  in  

Section  138  cases  is  meant  more  to  ensure  payment  of  

money rather than to seek retribution. The Court said:

“17....Unlike  that  for  other  forms  of  crime,  the   punishment  here  (in  so  far  as  the  complainant  is   concerned)  is  not  a  means of  seeking retribution,   but is more a means to ensure payment of money.  The  complainant's  interest  lies  primarily  in   recovering the money rather than seeing the drawer   of  the  cheque  in  jail.  The  threat  of  jail  is  only  a   mode to  ensure  recovery. As  against  the  accused  who is willing to undergo a jail term, there is little   available as remedy for the holder of the cheque.”

 (emphasis supplied)

This  Court  also  took  note  of  the  number  of  cases  

involving  dishonor  of  cheques  choking  the  criminal  justice  

system  of  this  country,  especially  at  the  level  of  the  

Magisterial Courts, and held that dishonor of cheque being a  

regulatory  offence,  aimed  at  ensuring  the  reliability  of  

negotiable  instruments,  the  provision  for  imprisonment  

extending up to two years was only intended to ensure quick  

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recovery of the amount payable under the instrument. The  

following  passages  from  the  decision  are  in  this  regard  

apposite:

“4...It is quite evident that the legislative intent was   to provide a strong criminal remedy in order to deter   the  worryingly  high  incidence  of  dishonour  of   cheques. While the possibility of imprisonment up to   two years provides a remedy of a punitive nature,   the provision for imposing a `fine which may extent   to  twice  the  amount  of  the  cheque'  serves  a   compensatory purpose. What must be remembered  is  that  the  dishonour  of  a  cheque  can  be  best   described  as  a  regulatory  offence  that  has  been  created to serve the public interest in ensuring the   reliability of these instruments. The impact of this   offence  is  usually  confined  to  the  private  parties   involved in commercial transactions. 5.  Invariably,  the  provision  of  a  strong  criminal   remedy  has  encouraged  the  institution  of  a  large   number of  cases that  are relatable to the offence   contemplated by Section 138 of the Act. So much   so,  that  at  present  a  disproportionately  large  number of cases involving the dishonour of cheques   is choking our criminal justice system, especially at  the level  of Magistrates'  Courts. As per the 213th   Report of the Law Commission of India,  more than  38  lakh   cheque  bouncing  cases  were  pending    before various courts in the country as of October   2008. This is putting an unprecedented strain on our   judicial system.”

                        (emphasis supplied)

We  do  not  consider  it  necessary  to  examine  or  

exhaustively  enumerate  situations  in  which  Courts  may  

remain  content  with  imposition  of  a  fine  without  any  

sentence  of  imprisonment.  There  is  considerable  judicial  

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authority for the proposition that the Courts can reduce the  

period of  imprisonment depending upon the nature of  the  

transaction, the bona fides of the accused, the contumacy of  

his conduct, the period for which the prosecution goes on,  

the amount of the cheque involved, the social strata to which  

the parties belong, so on and so forth. Some of these factors  

may indeed make out a case where the Court may impose  

only a sentence of fine upon the defaulting drawer of the  

cheque.  There  is  for  that  purpose  considerable  discretion  

vested in the Court concerned which can and ought to be  

exercised in appropriate cases for good and valid reasons.  

Suffice it to say that the High Court was competent on a  

plain reading of Section 138 to impose a sentence of fine  

only upon the appellant. In as much as the High Court did so,  

it  committed  no  jurisdictional  error.  In  the  absence  of  a  

challenge to the order passed by the High Court deleting the  

sentence of imprisonment awarded to the appellant, we do  

not consider it necessary or proper to say anything further at  

this stage.

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Coming  then  to  the  question  whether  the  additional  

amount which the High Court has directed the appellant to  

pay could be levied in lieu of the sentence of imprisonment,  

we  must  keep  two  significant  aspects  in  view.  First  and  

foremost  is  the  fact  that  the  power  to  levy  fine  is  

circumscribed under the statute to twice the cheque amount.  

Even in a case where the Court may be taking a lenient view  

in favour  of  the accused by not  sending him to prison,  it  

cannot impose a fine more than twice the cheque amount.  

That statutory limit is inviolable and must be respected. The  

High Court has, in the case at hand, obviously overlooked the  

statutory limitation on its power to levy a fine. It appears to  

have  proceeded  on  the  basis  as  though  payment  of  

compensation under Section 357 of CrPC is different from the  

power to levy fine under Section 138, which assumption is  

not correct.  

The  second  aspect  relates  precisely  to  the  need  for  

appreciating that the power to award compensation is not  

available under Section 138 of Negotiable Instruments Act. It  

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is only when the Court has determined the amount of fine  

that the question of paying compensation out of the same  

would  arise.  This  implies  that  the  process  comprises  two  

stages.  First, when the Court determines the amount of fine  

and levies the same subject to the outer limit, if any, as is  

the position in the instant case. The second stage comprises  

invocation of the power to award compensation out of the  

amount so levied. The High Court does not appear to have  

followed that process. It has taken payment of Rs.80,000/-  

as compensation to be distinct from the amount of fine it is  

imposing equivalent to the cheque amount of Rs.69,500/-.  

That  was  not  the  correct  way  of  looking  at  the  matter.  

Logically,  the High Court  should have determined the fine  

amount to be paid by the appellant, which in no case could  

go beyond twice the cheque amount, and directed payment  

of compensation to the complainant out of the same. Viewed  

thus, the direction of the High Court that the appellant shall  

pay a  further  sum of  Rs.69,500/-  does  not  appear  to  be  

legally sustainable as rightly observed by my erudite Brother  

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Vikramajit  Sen,  J.  I,  therefore,  entirely  agree  with  my  

Brother’s view that payment of a further sum of Rs.20,000/-  

towards fine, making a total fine of Rs.1,00,000/- (Rupees  

one lac) out of which Rs.80,000/- has already been paid as  

compensation  to  the  complainant,  should  suffice.  The  

amount  of  Rs.20,000/-  (Rupees  twenty  thousand)  now  

directed to be paid shall not go to the complainant who is, in  

our  view,  suitably  compensated  by  the  amount  already  

received by him.   In the event of failure to pay the additional  

amount  of  Rs.20,000/-  the  appellant  shall  undergo  

imprisonment for a period of six months. With these words, I  

concur with the order proposed by Brother Vikramajit Sen, J.

………………….……….…..…J.                                                           (T.S. Thakur) New Delhi October 7, 2013

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