Suresh Kumar Vs. R. Shankar  Insc 258 (8 March 2007)
S.B. Sinha & Markandey Katju
S.B. SINHA, J :
The parties hereto were partners. The partnership business ran into rough
weather. Appellant intended to initiate some criminal proceedings against the
respondent. Allegedly, the bank account was to be operated jointly. Respondent
alone as a partner, thus, could not have taken out any money from the bank.
However, allegedly, he did so. According to the respondent, a compromise was
entered into by and between the parties in a police station on the following
"1) Both the firms accounts right from inception till date shall be
finalized and the share of profits determined by an independent auditor, Mr. R.
Kasi Viswanathan. His determination shall be final and binding on both the
2) The above scrutiny and finalization shall be completed before 31.1.1996.
Until such time, we shall not raise any dispute against each other.
3) Till such finalization, Mr. Shankar shall handover a cheque (cheque No.
551661 dated 31.1.96) for Rs. 7 lakhs to Mr. Suresh Kumar as security deposit.
4) If the share of profits for Mr. Suresh Kumar is more than 7 lakhs, he
shall encash the cheque and shall also receive the balance amount from Shankar
forthwith. If the share of profits is less than 7 lacs, Suresh Kumar shall
return the said cheque and Shankar shall pay Suresh Kumar a draft for the
amount of profits determined. If any profit is due to Shankar, Suresh Kumar
shall pay the same to Shankar forthwith."
Pursuant thereto or in furtherance thereof, the respondent allegedly handed
over a post dated cheque for a sum of Rs. 7,00,000/- to the appellant.
As the said cheque was dishonoured on presentation, a complaint petition was
filed by the appellant inter alia alleging:
"3Further the accounts in the Bank are joint accounts and the cheques
can be drawn only by both of partners on any account and not by one partner.
4. The Complainant submits that the accused has taken some amounts from the
Bank and the bills also encashed by him for his own gain without concern of
complainant. Therefore the accused has agreed to pay the profits sharing of a
sum of Rs. 12 lacs towards the complainant. But he agreed to pay advance share
of profit which he owes to the complainant till appropriate audit and
accounting is made, the accused has given a sum of Rs. 7 lacs by cheque No.
551661 dated 31.1.1996 drawn of Syndicate Bank, Kodambakkam Branch as assured.
The accused is to settle the entire due towards the complainant before 31.1.1996.
5. The complainant submits that the accused has not informed the complainant
anything about the stop payment or requesting not to present the cheque.
Therefore, in good faith the complainant has presented the cheque on 31.1.1996
through his Bankers Syndicate Bank, Kodambakkam Branch through his S.B. Account
No. 10521. And the complainant has received an intimation from the Bankers that
the payment stopped by the drawer and thus the cheque is dishonoured. The
complainant has also verified whether the accused has sufficient funds in the
Bank account on 31.1.96 but to his shock found that the accused was not having
sufficient funds to honour the cheque on 31.1.96. Therefore the complainant has
issued a lawyer's notice dt. 3.2.1996 to the accused stating that the
dishonouring of the cheque and the accused caused complainant mental agony and
demanded the cheque amount to be paid to the complainant within 15 days from
the date of receipt of the notice. The accused has received the notice on
6.2.1996 but he has preferred no reply to the notice even after 15 days and he
has not paid the cheque amount till date."
The learned Trial Judge, however, found the said defence of the respondent
to be not acceptable. The learned Magistrate by a judgment and order dated 12.10.1998
imposed a fine of Rs. 7,05,000/- and directed that if the respondent fails to
remit, he will undergo three months simple imprisonment. Out of the said
amount, he was directed to pay a sum of Rs.
7,00,000/- by way of compensation and the remaining sum of Rs. 5000/- was to
be credited to the Government.
An appeal thereagainst was filed by the respondent. The learned Additional
Sessions Judge partially allowed the said appeal stating:
"22. In the result, this Criminal Appeal is partly allowed thereby the
finding of conviction against the accused under Sec. 138 of Negotiable
Instrument Act is confirmed and the sentence is modified to the effect that the
appellant/ accused should pay a fine of Rs. 5,000/- (Rupees five thousand only)
under Sec. 138 of Negotiable Instrument Act and in default to undergo three
months simple imprisonment and the order of the learned Magistrate in awarding
compensation is set aside. There is no order as to cost. The appellant/ accused
will be entitled to get back the amount deposited by him less the fine amount,
now imposed, and entitled to get back the bank guarantee and other security
deeds filed by him in this case after the time for revision or appeal is over
or after the revision or after if any preferred is over."
Appellant herein preferred a revision application before the High Court
which was marked as R.C. No. 1213 of 2001 whereby and whereunder modification
was made by the appellate court in relation to the quantum of fine.
Respondent filed a criminal revision against the said order which was marked
as Criminal R.C. No. 713 of 2001. The High Court dismissed both the civil
revisions confirming the conviction of the respondent under the provisions of
the Act as also the order qua the question of the payment of fine.
Respondent herein has not approached this Court from the said order.
Only Appellant has. By an order dated 6.10.2005, a 3-Judge Bench of this
Court while granting leave directed:
"Notice shall issue to the respondent to show cause why the sentence be
not enhanced and the sentence of fine be not substituted by order for
imprisonment as also an order for payment of compensation under Section 357(3)
of the Code of Criminal Procedure read with Section 138 of the Negotiable
Instruments Act, returnable after four weeks."
It is not in dispute that the Negotiable Instruments Act (for short
"the Act") was amended by the Negotiable Instruments (Amendment &
Provisions) Act, 2002 which came into force with effect from 6.02.2003 in
terms whereof the accused could also be imprisoned 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. The amended provision, however, is not applicable in the instant
Mr. Kailash Vasudev, learned senior counsel appearing on behalf of the
appellant, would submit that the learned District Judge and the High Court
committed a serious error in passing the impugned judgment insofar as they
failed to take into consideration that the quantum of punishment should be commensurate
with the gravity of the offence and having regard to the amendment in the Act
which came into force on 6.02.2003, it is a fit case where the respondent
should have been awarded substantial punishment.
Mr. V. Prabhakar, learned counsel appearing on behalf of the respondent, on
the other hand, would submit that having regard to the fact that this Court had
issued notice on enhancement of sentence; in terms of Section 377 of the Code
of Criminal Procedure, the respondent would be entitled to contend that no case
had been made out for recording a judgment of conviction by the courts below.
According to the learned counsel, the defence of the respondent having regard
to entering into a compromise by and between the parties hereto was wrongly not
accepted by the courts below, as the same should have been considered by the
courts below in the light of the averments made by the complainant in the
complaint petition wherefrom it would be evident that :
(i) the share of the profit in the partnership business was still to be
(ii) the cheque was issued in anticipation of the accounts to be audited by
a named auditor;
(iii) Only upon finalization of the accounts by the auditor, the debt or
liability of the respondent could have been clearly ascertained so as to make
him liable for payment of any amount pursuant thereto or in furtherance
In the instant case, it was urged, as the appellant himself in his complaint
petition categorically stated that the actual amount of the liability of the
respondent was yet to be ascertained, the courts concerned must be held to have
committed a manifest error in recording a judgment of conviction.
It was further submitted that the appellate court and consequently, the High
Court also committed a manifest error inasmuch as they failed to take into
consideration that the burden of proof on the accused can be discharged by
showing only preponderance of probabilities; the standard of proof not being
the proof beyond all reasonable doubt. Our attention has further been drawn to
the fact that although the learned Trial Judge had directed payment of
compensation and fine of Rs. 7,05,000/-, the appellant had not filed any appeal
thereagainst and in that view of the matter, the revision petition filed by it
was not maintainable.
Section 138 of the Act is a special statute. It provides inter alia for
imposition of fine which may extend to twice the amount of the cheque.
We, as at present advised, need not go into the question as to whether
having regard to the provisions contained in Sub-section (2) of Section 29 of
the Code of Criminal Procedure, the jurisdiction of the Magistrate would be to
impose a fine for a sum of Rs. 5,000/- or not in view of the decisions of this
Court in Pankajbhai Nagjibhai Patel v. State of Gujarat [(2001) 2 SCC 595] and
K. Bhaskaran v. Sankaran Vaidhyan Balan [(1999) 7 SCC 510].
The question arising in this case, in our opinion, should be considered
absolutely from a different angle.
Although the power of the court to impose a fine may or may not be limited,
it is not in dispute that the power to award compensation is not. The purpose
for which such compensation is to be granted to the complainant whether in
terms of clause (b) of Sub-section 1 of Section 357 of the Code of Criminal Procedure
or Sub-section (3) of Section 357 is not of much significance for our purpose,
although there cannot be any doubt whatsoever that consideration for payment of
compensation is somewhat different from payment of fine. [See Rachhpal Singh v.
State of Punjab (2002) 6 SCC 462] In State of Punjab v. Gurmej Singh [(2002) 6
SCC 663] it was stated:
"9. The next contention raised by the learned counsel for the appellant
is that the surviving victim, namely, the daughter of Jagjit Singh may be
awarded some compensation under Section 357(3) of the Code of Criminal
Procedure. In support of his submission he has also referred to a decision of
this Court in Rachhpal Singh v. State of Punjab. In the said case this Court
allowed compensation under sub-section (3) of Section 357 CrPC to the victims
but it would not be applicable in the present case since a sentence of fine has
also been imposed. A reading of sub-section (3) of Section 357 would show that
the question of award of compensation would arise where the court imposes a
sentence of which fine does not form a part. The decision in Rachhpal Singh
does not take any contrary view nor hold that compensation may be awarded over
and above the sentence of fine. A perusal of sub-section (3) of Section 357
CrPC would make the position clear.
11. In the present case, sentence of fine has also been imposed, as
indicated in the earlier part of this judgment. Out of the fine, a sum of Rs
1000 each had been ordered to be given to the three injured persons, namely,
Dalip Singh, Amarjit Kaur and Gurmeet Kaur. The balance amount is to go to the
legal heirs of Jagjit Singh. We had heard the learned counsel for both parties
on this aspect.
Learned counsel for the appellant submitted that Gurmeet Kaur lost both her
parents as well as her brother in the incident and now she is alone and would
have become of marriageable age or may have to start some work of her own. She
would need some money. In case she cannot be compensated, the amount of fine
may be enhanced to some extent. Learned counsel for the respondent has,
however, submitted that out of seven acres of land belonging to his father, the
same has been divided into three equal shares and some of it is also under
mortgage and he has got two daughters and a son and his wife. He has also
submitted that whenever the respondent was released on parole he met Gurmeet
Kaur and his wife also keeps on going to meet her. Their relations are normal
and cordial. If that is so, nothing better can be thought of in the prevailing
circumstances. However, we are not considering for awarding any compensation to
Gurmeet Kaur under Section 357(3) CrPC but the amount of fine imposed, can in
any case be reasonably enhanced."
Purpose of imposition of fine and/ or compensation, however, must be
considered having regard to the relevant factors in mind as envisaged under
Section 357 of the Code of Criminal Procedure.
We may notice that in Sube Singh v. State of Haryana [2006 (3) SCC 178], the
law has been stated in the following terms :
"...The quantum of compensation will, however, depend upon the facts
and circumstances of each case. Award of such compensation (by way of public
law remedy) will not come in the way of the aggrieved person claiming
additional compensation in a civil court, in the enforcement of the private law
remedy in tort, nor come in the way of the criminal court ordering compensation
under Section 357 of the Code of Criminal Procedure."
The basic question, however, which arises for consideration before us is as
to whether we, in the peculiar facts and circumstances of this case, can delve
deep into the matter so as to find out the culpability of the respondent herein
and pass a judgment of acquittal in his favour. We do not think that we should
do so. Section 377 of the Code of Criminal Procedure has no application in the
instant case. Respondent has not preferred any appeal.
Even otherwise the complainant had categorically stated in his complaint
petition that although his claim was for a sum of Rs. 12 lakhs which amount the
respondent is said to have been withdrawn from the bank in contravention of the
terms and conditions of the deed of partnership, he accepted his liability at
least to the extent of Rs. 7,00,000/-. It appears from a plain reading of the
complaint petition that the respondent had admitted his liability to the extent
of Rs. 7,00,000/-. It was found as of fact to be so by the courts below. The
said findings do not warrant any interference. The defence raised by the
respondent to the effect that the parties had entered into a compromise in the
police station and he had to sign a cheque under some threat or coercion had
not been accepted by the courts below. There cannot be any doubt whatsoever
that had the respondent been able to show that the cheque had been issued not in
discharge of a debt but by way of a security pending determination of his
liability by an auditor, the matter would have been different. In such an
event, the court could have arrived at a finding that the cheque having been
issued on the basis of an anticipated profit which by itself did not create any
liability in presenti and the result of the audit might have gone either way,
no case under Section 138 of the Act was made out. But, the same is not the
The question which now arises for consideration is as to whether any case
for awarding a substantial sentence has been made out. We do not think so.
Grant of compensation, in our opinion, would subserve the purpose.
Appellant may also file a suit for damages and/ or for other reliefs.
We do not know what was found by the auditor upon scrutiny of the books of
account of the partnership firm.
The relationship between the parties is not disputed.
Respondent has not been charged with any fraudulent action. He had a
probable defence. Appellant furthermore had not preferred any appeal against
the judgment of the learned Trial Judge for enhancement of the sentence. It may
be that quantum of compensation has been altered to that of the fine but in
effect and substance the same did not matter.
In our opinion, therefore, interest of justice would be subserved, if the
respondent is hereby directed to pay a compensation of Rs.7,00,000/- in stead
and place of a fine of Rs.5,000/-, as has been directed by the High Court.
Thus, the appellant would be entitled to get the aforementioned sum of
Rs.7,00,000/- by way of compensation.
This appeal is disposed of accordingly. Respondent should pay the amount of
compensation within a period of eight weeks, if not already deposited, failing
which steps may be taken for recovery thereof in accordance with law.
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