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CASE NO.: Appeal (crl.)  1335 of 2005

PETITIONER: P. Suresh Kumar

RESPONDENT: R. Shankar

DATE OF JUDGMENT: 08/03/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T

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 terms:

"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 parties. 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: "3\005Further 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

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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."

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       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 & Misc.  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 case.

       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  ascertained; (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 thereof.                    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.

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       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

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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 case here.   

       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

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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.