NI Act | Advisable To Impose Fine Equivalent To Amount Of Cheque With At Least 6% Interest For Uniformity: Punjab & Haryana High Court

The Punjab and Haryana High Court has said that, to maintain uniformity in imposing fines in cheque bounce cases under the Negotiable Instruments Act (NI Act), the fine should be equivalent to the amount of the cheque, plus at least 6% interest per annum from the date of the cheque until the date of the judgment of conviction."

Justice N.S. Shekhawat said, "To be consistent and uniform, it is always advisable to impose a fine equivalent to the amount of cheque plus at least 6% interest per annum from the date of cheque till the date of judgment of conviction. However, before inflicting such fine, the trial Magistrate must eschew the amount of interim compensation, if any, paid under Section 143A of the Act or such other sum which the accused might have paid during the trial or otherwise towards discharge of liability."

The Court further said that, a fine may or may not accompany the sentence of simple imprisonment. "It is purely in the discretion of the trial Magistrate but having regarding to the object of legislation, it shall be appropriate if the sentence of imprisonment imposed is kept at the minimum unless, of course, the conduct of accused demands otherwise."

"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," it added.

The judge directed the Registrar General to circulate the judgment to all the judicial officers, subject to the jurisdiction of the High Court, so that the "uniformity and inconsistency" in the matter of imposing the sentence of fine having regard to the compensatory aspect of the remedy under Section 138 of the Act is ensured.

These observations were made while hearing a revision plea against the order passed by the Additional Sessions Judge and judgment passed by the Judicial Magistrate 1st Class, whereby, the petitioner was n convicted for the offence punishable under Section 138 of the NI Act and sentenced to undergo rigorous imprisonment for a period of two years and to pay a fine of Rs. 10,000.

The complaint were deprived of an amount of Rs.19 lakh, which had become payable to him on in April 2015, i.e. about 10 years ago.

After hearing the submissions, the Court opined that the trial Court has "miserably failed" to take into account the peculiar facts of the present case and has imposed a fine of Rs.10,000 only under Section 138 of the Act and in default of payment of fine, the accused had been directed to further undergo rigorous imprisonment for a period of two months and no amount of compensation was awarded.

Reliance was placed on Bir Singh Vs. Mukesh Kumar, wherein the Supreme Court expressed its anguish that some magistrates adhered to the traditional view that criminal proceedings were solely for imposing punishment and did not exercise discretion to direct the payment of compensation. The Court noted that the same caused difficulty for the complainant, as the limitation for filing civil cases would invariably expire by the time the criminal case was decided.

The Court said that it has no hesitation to hold that while imposing sentence under Section 138 of the Act, the Court should exercise its discretion in imposing fine by having regard to Section 357(3) of Cr.P.C. "Rather, the Criminal Court should bear in the mind the laudable object of engrafting Chapter XVII containing Section 138 to 142 of the Act and give priority to compensatory aspect of remedy."

Justice Shekhawat highlighted that the Legislature has given discretion to the Magistrate to impose a sentence of fine which may extend to double the amount of cheque and, therefore, the sentence of fine whenever imposed by the Criminal Court upon conviction of accused under Section 138 of the NI Act must be sufficient enough to adequately compensate the complainant.

In the light of the above, the Court allowed the plea and remanded the matter back to the to the trial Court for considering the imposition of sentence on the present petitioner, de- novo.

The Court clarified that the trial Court shall hear the parties afresh, before imposing the sentence on the petitioner.

Mr. A.P.S.Deol, Senior Advocate with Mr. Himmat Singh Deol, Advocate for the petitioner.

Mr. J.S. Mehndiratta, Advocate/Amicus Curiae and Mr. P.K.S. Phoolka, Advocate for the respondent.

Title: Jugjit Kaur v. Rajwinder Singh

Citation: 2025 LiveLaw (PH) 116

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