The gravity of a complaint under the Negotiable Instruments Act cannot be equated with an offence under the provisions of the Indian Penal Code or other criminal offences. An offence under Section 138 of the Negotiable Instruments Act, 1881, is almost in the nature of a civil wrong that has been given criminal overtones.
The Supreme Court Bench comprising C.V. Ramana, Chief Justice of India, Justice Surya Kant and Justice A.S. Bopanna was hearing a case of dishonour of cheque.
The case of the appellant is that the respondent who was known to him for the past few years approached the appellant and informed him that due to his financial difficulty he intends to sell the house situated in Sirsi town. The appellant agreed to purchase the same for the negotiated total sale consideration of Rs.4,00,000/( Rupees four lakhs only). An agreement dated 06.06.1996 was executed by the respondent while receiving the advance amount of Rs.3,50,000/( Rupees three lakhs fifty thousand only). Subsequently, when the appellant made certain enquiries, he learnt that the house stood in the name of the father of the respondent and the respondent did not have the authority to sell the same. In that view, the appellant demanded the return of Rs.3,50,000/ ( Rupees three lakhs fifty thousand only) which he had paid as the advance amount. The respondent instead of paying the entire amount issued a cheque dated 17.05.1998 for the sum of Rs. 1,50,000/( Rupees one lakh fifty thousand only) being part of the amount. The appellant presented the cheque for realisation on 20.05.1998 when it came to be dishonoured with the endorsement ‘insufficient funds’.
"It is difficult to comprehend as to why it would have been drawn for Rs.1,50,000/( Rupees one lakh fifty thousand only) only when it is the case of the appellant that the advance amount paid was Rs.3,50,000/( Rupees three lakh fifty thousand only) and had to get back the entire advance paid. The natural conduct would have been to secure for the full amount if that was the situation. Keeping all these aspects in view, the case put forth by the respondent does not satisfy the requirement of rebuttal even if tested on the touchstone of preponderance of probability. Therefore, in the present facts, it cannot be held that the presumption which had arisen in favour of the appellant had been successfully rebutted by the respondent herein. The High Court, therefore, was not justified in its conclusion," the bench noted.
The Supreme Court Bench observed ".....we have given our thoughtful consideration relating to the appropriate sentence that is required to be imposed at this stage, inasmuch as; whether it is necessary to imprison the respondent at this point in time or limit the sentence to
the imposition of fine. As noted, the transaction in question is not an out and out commercial transaction. The very case of the appellant before the Trial Court was that the respondent was in financial distress and it is in such event, he had offered to sell his house for which the advance payment was made by the appellant. The subject cheque has been issued towards repayment of a portion of the advance amount since the sale transaction could not be taken forward. In that background, what cannot also be lost sight of is that more than two and half decades have passed from the date on which the transaction had taken place. During this period there would be a lot of social and economic change in the status of the parties. Further, as observed by this Court in Kaushalya Devi Massand v. Roopkishore Khore, REED 2011 SC 03001, the gravity of complaint under N.I. Act cannot be equated with an offence under the provisions of the Indian Penal Code, 1860 or other criminal offences."
"In that view, in our opinion, in the facts and circumstances of the instant case, if an enhanced fine is imposed it would meet the ends of justice. Only in the event the respondent-accused not taking the benefit of the same to pay the fine but committing default instead, he would invite the penalty of imprisonment," Supreme Court Bench noted.
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