The state is traditionally expected to punish a wrongdoer; few count on it to compensate or help the victim recover from the loss. Though provisions are available in law to compensate the sufferer, the court normally does not invoke them. The focus is on retribution. After dumping the offender in an overcrowded prison, the victim is forgotten.
The prospect of a jail sentence often makes the offender reach a compromise by paying damages. This is common in the case of complaints under the Negotiable Instruments Act when cheques are issued without sufficient balance in the bank. Some 3.8 million cases have been reported in the country under Section 138 of the Act and they outnumber other offences. The rate of “compounding”, or settling the cases, is also high. In Lok Adalats, cases involving cheques are settled in hundreds in one day.
Though the Act prescribes six months to complete the proceedings, it normally takes several years. Faced with such bleak outlook, and a maximum two-year jail sentence, most wrongdoers come to the table. Those who have filed the complaints are also exhausted by then. There is a speedy and sensible alternative, which is not invoked often. The guilty drawer of the cheque can be ordered to pay double the amount of the bounced cheque. However, this course is seldom adopted, which led the Supreme Court to find several blind spots last week in the case R Vijayan vs Baby.
In this case, a police woman – a widow – issued a cheque for Rs 20,000 to repay a loan that was dishonoured by the bank. This led to a criminal case against her, which had started in 1995 and ended last week in the Supreme Court. The magistrate imposed a fine of Rs 2,000 and a compensation of Rs 20,000 to the payee. On appeal, the sessions judge acquitted her on a technical point — that the postman who delivered the notice was not examined as witness. On further appeal, the Kerala High Court restored the fine, but not the compensation. Further technicalities brought the litigants to the Supreme Court.
There is an apparent clash of statutes. Under the Negotiable Instruments Act, a fine could be imposed up to twice the amount of the cheque amount. On the other hand, the Criminal Procedure Code points out two courses. Under Section 357(3) of the code, the court can impose any amount as compensation. But there should be no fine. According to Section 357(1)(b), when a fine is levied it can be ordered to be given to the sufferer. In practice, these provisions are not often invoked as the whole focus of prosecution is on jail sentence. Moreover, the present case showed how confused the subordinate courts could be while dealing with fine and compensation.
There is another course to reimburse the loser: moving the civil court for compensation. However, the regular trips to the magistrate’s court would have exhausted both parties by then. After such long travails, the holder of the cheque has hardly any patience, time or money to move a civil court for compensation for the hassle caused by the debtor. Moreover, there is a three-year time limit to move the civil court. Normally, the criminal trial would not be over before this period of limitation. Therefore, this remedy is illusory.
In order to overcome this welter of technicalities, the Supreme Court suggested a few methods, and a possible amendment to the law itself. The provision in the Negotiable Instruments Act should be read as strongly leaning towards grant of reimbursement of the loss by way of compensation. “The courts should,” said the judgment, “in all cases of conviction, uniformly exercise the power to levy fine up to twice the cheque amount and simple interest at 9 per cent and direct payment of such amount as compensation.”
At present, there is lack of uniformity in the orders. Some courts grant compensation while others do not. This creates uncertainty in the minds of the litigants about the functioning of the courts. “Uniformity and consistency in deciding similar cases not only increases the credibility of cheques as a negotiable instrument, but also the credibility of the courts,” the judgment emphasised.
This principle could be adopted in an amendment to the Act so that in all cases of conviction, there should be a consequential levy of fine of an amount sufficient to cover the cheque amount and interest upon it, followed by an award of such sum as compensation from the fine amount. These measures suggested in the judgment should unclog the system. The Law Commission had stated in its 213rd report that cheque cases virtually paralysed the criminal courts. It had recommended some of its own remedies. There is enough light on the problem; it’s time for action.
