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jmp (a)     09 September 2010

cheque return

Whether trial court can ignor to award interest on original amount when makes order to pay amount of cheque in a proven case filed under negotiabl instruement Act? Is it not compulsory to award interest till the date of payment in negotiable instruement Act?


 7 Replies

Uma parameswaran (lawyer)     09 September 2010

No interest but only compensation .

Jayesh Bheda (Advocate)     09 September 2010

From the descripttion It isdifficult ascertain the nature of case!

If it is civil matter fore recovery, then the court has to award 18% interest on the cheque amount!

jmp (a)     09 September 2010

In section 117(c) there is specific provision that person is entiteled for principle amount with interest. Sction 117 is as under.

117. Rules as to compensation

The compensation payable in case of dishonor of promissory note, bill of exchange or cheque, by any party liable to the holder or any endorsee, shall 30[***] be determined by the following rules:

(a) ...........

(b) ..........

(c) an endorser who, being liable, has paid the amount due on the same is entitled to the amount so paid with interest at 31[eighteen per centum] per annum from the date of payment until tender or realization thereof, together with all expenses caused by the dishonor and payment;

Adesh Kumar Sharma (Senior Associate Lawyer)     10 September 2010


My dear friends, section 138 of NI Act entails the penal provision to decide the criminal liability of the accused person. This section cannot be used as a recovery tool, but this section provides the punishment which may be double of the cheque amount and imprisonment which may be extended to two years. Beside that the courts have been given power to award compensation under the Code of Criminal Procedure.

The object of section 138 is to evade the dishonest drawers and to punish them.  The object of every complaint filed under section 138 is to get punished the accused not to recover the money. However section 138 by virtue of section 147 of NI Act has been made compoundable. Which may be read as under:

147. Offences to be compoundable

1[147. Offences to be compoundable.

Notwithstanding anything contained in the Code of Criminal Procedure, 1973, (2 of 1974.) every offence punishable under this Act shall be compoundable.]


Keeping in view the recommendations of the Standing Committee on Finance and other representations, it has been decided to bring out, inter alia, the following amendments in the Negotiable Instruments, Act, 1881, namely:-

(iv) to prescribe procedure for dispensing with preliminary evidence of the complainant


(v) to prescribe procedure for servicing of summons to the accused or wittiness by the Court through speed post or empanelled private couriers;

(vi) to provide summary trial of the cases under the Act with a view to speeding up disposal of cases

(vii) to make the offences under the Act compoundable;

1. Section 143 to 147 ins. by Act 55 of 2002, sec. 10 (w.e.f. 6-2-2003).


In a recent judgment the Supreme Court has framed guidelines that as to how the offence under section 138 can be compounded by the court, whereby the accused has been given a right to get compounded the offence.

These guidelines includes the most vital direction, which is that complainant has to file an affidavit at the time of filing of complaint under section 138 of NI Act, declaring that no other complaint is pending in any other court regarding the same transaction. Meaning thereby any of the Bank or financial institution now can not file number of complaints before various district court. If the Bank or individuals are found doing so, then the accused has right to approach the High Court and the High Court is directed to allow the transfer of the complaint imposing heavy cost upon the complainant.    

For further reference please read the attached judgment.

Now come up to the main query that the court can award interest while imposing a sentence or not.

I wud say yes, court has power to impose the interest under section 117 of NI Act. Further the Criminal Courts have been given power to pass an order to pay compensation under section 357 of Cr.P.C., If you need compensation and trial court has not awarded, this option can be opted by filing revision or appeal as the case may be. The section which be read as hereunder:

357. Order to pay compensation.

(1) When a court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, the court may, when passing judgment order the whole or any part of the fine recovered to be applied-

(a) In defraying the expenses properly incurred in the prosecution,

(b) In the payment to any person of compensation for any loss or injury caused by the offence, when compensation is, in the opinion, of the court, recoverable by such person in a Civil Court;

(c) When, any person is convicted of any offence for having caused the death of another person or of having abetted the commission of shelf all offence, in paying in, compensation to the persons who are, under the Fatal Accidents Act, 1855 (13 of 1855) entitled to recover damages from the person sentenced for the loss resulting to them from such death;

(d) When any person is convicted of any offence which includes theft, criminal, misappropriation, criminal breach of trust or cheating, or of having dishonestly received or retained, or of having voluntarily assisted in disposing of stolen property knowing or having reason to believe the same to be stolen in compensating any bona fide purchaser of such property for the loss of the same if such property is restored to the possession of the person entitled thereto.

(2) If the fine is imposed in a case, which is subject to appeal, no such payment shall be made before the period allowed for presenting the appeal his elapsed, or if an, appeal be presented, before the decision of the appeal.

(3) When a court imposes a sentence, of which fine does not form a part, the court may, when passing judgment order the accused person to pay, by way of compensation such amount as may be specified in the order to the person who has suffered any loss or injury reason of the act for which the accused person his been so sentenced.

(4) An order under this section may also be made by all Appellate Court or by the High Court or Court of Session when exercising its powers of revision.

(5) At the time of awarding compensation in any subsequent civil suit relating to the same matter, the court shall take into account any sum paid or recovered as compensation under this section.


Further I wud say that if the trial court has not used its discretion while imposing the sentence this option is always open left to prefer an revision or appeal and to make a specific prayer to grant compensation under section 358 (4) of Cr.P.C.,

Apart from the above provision there is one other section i.e. section 359 of Cr.P.C., whereby the court has power to impose cost in non-cognizable offences. Meaning thereby as the section 138 of NI Act is a non-cognizable offence a prayer can be made under this section also. The section be read as hereunder:

359. Order to pay costs in non-cognizable cases

(1) Whenever any complaint of a non-cognizable offence is made to a court, the court, if it convicts the accused, may in addition to penalty imposed upon him, order him to pay to the complainant, in whole or in part, the cost incurred by him in the prosecution, and may further order that in default of payment, the accused shall suffer simple imprisonment for a period not exceeding thirty days and such costs may include any expenses incurred in respect of' process-fees witnesses and pleader's fees which the court may consider reasonable.

(2) An order under this section may also be made by an Appellate Court or by the High Court or Court of Session when exercising its powers of revision.

Therefore I wud suggest to prefer a revision or appeal on the quantum of adequate sentence as the case may be and to make a specific prayer to award compensation or interest woteva you want.




Attached File : 5 5 award of interest under section 138.doc downloaded: 79 times

Adesh Kumar Sharma (Senior Associate Lawyer)     10 September 2010

Dear Friends please find attached herewith the guidelines framed by Supreme court in a case under section 138 of NI Act.


Attached File : 41 41 guidelines of supreme court to compund the office under section 138.doc downloaded: 119 times

jmp (a)     10 September 2010

Thanks for detail reply. I Liked it. I want to stick to section 117 of N.I. Act only. I want to know whether (1)Court has power to neglect or non adoption of section 117 at the time of dispose of case u/s 138 of N.I. Act? (2) If interest not awarded in order disposing the case u/s 138 and no civil suite was filed for interst or principle amount, revision against order u/s 138 can be filed?

Adesh Kumar Sharma (Senior Associate Lawyer)     10 September 2010

My dear friend you can not take advantage of section 117 of NI Act in a complaint case filed under section 138 of NI Act. But if you filed the recovery suit den you can take benifit of seciton 117 of NI Act. Because the object of the complaint u/s 138 is to penalise the accused not to recover the money. 

If you need some additional cost you need to make a prayer under the provision of Criminal Procedure Code.


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