Exclusive HOLI Discounts!
Get Courses and Combos at Upto 50% OFF!
Upgrad
LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Madhu Mittal (Director)     12 October 2015

Interest u/s 80 and section 138 niact

Respected Sirs of LCI,

I know that this is not a teaching forum. But Still I do not know where to write whenever there is two opinions of learned advocates with one point, that is why I want guidance from the learned members of this forum:

In  Court, learned advocates of same group have different opinions about a Citation whether it supports the point or not.

u/S 80 of N I Act,  there is a provision of interest @ 18 per cent per annum to be calculated on the cheque amount with non obstinate clause. So it is statutory interest as also held by various High Courts.

Now in a case u/s 138 N I Act, this interest was not got given by the trial court even after case ended in conviction, revision court and High court also. Now before Supreme Court level one advocate is of the view that attached decision (decision of three judge bench of Supreme court named State of Tamil Nadu vs. Padmavathiammal (12.01.1981 - SC)) support the view that interest should be got given as statutory interest whereas the other of the view that this citation is not decided u/s 138 NI Act, so it will not support case u/s 138. Now I request to learned members of this forum to comment.



Learning

 9 Replies

Meghavath M R (Human Welfare Practitioner)     13 October 2015

Dear Mittal,

Please analyse Sec 78, 79 & 80 of NI Act. 78 deals with the amount of a PN, BoE or Chq whereas 79 & 80 deals with the interest payable on PN or BoE and not Chq (specifically excluded). The reason for exclusion is; though cheque is a BoE, it must be drawn on a specified banker and not expressed to be payable otherwise than on demand (no part payment or grace period is allowed). Therefore, Sec 79 & 80 are not applicable to cheques. Further, Sec 138 is exclusively for cheques and as such Sec 79 or 80 cannot be enjoined with this section. Thus the given citation is of no use and the courts which have not considered the claim on interest are in order. Hope, I am clear.

Madhu Mittal (Director)     14 October 2015

Respected Sir, Suppose for a moment that s 80 is applicable, will than this citation support or not ?

Meghavath M R (Human Welfare Practitioner)     14 October 2015

No imaginary views on ifs and buts. It is like wasting time to extract Makkhan from Pani. The given citation is all about a specific compensation to be determined according to a prescibed statutory formula. As far as NI Act is concerned, there is a compensation formula u/s 117 within. In any case, Sec 80 is not applicable for cheques. 

Madhu Mittal (Director)     14 October 2015

Respected Sir,

u/s 117 (a) Ni act, the holder is entitled to the amount due upon the instrument.

u/s 82 c Ni act Discharge from liability-by payment- ..in due course of the amount due thereon.

And what and how to calculate  the amount due is written u/s 79  interest when rate specified, and u/s 80 Interest when no rate specified. on cheque, no rate of interest is written. so amount due on cheques comes u/s 80.

So in this way the compensation should be face value of cheque+ 18 % interest p.a as per s 80 +prosecution cost.

other wise o.k. compensation formula u/s 117. so this citation should support this formula, or not becuase this citation belong to Land compensation?

Thanks with Regard, 

 

Meghavath M R (Human Welfare Practitioner)     14 October 2015

Further, as per the scheme of compensation u/s 117 of NI Act, only endorser can claim the interest compensation. Though sec 80 is made applicable by any court of law, it cannot benefit other than an endorser. In the case on hand, claiming interest through a civil dispute is a prudent way. Clubbing civil & criminal disputes emerging out of sec 138 is a matter pending before law commission. This is for information, ignore if extraneous.

Madhu Mittal (Director)     14 October 2015

Respected Sir,

you did not coment on u/s 117 a about amount due.

Again  

o.k. What ever compensation u/s 117. so this citation should support this formula, or not becuase this citation belong to Land compensation? please answer this.

Thanks with Regard, 

Meghavath M R (Human Welfare Practitioner)     14 October 2015

117 (a) amount due = principle

      (b) currency exchange difference

      (c) interest to endorser

      (d) currency exchange difference on interest to endorser

      (e) a new bill for gross settlement

All the above compensations are available upon dishonour of an NI. The given citation supports only if the claim is as per above framework. However, it should not be confused with sec 79 & 80 which are operative only in the couse of normal payment (non dishonour) of NIs excluding cheques and subject to court discretion after institution of recovery suit upon non payment. Sec 138 deals exclusively on dishonour of cheques for the reason insufficient funds (criminal offence).

Madhu Mittal (Director)     15 October 2015

Respected Sir,

Now thanks for direct answer "The given citation supports only if the claim is as per above framework."

Here difference of opinion is only with 117 (a) amount due=principle, according to you. According to me, 117 (a) amount due = principle ie face value of cheque+ interest 18 % p.a. u/s 80.

Thanks with Regards,

Other learned members are also requested to comment.

 

Madhu Mittal (Director)     17 October 2015

Respected Sirs,

As stated by me at thread  : - https://www.lawyersclubindia.com/experts/Interest-u-s-80-and-section-138-niact-565481.asp#.ViFa6NIrJkg

I am enclosing the decision of Smt. Bhavani hc karnataka div bench for ready reference, please let us know whether it was decided wrongly? I could not attach here also. So I am writing the whole citation.

Karnataka High Court
Smt. Bhavani vs D.C. Doddarangaiah And Anr. on 14 June, 2002
Equivalent citations: 2002 CriLJ 3814, 2002 (5) KarLJ 516
Author: K S Rao
Bench: K S Rao
ORDER K. Sreedhar Rao, J.
1. This petition is filed under Section 397 of the Cr. P.C. against the order of XVI Additional Chief
Metropolitan Magistrate, Bangalore in C.C. No. 6717 of 1997. The petitioner is the complainant. She
prosecuted a private complaint under Section 200 of the Cr. P.C. against the respondent alleging
commission of offence under Section 138 of the Negotiable Instruments Act.
2. The Trial Court after holding valid trial, passed the judgment of conviction and imposed sentence
of fine of Rs. 15,000/-, in default to undergo simple imprisonment for a period of three months. Out
of the fine amount, Rs. 12,000/- is directed to be payable as compensation to the complainant. In
this regard, the complainant (revision petitioner) contends that sentence of fine imposed is grossly
inadequate and does not commensurate with the nature of crime and the value thereof.
3. The complainant's case is that a cheque for Rs. 1,50,000/- was issued which came to be
dishonoured and thus it was contended that Section 138 of the Negotiable Instruments Act attracts
and as such the respondent is liable for conviction and penalty as per law.
4. The Trial Court has upheld the contention of the complainant and found the accused-respondent
guilty. Section 138 of the Negotiable Instruments Act provides for three types of punishment,
namely, sentence of imprisonment with fine to an extent of one year or with fine which may extend
to twice the amount of cheque or with both.
5. The Trial Court has levied punishment of fine only to an extent of Rs. 15,000/- and not the
amount which represents the cheque value or double of it.
6. Being aggrieved by the inadequate fine amount levied, the present revision is filed.
7. A contention is raised in the revision that it is mandatory on the part of the Magistrate while
convicting the accused to impose a punish ment of fine which should be twice the amount of cheque.
This Court has relied upon the decision in the case of B. Harikrishna v. Macro Links Private Limited,
Bangalore and Anr., 2000(2) Kar. L.J. 621: ILR 2000 Kar. 2855 in support of the said conten tion.
The learned Single Judge while hearing this matter, disagreed with the view taken in the aforesaid
decision and therefore referred the matter to the Division Bench. Accordingly, the Division Bench
after hearing the parties, has now laid down thus:
"It would be almost obligatory on the part of the Trial Court when the case has ended in a conviction
to award a compensation that would be commensurated with the legal principles of fair play and this
in our view having regard to the provision of Section 117 of the Negotiable Instruments Act, which
should not be less than the face value of the cheque, the interest computed at 18% per annum and
the costs that may be computed by the Court. There is a distinct reason why the Legislature has
provided for the upper limit of twice the face value of the cheque the reason being that having regard
to the loss of interest and the costs involved that if the compensation or the fine were to be limited to
the face value of the ' cheque, it could result in manifest injustice to the aggrieved party and the
wrong-doer being benefitted. In order to offset this injustice, the Legislature has provided for the
upper limit of twice the face value of the cheque and in our considered view no Trial Court would be
justified in overlooking this important aspect of the law".
8. In view of the ratio laid down by the Division Bench, I deem it appropriate that in this case the
order of the Trial Court in levying sentence of fine of Rs. 15,000/- has to be modified and to be
enhanced to twice the cheque amount which will be in a sum of Rs. 3,00,000/-. Out of the fine
amount, a sum of Rs. 2,95,000/- shall be payable to the complainant as compensation and Rs.
5,000/- to be appropriated to the State, in default, the accused to undergo imprisonment for a
period of three months.
Accordingly, the petition is allowed.
Fee of Rs. 1,000/- is payable to the Amicus Curiae.
Smt. Bhavani vs D.C. Doddarangaiah And Anr. on 14 June, 2002
Indian Kanoon - https://indiankanoon.org/doc/1758807/ 2


Attached File :
  • downloaded: 80 times

  • Leave a reply

    Your are not logged in . Please login to post replies

    Click here to Login / Register