HC: Bail can’t be cancelled for not depositing compensation

CHANDIGARH: The Punjab and Haryana High Court has made it clear that bail granted to a convict in a cheque bounce case cannot be automatically cancelled for his failure to deposit compensation amount as directed by the courts

Updated At : 12:38 PM Jul 31, 2019 IST

Saurabh Malik
Tribune News Service
Chandigarh, July 30

The Punjab and Haryana High Court has made it clear that bail granted to a convict in a cheque bounce case cannot be automatically cancelled for his failure to deposit compensation amount as directed by the courts.

Justice Anil Kshetarpal also made it clear that a convict under Section 138 of the Negotiable Instruments Act was entitled to adjustment of the amount already recovered from him towards percentage of compensation or fine ordered to be deposited by the appellate court.

The judgment, first on the issue, came on two petitions against Kotak Mahindra Bank Ltd. The cases have their genesis in Section 148(2) of Act on ordering an accused to deposit up to 20 per cent of the cheque amount as interim compensation. In the case in hand, the petitioners had prayed for adjustment of the amount directed to be paid by the appellate court as interim compensation against the amount already recovered under SARFAESI Act.

Cheques presented for encashment were dishonored, resulting in filing of two complaints under Section 138.

A Judicial Magistrate subsequently convicted the petitioners and sentenced them to imprisonment for two years in two cases. They were also directed to pay compensation equivalent to the cheque amount to the complainant.

In the proceedings under SARFAESI Act, two mortgaged properties were sold and respondent bank recovered Rs 1.73 crore. Aggrieved by proceedings under Section 138, two separate appeals were filed and concession of bail was granted by the first appellate court. Simultaneously, petitioners-convicts were directed to deposit 20 per cent of the compensation amount under Section 148(2).

The petitioners’ application for adjustment of amount directed to be paid as interim compensation against the amount recovered under SARFAESI Act was dismissed on the ground that the appellants failed to point out any provision of law permitting such adjustment/arrangement.

Justice Kshetarpal asserted 20 per cent came out to be Rs 60,00,000, while the respondent-bank had recovered Rs 1,21,00,000 by the sale of showroom, besides Rs 52,00,000 recovered earlier. “The first appellate court has erred in addressing the issue… It is fundamental rule of law that if more than one proceeding is pending for recovery of the same or connected or interlinked amount, the court would normally adjust the amount which has been paid/recovered in one proceeding”.

Justice Kshetarpal added the intention of the legislature was to ensure that at least certain percentage of the defaulted cheque amount or compensation ordered was recovered as an interim measure as because decision in the trial and appeal took lot of time. “However, the intention of legislature cannot be that the interim compensation is bonanza to the complainant,” he added.