The High Court of Delhi ruled that an amount recovered by a complainant in a civil suit execution proceeding, arising from a dishonoured cheque, can be adjusted against the compensation amount imposed on the accused in a parallel criminal proceeding under Section 138 of the Negotiable Instruments (NI) Act for the same transaction.
Applying a “reverse analogy” of Section 357(5) of the Code of Criminal Procedure (CrPC), Justice Manoj Kumar Ohri allowed an application filed by the appellant, Mohd Umar. The Court adjusted the recovered sum against the compensation, proportionally reduced the appellant’s default sentence, and ordered his immediate release, finding he had already served the reduced term.
The judgment was passed in Crl.A. 90/2025, which challenged a judgment dated 25.08.2022 from the learned ASJ, Karkardooma Courts.
Background of the Case
The appellant, Mohd Umar, was convicted by a Trial Court in Criminal Complaint No. 56308/2016 under Section 138 of the NI Act vide judgment dated 23.12.2020. The Trial Court sentenced him to 2 months of simple imprisonment and directed him to pay compensation of Rs. 1,50,00,000 within 30 days. In default of payment, he was to undergo simple imprisonment for 1 month.
The private respondent (complainant), Asad Raza, being aggrieved with the “inadequacy of sentence,” sought its enhancement.
Vide the impugned judgment dated 25.08.2022, the Sessions Court enhanced the substantive sentence for the offence to simple imprisonment for 1 year. While affirming the compensation amount of Rs. 1,50,00,000, the Sessions Court increased the default sentence for non-payment to 6 months.
Separately, on account of the same cause of action, the respondent had pursued a civil suit (Civil Suit No. 10359/2016) which was decreed in his favour on 27.04.2017. It was “concededly” stated that in the execution proceedings from this civil suit, the respondent had realised a sum of Rs. 33,10,000.
Submissions Before the High Court
Appearing for the appellant, Mr. Alok Tripathi submitted that the appellant had already undergone the entire substantive sentence of 1 year, which ended on 26.05.2025. He stated that the appellant did not wish to press the accompanying appeal on its merits.
The appellant was, however, currently undergoing the default sentence of 6 months for non-payment of the Rs. 1.5 Crore compensation.
The appellant’s counsel prayed that the Rs. 33,10,000 recovered by the respondent in the civil proceedings be adjusted against the compensation amount, as both proceedings were in respect of the same cheque amount. Relying on the decision in Vivek Sahni and anr v. Kotak Mahindra Bank Ltd., it was argued that if the amount were adjusted, the appellant would be entitled to release under Section 69 of the Indian Penal Code (IPC), which provides for termination of imprisonment upon payment of a proportional part of the fine.
Mr. Jitendra Bakshi, counsel for the respondent, submitted that the appeal was time-barred with a delay of 879 days and argued that “in light of conduct of the appellant, no discretion be exercised in his favour.”
Court’s Analysis and Findings
Justice Ohri, focusing on the application for adjustment (CRL.M.A. 28731/2025), first affirmed the legality of imposing a default sentence for compensation awarded under Section 357(3) CrPC. The judgment noted that reading Section 357(3) with Section 431 CrPC (money recoverable as a fine) and Section 64 IPC (sentence of imprisonment for non-payment of fine) empowers the court to do so.
The Court cited the Supreme Court’s decision in Vijayan v. Sadanandan K. & Anr., which held: “The provisions of Sections 357(3) and 431 Cr. P.C., when read with Section 64 IPC, empower the Court, while making an order for payment of compensation, to also include a default sentence in case of non-payment of the same.”
The Court then addressed the primary question of adjustment. It referred to Section 357(5) CrPC, which states that a court in any subsequent civil suit “shall take into account any sum paid or recovered as compensation” in the criminal proceedings.
The judgment also discussed the Punjab and Haryana High Court’s decision in Vivek Sahni (Supra), which had relied on the Supreme Court case D. Purshotama Reddy and another vs. K. Sateesh. The Vivek Sahni judgment was quoted: “…this Court is of the view that the facts of each case particularly when the amount under cheque and recovery proceedings under any other provision is same and interconnected, the Courts are well within their power to order adjustment.”
Based on this precedent, the High Court established its key finding by applying the same principle in reverse:
“Since Section 357(5) CrPC allows the Court to adjust any amount paid or compensation received in criminal proceedings in any subsequent civil suit relating to the same matter, there is no bar in applying the reverse analogy, and adjusting any amount earlier received in a civil suit pertaining to the same matter, in the subsequent criminal proceedings.”
The Court held: “This Court deems it fit to adjust the amount received by the respondent in the execution proceedings, i.e. Rs. 33,10,000/-, towards the compensation amount of Rs. 1.5 Crores.”
The Final Decision
Having ordered the adjustment, the Court applied Section 69 IPC. It noted that the appellant’s 6-month default sentence was set to expire on 26.11.2025.
The Court calculated that the Rs. 33,10,000 already recovered by the respondent amounted to “around 22 percent of the total compensation amount.” Consequently, the judgment held, “the default sentence is also reduced by a similar proportion, i.e. by around 39 days.”
Observing the timeline, the Court concluded, “Since the remaining sentence is less than 39 days, the appellant has already undergone the reduced default sentence.”
Allowing the application and disposing of the appeal, the High Court ordered: “Consequently, the appellant is directed to be released forthwith, if not required in any other case.” A copy of the judgment was directed to be sent to the Trial Court and the Jail Superintendent.
