Answer By law4u team
Under Indian law, specifically the Negotiable Instruments Act, 1881 (NI Act), the person who received the cheque is actually the complainant or the payee in whose favor the cheque was drawn, and who suffered financial loss when the cheque was dishonored due to insufficient funds or other reasons specified in Section 138 of the NI Act. Instead of paying compensation to the payee, the law provides that the court can order the accused drawer of the cheque to pay compensation to the payee as part of the legal remedy. When a cheque is dishonored, the payee can file a criminal complaint under Section 138 of the NI Act after following the mandatory procedure, which includes presenting the cheque within its validity period, issuing a formal demand notice within thirty days of receiving information about the dishonor from the bank, and waiting fifteen days from the receipt of the notice for the drawer to make the payment. If the drawer fails to make the payment within this statutory period, the payee can file a complaint before a judicial magistrate of the first class or a metropolitan magistrate within one month of the cause of action arising. During the trial, under Section 143 of the NI Act, summary trials are usually conducted for speedy disposal, and under Section 143A of the NI Act, the court has the power to order the drawer to pay interim compensation to the payee during the pendency of the proceedings, which can be up to twenty percent of the cheque amount. Furthermore, under Section 138 of the NI Act, upon conviction, the court can sentence the drawer to imprisonment for a term which may extend to two years, or with a fine which may extend to twice the amount of the cheque, or with both. Crucially, under Section 357 of the Code of Criminal Procedure, 1973 (CrPC), or the corresponding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), the court can direct that the whole or any part of the fine recovered be paid as compensation to the person who suffered the loss, which in this context is the payee who received the dishonored cheque. Therefore, the person who received the cheque does not pay compensation; rather, that person is entitled to receive the cheque amount, interim compensation during the trial, and final compensation through the fine imposed upon the conviction of the drawer by the court.
