Delhi High Court Permits Adjustment of Civil Compensation in Criminal Fine Under NI Act

Mohd Umar Released After Court Applies Reverse Analogy for Compensation Adjustment

In a landmark judgment, the Delhi High Court has allowed the adjustment of compensation received in a civil suit towards the fine imposed in criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881. The judgment was delivered by Justice Manoj Kumar Ohri on November 1, 2025, in the case of Mohd Umar v. State of NCT of Delhi. This ruling marks a significant development in the interpretation of compensation adjustments between civil and criminal proceedings pertaining to the same cheque and transaction.

The appellant, Mohd Umar, was convicted by the Trial Court for dishonor of a cheque under Section 138 of the NI Act and was sentenced to two months of simple imprisonment, along with a directive to pay Rs. 1.5 Crores as compensation. In default of payment, an additional imprisonment of six months was imposed. Subsequently, Umar appealed to the High Court, seeking adjustment of Rs. 33,10,000 paid in a civil suit against the criminal fine.

The civil suit, filed by the respondent Asad Raza, was decreed in favor of Raza in 2017, and Rs. 33,10,000 was realized in execution proceedings. Umar's counsel argued for the adjustment of this amount towards the criminal compensation, citing precedents from the High Court of Punjab and Haryana and the Supreme Court, which allowed such adjustments under certain circumstances.

Justice Ohri, referencing Sections 357(3), 357(5), and 431 of the Criminal Procedure Code along with Sections 64 and 69 of the Indian Penal Code, held that compensation received in civil suits can be adjusted towards criminal fines when both proceedings relate to the same matter. The court applied a reverse analogy from Section 357(5) CrPC, allowing the adjustment of civil compensation in criminal proceedings, thus reducing Umar's default sentence proportionately.

With the adjustment, Umar's remaining default sentence was reduced by around 39 days, leading to his immediate release as he had already served the substantive sentence. The court's decision reinforces the legislative intent to ensure equitable relief in interconnected civil and criminal proceedings involving monetary transactions.

This judgment sets a precedent for similar cases, promoting a purposive interpretation of statutory provisions to prevent duplicative financial penalties across civil and criminal jurisdictions. The decision is expected to influence future cases where compensation and fines overlap due to the same underlying financial dispute.

Bottom Line:

Adjustment of compensation amount received in a civil suit towards the fine imposed in criminal proceedings under Section 138 NI Act is permissible when both proceedings pertain to the same cheque and transaction.

Statutory provision(s):  

• - Negotiable Instruments Act, 1881 Section 138  
• - Criminal Procedure Code, 1973 Sections 357(3), 357(5), 431  
• - Indian Penal Code, 1860 Sections 64, 69

Mohd Umar v. State of NCT of Delhi, (Delhi) : Law Finder Doc Id # 2803335