Default sentences for multiple cheque dishonour convictions arising from a single transaction may be reduced to prevent disproportionate incarceration.

In brief

The question

1. Whether the imposition of separate default sentences in three distinct prosecutions arising from a single transaction results in punitive excess contrary to the mandate of Section 65 of the IPC (now Section 8(3) of the BNS)

The court held

The Court allowed the petition, holding that the aggregate default sentence was excessively harsh and disproportionate

It also directed

It ordered that the default sentences in all three cases be staggered and equalized to the period of imprisonment already undergone by the petitioner

The Court directed his immediate release within four days of the order. However, it clarified that this order does not absolve the petitioner of his pecuniary liability; the complainants remain at liberty to pursue recovery of the fine amounts through property attachment under Section 421 of the Cr.P.C. (Section 461 of the BNSS)

01Facts

The petitioner entered into a loan agreement with Respondent No. 3 for ₹10 crores, logic which resulted in the issuance of three cheques totaling ₹9 crores to repay the principal and interest

p. 4

All three cheques were dishonored for insufficient funds, leading to a single statutory demand notice

p. 4

Consequently, the petitioner was convicted in three separate cases (C.C.Nos. 15234, 15235, and 15236 of 2021) under Section 138 of the Negotiable Instruments (NI) Act

p. 5

The Trial Court imposed substantial fines and, in default of payment, sentenced him to 3 months of simple imprisonment in each case

p. 5

After the petitioner failed to pay the fines, the Magistrate directed the default sentences to run consecutively starting 29.09.2025

pp. 10-13

The petitioner sought a reduction in the default sentence, arguing that since the maximum punishment under Section 138 is 2 years, any default sentence cannot exceed one-fourth of that term (6 months) in aggregate for a single transaction

pp. 6-7

02Issues

i.1. Whether the imposition of separate default sentences in three distinct prosecutions arising from a single transaction results in punitive excess contrary to the mandate of Section 65 of the IPC (now Section 8(3) of the BNS)

p. 14

ii.2. Whether the court should exercise its inherent power to reduce default sentences when continued incarceration appears disproportionate to the offender's financial incapacity

p. 38

03Law Applied

The court applied Section 65 of the Indian Penal Code (IPC) and its successor, Section 8(3) of the Bharatiya Nyaya Sanhita (BNS), which limits imprisonment in default of fine to one-fourth of the maximum term prescribed for the offence

pp. 15-16

It further relied on Section 30 of the Cr.P.C. (now Section 24 of the BNSS), which restricts a Magistrate's power to award default terms exceeding one-fourth of their competence

pp. 18-19

The court integrated principles from K. Pranil Reddy v. State of Telangana, emphasizing that default sentences should not be oppressive where financial inability exists

p. 21

Sanjay Vasudeva v. State, which clarified that default imprisonment is a coercive tool, not an additional substantive punishment

p. 28

Provisions in the judgment · 25 · Linked ones open on LawLens

Negotiable Instruments Act, 1881 Section 138 Section 141 Section 143

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 23 Section 24 Section 395 Section 400 Section 461 Section 471 Section 528 Section 531

Bharatiya Nyaya Sanhita, 2023 Section 8 Section 24

Code of Criminal Procedure, 1973 Section 29 Section 30 Section 255 Section 357 Section 421 Section 427 Section 428 Section 431

Indian Penal Code, 1860 Section 64 Section 65 Section 326

Code of Civil Procedure, 1908 Section 51

04Reasoning

The Court observed that Section 138 of the NI Act carries a maximum punishment of two years; thus, the statutory ceiling for default imprisonment per case is six months

p. 20

While acknowledging the rule that default sentences typically run consecutively rather than concurrently, the Court noted that the petitioner’s three cases stemmed from a singular financial transaction

p. 50, 10

Relying on the "single transaction rule" and constitutional mandates under Articles 14 and 21, the Court reasoned that keeping a person in a "debtors’ prison" for an inordinately long period due to poverty is unconscionable

p. 42, 55

It determined that while the default sentence is a penalty for non-compliance, it must not become a life-long or "life sentence" equivalent

p. 40

Since the petitioner had already suffered substantial incarceration, the Court found that continued detention served no societal purpose other than "perverse vengeance"

p. 39