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

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

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

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

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

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

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

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)

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

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

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

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

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

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

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

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

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

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

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)