Delhi HC Upholds Property Owner’s Conviction Over ₹30 Lakh Settlement Cheques, Cuts Jail Term To 6 Months

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) for three cheques totalling ₹30 lakh, issued after a property-development dispute was resolved by a settlement dated 1 February 2016.

The Trial Court sentenced him to ten months’ simple imprisonment and directed payment of ₹42 lakh compensation, with two months’ simple imprisonment in default; the appellate court affirmed the conviction.

In revision, the petitioner argued that the cheques were security, disputed the settlement, challenged the rejection of applications to introduce further evidence, and contended that one cheque had been materially altered and was not presented to the drawee bank.

The complainant relied on the settlement document, an attesting witness’s testimony and the petitioner’s admitted signatures on the cheques.

Under Sections 118(a) and 139 NI Act, once execution of a cheque is admitted or proved, the court presumes that it was issued for consideration and towards discharge of a legally enforceable debt or liability; the accused may rebut that presumption on a preponderance of probabilities, including by relying on the complainant’s evidence (*Rangappa v. Sri Mohan*, *Bir Singh v. Mukesh Kumar*).

Revisional jurisdiction is limited and does not permit reappreciation of evidence merely because another view is possible; interference is warranted for perversity, material legal error or comparable grounds (*Kuntegowda v. Thurubaiah*).

Section 87 NI Act renders an instrument void against a party who did not consent to a material alteration, while completion of a voluntarily delivered signed cheque does not, by itself, amount to such alteration (*Veera Exports v. T. Kalavathy*; *Bir Singh*).

A facially apparent material alteration may be established from the instrument itself (*Rajasab v. Hulagappa*).

Sections 391 and 311 CrPC permit additional evidence or further examination where warranted; they do not create an unfettered entitlement to introduce evidence belatedly.

Compensation in cheque-dishonour cases should be practical and reasonable, ordinarily reflecting the cheque amount and interest for the period of deprivation (*R. Vijayan v. Baby*).

The petitioner admitted signing and delivering the cheques. The settlement document, the attesting witness’s evidence that the settlement and cheque delivery occurred, and the petitioner’s equivocal evidence about his signature supported the concurrent finding that the cheques arose from a monetary settlement, not merely a security arrangement.

The alleged unpaid contractual amount and incomplete construction did not establish that the subsequent settlement was not reached or that its liability had been adjusted.

The belated affidavit had not been relied on during trial and was materially incomplete; the proposed further evidence was sought late, and its subject matter did not displace the distinct settlement liability.

As to cheque No. 315387, the entries for the amount in words and figures corresponded, and the petitioner did not prove that an existing amount had been altered without consent. The collecting bank’s endorsement alone did not establish an unauthorised alteration; nor did the record establish that the cheque had not been forwarded to the drawee bank.

The sentence of imprisonment was reduced in light of the circumstances and the ₹21 lakh deposited during proceedings, while the ₹42 lakh compensation was upheld as reasonable given the prolonged non-payment.

It partly allowed the revision only to reduce the substantive sentence from ten months’ to six months’ simple imprisonment.

It directed release to the complainant of the ₹12.6 lakh held by the High Court Registry, with accrued interest, to be adjusted against compensation; the complainant could seek release of the ₹8.4 lakh deposited before the Trial Court, likewise subject to adjustment.