Friend’s ₹4-Lakh Loan Cheque Bounce: Jharkhand HC Upholds Man’s 6-Month Jail Term and ₹70,000 Compensation

The complainant alleged that he advanced the petitioner a friendly loan of ₹4,00,000 in December 2012 and received a post-dated cheque for repayment.

The cheque was dishonoured for insufficient funds; the complainant sent a demand notice by registered post, and, after the amount remained unpaid, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

The trial court convicted the petitioner under Section 138 and sentenced him to six months’ simple imprisonment and payment of ₹70,000 as compensation.

The Sessions Judge dismissed his appeal.

The petitioner challenged both decisions in revision, disputing the debt and alleging that no statutory demand notice had been sent.

Section 138 of the NI Act criminalises dishonour of a cheque issued towards a legally enforceable debt or liability, subject to the statutory requirements of timely presentation, written demand notice, and non-payment within fifteen days of receipt of notice.

Sections 118 and 139 create rebuttable presumptions, respectively, as to consideration for a negotiable instrument and that the holder received the cheque towards discharge of a debt or liability.

Section 142 prescribes requirements for cognizance and trial of Section 138 offences.

Under Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460, revisional jurisdiction is limited and may be exercised for such matters as a gross error, legal non-compliance, findings based on no evidence, disregard of material evidence, or arbitrary or perverse exercise of discretion.

The court noted that the complainant’s evidence and documents supported the allegation that the cheque was issued for the ₹4,00,000 loan, dishonoured for insufficient funds, and followed by a demand notice sent by registered post; the petitioner did not repay the amount.

The petitioner did not dispute his signature on the cheque, and the court found that he had neither adduced evidence nor otherwise rebutted the presumptions under Sections 118 and 139.

Applying the restricted revisional standard, the court found no basis to disturb the concurrent findings of the trial and appellate courts.

It cancelled the petitioner’s bail bond and directed him to surrender before the trial court within two months to undergo the remaining sentence, failing which coercive steps could be taken.