Jharkhand HC Upholds Borrower’s 1-Year Jail Term, ₹12.5 Lakh Compensation In ₹10 Lakh Cheque-Bounce Case

The complainant alleged that he lent the petitioner ₹10 lakh in installments for business purposes, repayable by December 2012. After repayment was demanded, the petitioner allegedly issued a cheque for ₹10 lakh, which was dishonoured for insufficient funds. The complainant sent a demand notice, but payment was not made.

The trial court convicted the petitioner under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”), sentencing him to one year’s simple imprisonment and directing payment of ₹12.5 lakh as compensation. The appellate court affirmed the decision, and the petitioner challenged both decisions in revision.

He contended that the loan acknowledgment was not proved by an independent witness, that the cheque was given as security and later filled in without his knowledge, and that he had not received notice.

Section 138 of the NI Act criminalises the dishonour of a cheque issued in discharge of a liability where the statutory requirements, including demand by notice and failure to pay within the prescribed period, are met.

The court stated that filling in the cheque’s amount or date by another person does not, by itself, invalidate a cheque that was properly signed by and admitted to have been issued by the drawer.

On revisional jurisdiction, the court relied on Amit Kapoor v. Ramesh Chander, (2012) 9 SCC 460: revision is limited and is not to be exercised routinely; interference may be warranted for, among other things, gross error, non-compliance with law, findings based on no evidence, disregard of material evidence, or arbitrary or perverse exercise of discretion.

The High Court found that the complainant had consistently established the transaction and the formal requirements for proceedings under Section 138, while the defence had elicited no material to cast doubt on that evidence.

The absence of an independent witness to the loan acknowledgment did not, by itself, discredit the complainant’s testimony. Nor did the assertion that the cheque was filled in by another person invalidate it, given the petitioner’s admitted signature and the court’s finding that the cheque was issued in connection with the loan liability.

Applying the limited revisional standard in Amit Kapoor, the Court found no perversity or other basis to disturb the concurrent findings.

It cancelled the petitioner’s bail bond and directed him to surrender before the trial court within two months from the date of judgment to undergo the remaining sentence; failing surrender, the trial court was directed to take coercive steps to secure his attendance.