Modification of NI Act sentence to mere cheque amount without interest or imprisonment is perverse.

The Appellant (original complainant) filed two complaints under Section 138 of the Negotiable Instruments Act, 1881, against the Respondent for the dishonor of two cheques amounting to Rs. 2,00,000 and Rs. 50,00,000

The Trial Court convicted the Respondent, sentencing him to two years of imprisonment and a fine of double the cheque amounts; this was upheld by the Appellate Court

On revision, the High Court of Karnataka modified the sentence, restricting the fine to just the cheque amount and setting aside the prison term, effectively allowing the Respondent to pay the principal sum without interest or penalty after a 10-year delay

1. Whether the High Court, while exercising revisional jurisdiction, acted perversely by limiting the sentence to the mere repayment of the cheque amount without interest or imprisonment

2. Whether the settlement proposed by the parties during the Supreme Court proceedings should be recorded as the final resolution of the dispute

Section 138 of the Negotiable Instruments Act, 1881, which provides penalties for the dishonor of cheques, including imprisonment for a term which may extend to two years, or with a fine which may extend to twice the amount of the cheque, or both

The scope of revisional jurisdiction under the Code of Criminal Procedure, distinguishing it from appellate power, particularly regarding the discretionary power of a court to impose an "appropriate sentence" that serves as a penalty for a proved offence

The Supreme Court observed that the High Court erroneously exercised its revisional jurisdiction as if it were an appellate court

The Court found the High Court's decision to let the Respondent off by paying only the face value of the cheques—ten years after dishonor—without interest or a prison term to be "perverse," "erroneous," and "indefensible," as it failed to impose any actual penalty for a proved criminal offence

The Court noted that such a modification effectively ignored the statutory intent of Section 138. However, during the pendency of the appeal, the parties reached a consensus where the Respondent undertook to pay a consolidated sum of Rs. 45,00,000 in addition to amounts already withdrawn, which the Court accepted to facilitate a final settlement

The Court recorded the Respondent's undertaking to pay the Appellant a sum of Rs. 45,00,000 by August 31, 2026, as a full and final settlement. The Court further ordered that should the Respondent fail to make this payment, the Appellant is at liberty to revive the appeals, at which point the Court would consider sending the Respondent to prison