P&H HC Upholds 2-Year Jail Term For Developer Director After His ₹30 Lakh Cheque To Plot Buyer Bounced

The complainant alleged that he paid ₹30 lakh to M/s Shri Shyam Sunder Developers Pvt. Ltd. for a plot in a proposed township.

After the company failed to develop the township and allot the plot, petitioner Mahipal Singh, its director and authorised signatory, issued a cheque for ₹30 lakh.

The cheque was dishonoured for insufficient funds, and the complainant’s demand notice was not followed by payment.

The trial court convicted the petitioner under Section 138 of the Negotiable Instruments Act, 1881, and imposed two years’ rigorous imprisonment and compensation of ₹30 lakh; the appellate court upheld the conviction and sentence.

The petitioner filed a revision 757 days late; the High Court condoned the delay and considered the revision on its merits.

Section 5 of the Limitation Act permits condonation of delay for sufficient reasons; the Court allowed the application on the reasons stated in it.

Section 138 of the Negotiable Instruments Act applies where a cheque is drawn on an account for discharge of a debt or liability, is presented within its validity, is dishonoured for a specified reason, and the drawer fails to pay within 15 days of receiving a written demand notice.

The Court also stated that revisional jurisdiction under Section 397 Cr.P.C. is supervisory and is not a general power to reappreciate evidence; interference is warranted for material legal or procedural error, unsupported or perverse findings, or a gross miscarriage of justice.

Relying on M/s Maharia Automobiles v. Anil Kumar, CRA-AS-249-2023, the Court further stated that a cheque drawn for a time-barred debt may itself create an enforceable promise or contract.

The petitioner admitted his signatures on the cheque, and the record established timely presentation, dishonour for insufficient funds, service of the demand notice, and non-payment.

The complainant’s evidence supported payment of ₹30 lakh to the company for the plot; the Court considered the company’s own records relevant to rebutting that evidence, and held that the complainant’s failure to specify the payment details or mode was not fatal.

It rejected the time-barred-debt defence, reasoning that the cheque was issued after the company failed to develop the township and was intended to discharge the existing liability; it also applied the principle that a cheque for a time-barred debt can create an enforceable promise.

Finding no material error in the concurrent factual findings or procedure, the Court saw no basis for revisional interference.

It upheld the petitioner’s conviction under Section 138 of the Negotiable Instruments Act and the sentence of two years’ rigorous imprisonment with compensation of ₹30 lakh, finding no illegality, impropriety, or perversity in the lower courts’ decisions.