Supreme Court Restores Conviction Over Dishonoured Cheque, Modifies Sentence To Monetary Fine

A bench of Justices Sudhanshu Dhulia and Ahsanuddin Amanullah heard the criminal appeal arising from a challenge to the High Court, Lucknow Bench's order acquitting an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act. The appeal, filed by the complainant, contested the High Court’s setting aside of concurrent findings of guilt recorded by the trial court and affirmed by the appellate court.

The Supreme Court allowed the appeal, set aside the High Court’s impugned order and held that the findings of the trial court and the appellate court did not warrant interference. The Court restored the conviction and sentence previously imposed by the trial court but, having regard to the accused’s age and other submissions, modified the sentence to a monetary penalty: payment of a fine of Rs.32,00,000 within four months. The Court directed that on failure to deposit the modified fine within the stipulated period, the original sentence of one year simple imprisonment and fine of Rs.35,00,000 would be restored, with the full fine payable to the complainant. The Court emphasised the statutory framework for cheque dishonour cases and the allocation of onus between the parties. The Court, in its reasoning, observed: “There can be no dispute that in matters relating to alleged offences under Section 138 of the Act, the complainant has only to establish that the cheque was genuine, presented within time and upon it being dishonoured, due notice was sent within 30 days of such dishonour, to which re-payment must be received within 15 days, failing which a complaint can be preferred by the complainant within one month as contemplated under Section 142 (1)(b) of the Act.” The judgment further noted that the accused’s principal defence was to deny liability on the ground that the cheque did not represent a "legally enforceable debt".

Background

The dispute arose after the complainant alleged that he advanced a loan of Rs.22,00,000 to the accused on assurance of repayment and received Cheque No.726716 dated 17.03.2010 as security. The cheque was presented and was dishonoured on 07.05.2010 with the endorsement “payment stopped by drawer”. The complainant issued a legal notice on 18.05.2010 and subsequently filed the complaint. The trial court found the accused guilty under Section 138 NI Act, sentenced him to one year simple imprisonment and imposed a fine of Rs.35,00,000, directing Rs.30,00,000 as compensation to the complainant. The appellate court affirmed those findings.

The accused obtained criminal revision before the High Court which allowed the revision and set aside the conviction, observing that the complainant had failed to prove that the cheque was issued towards discharge of a lawful debt and had not disclosed bank account details or documentary proof of withdrawal and payment, thereby creating "glaring inconsistencies". On appeal, the complainant contended that statutory presumptions under Sections 118 and 139 shifted the burden to the accused and that the signature on the cheque was admitted.

The accused countered that the cheque was lost, that an intimation to police dated 12.03.2010 was lodged only in 2011 and not converted into an FIR, and that no evidence established the complainant’s capacity to advance such a loan. He also argued that the drawer was a partnership firm and the firm had not been arrayed as a party. The Supreme Court examined these contentions, considered authorities including Rohitbhai Jivanlal Patel and decisions on the scope of prosecution where corporate or firm entities are involved, and held that on the material before the courts the statutory presumption in favour of the complainant was not successfully rebutted. The Court found that the High Court had erred in placing an initial onus on the complainant to prove his financial capacity and in re-appreciating evidence to reverse concurrent findings without adequate justification.

The appeal was therefore allowed, the High Court’s order was set aside, and the conviction and sentence were revived subject to the modification of sentence to payment of a fine of Rs.32,00,000 within four months, failing which the original sentence and fine would be restored. Parties were directed to bear their own costs and certain additional documents were permitted to be placed on record.

Case Details: Case No.: CRIMINAL APPEAL NO.4171 OF 2024 (2025 INSC 427) Case Title: Ashok Singh v. State of Uttar Pradesh & Anr. Appearances: For the Petitioner(s): Mr. Pinaki Addy, Advocate For the Respondent(s): Mr. Shadan Farasat, Senior Advocate (for Respondent No.2); (State represented as noted in papers)