Gravity of complaint under N.I. Act cannot be equated with offence under provisions of Indian Penal Code or other criminal offences, reiterates Supreme Court

Read Judgment: Triyambak S. Hegde vs. Sripad

Pankaj Bajpai

New Delhi, September  24, 2021: Taking reference from the decision of this Court in Kaushalya Devi Massand vs. Roopkishore Khore , the Supreme Court has reiterated that gravity of complaint under Negotiable Instruments Act, 1881 cannot be equated with an offence under the provisions of the Indian Penal Code, 1860 or other criminal offences.

A Three Judge Bench of Chief Justice N.V. Ramana, Justice A.S. Bopanna and Justice Surya Kant therefore observed that in the facts and circumstances of the instant case, if an enhanced fine is imposed it would meet the ends of justice. However, in the event the respondent (accused) not taking the benefit of the same to pay the fine but committing default instead, he would invite the penalty of imprisonment.

The observation came pursuant to an appeal against an order passed by the Karnataka High Court setting aside a conviction by the Judicial Magistrate First Class (JMFC) and affirmed by the Sessions Judge under the NI Act.

Going by the background of the case, the appellant had agreed to buy a house from the respondent who was in financial difficulty and accordingly entered into an agreement. On learning that the house belonged to the respondent’s father and therefore, the respondent himself had no authority to sell, the appellant demanded a return of his advance.

Hence, the respondent issued a cheque, but the same came to be dishonoured when presented for realization, with the endorsement ‘insufficient funds’. The appellant therefore issued a notice to the respondent and sought payment of the amount but in vain.

Later, on a complaint u/s 200 of the CrPC, the JMFC convicted the respondent to simple imprisonment and a fine. When the matter reached High Court, the conviction of the respondent was set aside. Hence, present appeal.

The Top Court noted that the respondent has not disputed the signature on the cheque, a presumption would arise u/s 139 in favour of the appellant who was the holder of the cheque.

At the same time, the Top Court observed that the transaction in question is not an out and out commercial transaction and the very case of the appellant before the Trial Court was that the respondent was in financial distress and it is in such event, he had offered to sell his house for which the advance payment was made by the appellant.

“The subject cheque has been issued towards repayment of a portion of the advance amount since the sale transaction could not be taken forward. In that background, what cannot also be lost sight of is that more than two and half decades have passed from the date on which the transaction had taken place. During this period there would be a lot of social and economic change in the status of the parties”, observed the Bench. 

The Apex Court therefore restored the conviction ordered by the JMFC, however modified the fine awarded by the High Court to two lakhs.