Himachal Pradesh High Court Reduces Sentence U/S 138 NI Act To 'Till Rising Of Court' On Full Payment Of Cheque Amount

Himachal Pradesh High Court Reduces Sentence to 'Till Rising of the Court' Under Section 138 of the Negotiable Instruments Act, Holding That While the Act Prescribes No Minimum Punishment, Sentence May Be Reduced Where the Accused Has Deposited the Entire Default Amount.

Justice Virender Singh: “Considering the fact that under the Negotiable Instruments Act, no minimum punishment has been provided, for the offence, punishable under Section 138 of the NI Act, this Court is of the view that the quantum of punishment is liable to be modified. Consequently, the ends of justice would be met, in case, the accused is sentenced to undergo punishment till the rising of the Court”.

Background Facts:

The case began when the complainant, Sahil Sood, filed a complaint under Section 138 of the Negotiable Instruments Act against the accused, Dinesh Negi. He alleged that the accused had issued Cheque for ₹5,20,000 as part payment of a financial liability owed to him.

However, when the cheque was presented by the complainant in the bank, it was dishonoured and returned with a memo stating "insufficient funds" as the reason for non-payment.

Pursuant to which, the complaint issued a legal notice to the accused, demanding payment of the cheque within fifteen days. Despite receiving the notice, the accused neither responded nor made any payment. As a result, the complainant filed a criminal complaint before the trial court.

After hearing both sides and reviewing the record, the trial court convicted the accused under Section 138 of the NI Act for non-payment of dues, and sentenced him to simple imprisonment along with compensation.

The accused challenged this conviction by filing an appeal before the Sessions Court, which was dismissed. Aggrieved by the same, he filed a criminal revision petition before the High Court, seeking to overturn the conviction.

Contentions:

The Accused contended that the evidence had been misread and mis-appreciated by the trial Court, as, the trial Court had wrongly taken into consideration two documents that were not mentioned in the notice issued by the Complainant and were brought up later.

He further submitted the complainant had admitted that the accused had no dealing with him and also admitted that the liability, if any, was towards the father of the complainant. On this basis, the accused argued that the complainant was not the rightful holder of the cheque in due course.

It has also been submitted by the accused that the entire amount of compensation has been deposited. 20% of the compensation has been deposited before the trial Court and 80% of the same had been deposited before the High Court.

In response, the complainant stated that trial Court, as well as, the Appellate Court has rightly appreciated the evidence and now, in revisional jurisdiction, the evidence, so discussed by the trial Court, can't be re- appreciated.

Findings:

The High Court Observed that the accused had admitted his signature on the cheque. Once the signature on the cheque is acknowledged, the law under Section 139 of the NI Act presumes that the cheque was issued to discharge a legal liability.It is then on the accused to rebut this presumption by showing that the cheque was not issued in discharge of any legal liability. However, the Court noted that the accused failed to provide adequate evidence to rebut this presumption.

Regarding the two documents that were introduced later in the case, the Court noted that permission had been granted to bring them on record through a recall of the witness for further questioning. The complainant was called back to the witness box and was cross-examined on those documents. Therefore, the Court held that this did not cause any unfairness or disadvantage to the accused.

As for the claim that the accused had no dealing directly with the complainant but with his father, the Court held that this argument could not override the legal assumption that the cheque was issued to settle a debt, especially since the accused failed to rebut this presumption.

In State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand (2004), the Supreme Court clarified that the “High Court's power in revision is limited to correcting unreasonable or perverse legal findings. It cannot be used to re-examine facts that have already been properly considered by the lower courts”.

Therefore, the court noted that the findings recorded by the trial court which were upheld by the Appellate Court do not fall within the definition of 'perverse findings' and do not require any interference.

However, the High Court took into account that the accused had deposited the full compensation amount and that the complainant had not filed any appeal for enhancement of compensation. In view of these circumstances, the Court stated that the punishment given by the trial court is on the higher side.

In P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., 2021, the Supreme Court highlighted that the “real object of the provision of Section 138 of NI Act is not to penalise the wrongdoer for an offence that is already made out, but to compensate the victim.”

In conclusion, the High Court upheld the conviction of the accused under Section 138 of the NI Act but modified the sentence. Considering the full payment of compensation, the Court reduced the sentence to imprisonment “till the rising of the Court.”

Case Name: Dinesh Negi v/s Sahil Sood

Case No.: Cr. Revision No. 54 of 2022

Date of Decision: 16.05.2025

For the petitioner : Petitioner in person with Mr. Anirudh Sharma, Advocate.

For the respondent : Mr. Sudhir Thakur, Senior Advocate, with Mr. Somesh Sharma, Advocate.

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