Cheque Dishonour: Fine Cannot Exceed Double the Cheque Amount

Recently, the Karnataka High Court partly allowed the revision petition filed by an accused in a matter involving cheque dishonour and emphasised that the Trial Court had no power to impose a fine that exceeded double the cheque amount.[1]

In this case, an order came to be passed by the Trial Court convicting the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The appeal filed by the petitioner before the District Court was later dismissed. This led the petitioner to approach the Karnataka High Court. It was averred that the complainant (respondent in the instant case) failed to discharge the burden of showing that sufficient loan was provided by him through documents such as passbook, IT returns, etc. It was added that the order of conviction was issued despite the lack of any material to depict that the petitioner owed the amount at the relevant point in time.

After hearing the parties, the Court observed that the initial burden cast on the complainant had been discharged by the complainant for invoking the presumption available under Section 138 of the Act; there was no dispute that the cheque and the signature therein were of the accused.

As to the contention that the cheque was issued in favour of another person and was misused by the complainant, it was noted that the petitioner neither placed any evidence on record in support of this nor did he take action regarding such misuse.

In light of the above, the Court refused to interfere with the order of conviction. However, the Court found faults concerning the fine imposed, i.e., Rs.4,30,000 out of which Rs.4,00,000 was ordered to be paid as compensation to the complainant and Rs.30,000 as defraying expenses of the State. Firstly, imposing double the cheque amount (the amount of cheque being Rs.2,00,000) as fine was held to be uncalled for in the circumstances of the present case. Secondly, it was stated that the lis was between two private parties and no State machinery was involved to justify the imposition of a sum of Rs.30,000 as the defraying expenses to the State. The High Court also highlighted that the Trial Court had no power to impose a fine that exceeded double the cheque amount, an aspect disregarded by the District Court on appeal.

With this, the High Court partly allowed the revision petition. Considering the time gap between the order of conviction and the disposal of appeal by the District Court, the fine amount was modified to Rs.3,25,000. The same was held to be payable as compensation by the petitioner by July 10. It was held that on failure to pay said amount, the accused would have to undergo a simple imprisonment for six months.

[1] A M Harish Gowda v. Chaluvaraju H S (Criminal Revision Petition no.619 of 2021)