Bombay High Court Finds Prolonged Detention In Cheque Bounce Case “Shockingly Disproportionate”

The Bombay High Court on 5 May held that prolonged incarceration of a cheque bounce convict solely for non-payment of compensation is ex-facie unreasonable, excessively harsh and "shockingly disproportionate".

A Bench of Justice N.J. Jamadar modified the default sentence imposed on Cyrus Noshirwan Kartak, the Director of Mintaur Engineering Private Limited in 17 cheque dishonour cases to the period already undergone and directed his release. He observed:

“Default sentence is essentially by way of penalty for the failure to abide the order of the Court to pay fine or compensation. Therefore, while imposing a sentence in default of payment of fine, the Court should be alive to the object of the measure of the sentence in default. It can never be imposed by way of an additional punishment.”

The case arose from 17 cheque dishonour complaints filed against Kartak concerning alleged dues exceeding Rs. 22.68 crore towards goods sold and delivered. The complaints alleged that 60 cheques issued towards discharge of liability were dishonoured between 7 July and 30 July 2014.

In May 2017, the Metropolitan Magistrate at Andheri convicted Kartak in all 17 complaints under Sections 138 and 141 of the Negotiable Instruments Act, 1881, sentencing him to 15 months' simple imprisonment in each case along with compensation. It also imposed 12 months' imprisonment in default of payment of compensation in each complaint, directing substantive sentences to run concurrently and default sentences consecutively. Kartak's appeals were dismissed by the Sessions Court in January 2025.

Before the High Court, Kartak argued that all cheques arose from a single transaction and that separate prosecutions and sentences across 17 complaints were impermissible. He further contended that imposing 12 months' imprisonment in default of compensation violated Section 65 of the Indian Penal Code.

Interpreting the statutory framework, the Court observed:

“Conjoint reading of the aforesaid provisions would indicate that the Magistrate is empowered to award imprisonment in default of payment of fine, as is authorized by law. The proviso to sub-section (1), however, restricts the power of the Magistrate to impose sentence in default of payment of fine.”

The Bench held that imprisonment in default of payment of fine or compensation cannot exceed statutory limits and noted that, under the governing provisions, the maximum default sentence stood capped. It observed:

“The offence punishable under Section 138 of the NI Act, 1881 entails punishment which may extend to two years, or with fine which may extend to twice the amount of cheque or with both. In view of the provisions contained in Section 65 of the IPC read with Section 30 of the Code, 1973, the maximum sentence in default of payment of fine or compensation awarded for the commission of an offence punishable under Section 138 of the NI Act, 1881 would be six months.”

The Court held that the Magistrate erred in imposing 12 months' imprisonment in default of payment of compensation as it exceeded the permissible statutory limit. It further ruled that sentences in default of fine or compensation cannot run concurrently and clarified that default sentencing cannot be used to enhance substantive punishment.

Noting that Kartak had already undergone more than eight and a half years of imprisonment against a substantive sentence of 15 months, the Bench held that continued detention solely for non-payment of compensation was shockingly disproportionate.

Accordingly, the High Court modified the default sentence to the period already undergone and directed his release.

For Petitioner: Advocate Mohit Bharadwaj

For Respondents: Advocates P.P Malshe, APP, Jatin P Karia (Shah), Snehankita M Munj, Dipti Jatin Karia and Shraddha Kamble