Magistrate Can’t Impose More Than Six Months’ Imprisonment In Default Of Compensation Payment In Cheque Bounce Cases: Bombay High Court

The Court was hearing a writ petition by the petitioner who had been convicted in 17 cheque dishonour complaints under Sections 138 and 141 of the Negotiable Instruments Act, 1881. The petitioner challenged, among other things, the sentence directing him to undergo 12 months’ simple imprisonment in default of payment of compensation in each complaint.

A Bench of Justice N.J. Jamadar observed: “Reverting to the case at hand, 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.

“Learned Magistrate was, thus, in error in imposing the sentence of 12 months imprisonment in default of payment of compensation awarded under Section 357(3) of the Code, 1973, … Sentence of 12 months imprisonment is clearly in teeth of the mandate contained in Section 65 of the IPC and Section 30 of the Code, 1973, … These mandates are absolute”, the Bench added.

Advocate Mohit Bharadwaj appeared for the petitioner. P.P. Malshe, APP, appeared for the respondents.

Background

According to the complainant, goods had been sold and delivered to a company of which the petitioner was a director, and an amount exceeding ₹22 crore remained outstanding towards the price of the goods supplied. It was alleged that 60 cheques issued towards the discharge of the liability were dishonoured upon presentation.

Seventeen complaints were thereafter filed before the Metropolitan Magistrate. By separate judgments delivered on the same day, the petitioner was convicted in all 17 complaints under Sections 138 and 141 of the Negotiable Instruments Act and sentenced to 15 months’ simple imprisonment in each case. Compensation was also awarded under Section 357(3) CrPC, and, in default of payment of compensation, the petitioner was directed to undergo 12 months’ simple imprisonment in each complaint.

The Magistrate directed the substantive sentences to run concurrently, but ordered that the default sentences would run consecutively. Appeals filed by the petitioner before the Sessions Court were dismissed.

Before the High Court, the petitioner argued that the default sentence of 12 months in each complaint was illegal since Section 138 NI Act prescribes a maximum punishment of two years and, therefore, imprisonment in default of payment of compensation could not exceed six months.

Court’s Observation

The High Court first examined the scheme of Section 30 CrPC and Section 65 IPC dealing with imprisonment in default of payment of fine. The Court observed that both provisions impose a statutory restriction on the extent of default imprisonment that may be awarded.

The Bench observed: “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.”

Referring to M.B. Manjegowda v. State of Karnataka (2021), the Court observed that the Supreme Court had already clarified that “no default sentence can be awarded in excess of ¼th of the maximum punishment prescribed for the offence concerned.”

The Court therefore held that the Magistrate had committed a clear legal error in imposing 12 months’ imprisonment in default of payment of compensation and that the Sessions Court had failed to notice the illegality while affirming the sentence.

The High Court then examined whether default sentences could run concurrently. Referring to Sections 64 and 65 IPC, Section 30 CrPC and Sharad Hiru Kolambe v. State of Maharashtra (2018), the Court held that sentences in default of payment of fine or compensation cannot run concurrently and are required to run consecutively.

However, the Court clarified that imprisonment in default of payment of compensation stands on a footing distinct from substantive punishment. The Bench observed: “A sentence in default of payment of compensation is not a device to enhance the substantive sentence which the Court is empowered to inflict by way of punishment.”

The Court further 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.”

Referring to Shanti Lal v. State of Madhya Pradesh (2007) and Sahejadkhan Mahebubkhan Pathan v. State of Gujarat (2013), the Court reiterated that default imprisonment is not a substantive sentence but a penalty arising out of non-payment of fine or compensation.

The Bench also examined the constitutional implications of prolonged incarceration arising solely from the inability to pay compensation. The Court observed: “A procedure which authorises the detention of the convict for default in payment of compensation for a term of eight and a half years, when the substantive sentence of imprisonment is 15 months only, can only be said to be ex facie unreasonable, excessively harsh and shockingly disproportionate to the non-compliance of the order to pay the compensation.”

Relying upon Jolly George Varghese v. Bank of Cochin (1980), the Court observed that incarceration solely owing to poverty and inability to satisfy monetary liability may not satisfy the constitutional requirement of fairness under Article 21.

The Court also referred to the Delhi High Court judgment in Sanjay Vasudeva v. State of NCT of Delhi (2025), where default imprisonment imposed in multiple cheque dishonour cases was reduced after considering the excessive and disproportionate impact of prolonged incarceration.

Taking note of the petitioner’s incarceration certificate showing that he had already undergone more than nine years of imprisonment, including remission, the Court held that further detention merely to serve the default sentence would be “unjust, unconscionable and unjustifiable.”

Conclusion

The Bombay High Court held that imprisonment in default of payment of compensation for an offence under Section 138 of the Negotiable Instruments Act cannot exceed six months in view of the statutory mandate contained in Section 65 IPC and Section 30 CrPC.

While affirming that default sentences cannot ordinarily run concurrently, the Court held that prolonged incarceration solely arising out of inability to pay compensation would be excessively harsh and constitutionally disproportionate in the facts of the case.

Accordingly, the Court modified the sentence imposed by the Magistrate and directed that the imprisonment already undergone by the petitioner in default of payment of compensation would be treated as the total default sentence in all 17 complaints. The Court further directed the release of the petitioner forthwith if not required in any other case.

Cause Title: Cyrus Noshirwan Kartak v. State of Maharashtra & Anr. (Neutral Citation: 2026:BHC-AS:21287)

Appearances

Petitioner: Advocate Mohit Bharadwaj

Respondents: P.P. Malshe, APP, Advocates Snehankita M. Munj with Shraddha Kamble i/by Advocate Jatin Karia (Shah)

Click here to read/download Judgment