Gravity of complaint under Negotiable Instruments Act cannot be equated with IPC offences: Supreme Court

The Supreme Court on Thursday reaffirmed the principle that the gravity of a complaint for an offence under Section 138 of the Negotiable Instruments (NI) Act cannot be equated with an offence under the Indian Penal Code or other criminal offences. (Triyambak S. Hegde vs. Sripad).A Bench of Chief Justice NV Ramana, Justices Surya Kant and AS Bopanna, while restoring a conviction by the Judicial Magistrate First Class, modified the sentence by doing away with imprisonment and instead of ordering an enhanced fine.“As observed by this Court in Kaushalya Devi Massand vs. Roopkishore Khore, the gravity of complaint under NI Act cannot be equated with an offence under the provisions of the Indian Penal Code, 1860 or other criminal offences. If an enhanced fine is imposed it would meet the ends of justice. Only 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 Court, therefore, enhanced the fine from ₹2,00,000 to ₹2,50,000..The top court was hearing an appeal against an order passed by the Karnataka High Court setting aside a conviction by the Judicial Magistrate First Class and affirmed by the Sessions Judge under the NI Act..The dispute arose when the appellant had agreed to buy a house from the respondent who was in financial difficulty. An agreement dated June 6, 1996 was executed by the respondent while receiving an advance of ₹3,50,000.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.The respondent issued a cheque of ₹1,50,000, but when the same was presented for realisation, it came to be dishonoured with the endorsement ‘insufficient funds”.The appellant issued a notice to the respondent and sought payment of the amount but received no response.On a complaint under Section 200 of the CrPC, the Judicial Magistrate First Class convicted the respondent to simple imprisonment and a fine.The District and Sessions Judge dismissed the appeal against the same. The respondent then filed a criminal revision petition before the High Court which was allowed. The High Court set aside the conviction of the respondent leading to the present appeal before the Supreme Court. The counsel for the appellant argued that the manner in which documents were relied on by the High Court was beyond the scope of the NI Act.On the other hand, the counsel for the respondent argued that the magistrate and sessions courts had jumped to a conclusion, raising a presumption that the appellant possessed the funds and the same had been paid by him constituting a legally recoverable debt merely because of a signature on the cheque..The three-judge Bench found merit in the arguments of the appellant and observed that it could not be said that the presumption arising in favour of the appellant had been successfully rebutted by the respondent. Therefore, the High Court was not justified in its conclusion.However, the Court noted that two and half decades have passed from the date on which the transaction had taken place and various social and economic changes would have happened to the status of the parties during that period.“As noted, the transaction in question is not an out and out commercial transaction… 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,” the Court reasoned while modifying the sentence..Advocate Rajesh Inamdar appeared for the appellant while the respondents were represented by advocate GV Chandrasekar..[Read Judgement]