New Delhi, Oct. 16: Courts cannot impose a fine more than twice the amount in bounced cheques, the Supreme Court has ruled, overturning a Calcutta High Court order for overshooting the limit in one such case.
“The power to levy a fine is circumscribed under the statute to twice the cheque amount. Even in a case where the court may be taking a lenient view in favour of the accused by not sending him to prison, it cannot impose a fine more than twice the cheque amount. That statutory limit is inviolable and must be respected,” a bench of Justices T.S. Thakur and Vikramajit Sen said in a recent judgment.
Under the Negotiable Instruments Act (NI Act), an accused in a cheque-bounce case can be sentenced to a maximum of a year or fined twice the default amount, or both.
The high court had ordered a Calcutta borrower to pay Rs 1,49,500 — more than double the sum of Rs 69,500 on his bounced cheque.
The high court’s directive included a fine of Rs 69,500 over an above Rs 80,000 paid by Somnath Sarkar to the complainant on the orders of the trial court that had also sentenced him to six months in jail in 2004. The high court had stayed the prison term on the condition that he would pay the fine.
Sarkar initially agreed to pay but later claimed financial inability and moved the apex court with a plea to reduce the penalty.
The apex court reduced the fine from Rs 69,500 to Rs 20,000, accepting Sarkar’s plea that he is “a man of limited financial means” and concluding that the high court had exceeded the fine limit.
“The high court has , in the case at hand, obviously overlooked the statutory limitation on its power to levy a fine,” the bench said.
Sarkar was told to pay the reduced fine of Rs 20,000 within eight weeks. “The appellant…on the failure to make this payment, would be liable for imprisonment for six months. The appeal is allowed in these terms,” the judgment said.
The apex court held that with the Rs 80,000 already paid on the trial court’s orders, complainant Utpal Basu Mallick “has received compensation for the dishonoured cheque. “To put the matter finally at rest, We hold the total compensation payable is Rs 80,000, i.e. the cheque amount of Rs.69,500- together with Rs.10,500 which may be seen as constituting interest on the dishonoured cheque,” the bench said.
Section 138 of the NI Act states: “Such a person (whose cheque has bounced) shall without prejudice to any other provision of this act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both.”