1. Petition under Section 528 BNSS for reduction of default sentence for non-payment of fine in cheque dishonour cases under Section 138 NI Act. (Para 1 , 2 )
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2026 Supreme(Online)(Kar) 26655
THE HIGH COURT OF KARNATAKA
M. Nagaprasanna, J
Dinesh Malpani – Appellant
Versus
State of Karnataka – Respondent
Criminal Petition No.5718 of 2026
Advocates:
For the Appellants/Petitioners: Smt. Keerthi Reddy, Sri Adbhuth J. Kaushik
For the Respondents: Sri B.N. Jagadeesha (R-1 and R-2), Sri Vikram Huilgol, Smt. Amrita Shivaprasad (R-3)
For the Appellants/Petitioners: Smt. Keerthi Reddy, Sri Adbhuth J. Kaushik
For the Respondents: Sri B.N. Jagadeesha (R-1 and R-2), Sri Vikram Huilgol, Smt. Amrita Shivaprasad (R-3)
In multiple prosecutions under Section 138 of the Negotiable Instruments Act arising from a single transaction, default sentences must run consecutively, not concurrently.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Maximum punishment - Imprisonment in default of payment of fine - Limit - Section 65 of the Indian Penal Code, 1860 (Section 8(3) of the Bharatiya Nyaya Sanhita, 2023) - Default sentence cannot exceed one-fourth of the maximum term of imprisonment fixed for the offence - For Section 138, maximum imprisonment is 2 years, default sentence cannot exceed 6 months. (Paras 11, 11.4, 11.9)
(B) Criminal Procedure Code, 1973 - Section 30 (Section 24 of the Bharatiya Nagarik Suraksha Sanhita, 2023) - Sentence of imprisonment in default of fine - Term shall not exceed one-fourth of the term of imprisonment the Magistrate is competent to inflict as punishment for the offence. (Paras 11.5, 11.6, 11.7, 11.8)
(C) Criminal Procedure Code, 1973 - Section 421 - Warrant for levy of fine - Court can issue warrant for recovery of fine even after the offender has undergone imprisonment in default. (Para 23)
(D) Imprisonment in default of fine - Nature - It is not an additional punishment for the offence, but a coercive measure to secure compliance with the court's monetary order. (Paras 11.4, 11.5) (E) Default sentences in multiple cases - Cannot be directed to run concurrently. (Para 13)
Facts of the case:
The petitioner was convicted under Section 138 of the Negotiable Instruments Act in three separate cases (C.C.No.15234/2021, C.C.No.15235/2021, C.C.No.15236/2021) arising from three cheques issued as part of a single loan transaction. He was sentenced to pay fines and, in default, to undergo simple imprisonment of 3 months in each case. The petitioner failed to pay the fine and was taken into custody. He sought reduction of the default sentence, contending that the total default sentence of 9 months exceeded the limit of 6 months (one-fourth of the maximum 2 years imprisonment for the offence).
Findings of Court:
The court held that the outer limit of imprisonment in default of payment of fine under Section 138 of the NI Act is 6 months, being one-fourth of the maximum term of 2 years, as per Section 65 IPC/Section 8(3) BNS. However, since the default sentences in multiple cases cannot be directed to run concurrently, the petitioner must undergo them consecutively. The court, in exercise of its inherent jurisdiction, reduced the default sentence to the period already undergone (6 months), finding continued incarceration unjust and disproportionate. The court clarified that this does not absolve the petitioner of the liability to pay the fine, which can be recovered under Section 421 Cr.P.C.
Issues: Whether the imposition of separate default sentences in three distinct prosecutions, all springing from one transaction, results in a punitive excess contrary to the mandate of Section 65 of the IPC/Section 8(3) of the BNS, thereby entitling the petitioner to immediate release from custody.
Ratio Decidendi: The maximum default sentence under Section 138 of the NI Act is one-fourth of the maximum term of imprisonment (2 years), i.e., 6 months, as per Section 65 IPC/Section 8(3) BNS. However, default sentences in multiple cases must run consecutively. The court can, in its inherent jurisdiction, reduce the total default sentence to the period already undergone if continued incarceration is unjust and disproportionate.
Result: Petition allowed. Default sentence reduced to the period already undergone (6 months). Petitioner to be released forthwith, subject to verification that he is not required in any other case.
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2. Petitioner argued default sentence limited to six months; respondent argued consecutive sentences totaling nine months. (Para 5 )
3. What is the maximum default imprisonment for non-payment of fine under Section 138 of the Negotiable Instruments Act?
Default imprisonment cannot exceed one-fourth of the maximum term for the offence, i.e., six months, as per Section 65 IPC / Section 8(3) BNS. (Para 11 )
4. Can default sentences in multiple cheque dishonour cases be ordered to run concurrently?
No, the court held that there is no power to order default sentences to run concurrently, following Sharad Hiru Kolambe. (Para 13 )
5. Does default imprisonment have to be considered within the maximum substantive sentence?
No, default imprisonment is an additional coercive measure and the aggregate can exceed the maximum substantive term. (Para 14 )
Reserved on :24.04.2026
Pronounced on :04.06.2026
THIS CRIMINAL PETITION IS FILED UNDER SECTION 528 OF B.N.S.S, PRAYING TO 1. REDUCE THE DEFAULT SENTENCE TO 3 MONTHS ALTOGETHER IN THE THREE CASES BEING C.C.NO.15234/2021, C.C.NO.15235/2021 AND C.C.NO.15236/2021 PASSED BY THE HONBLE XVII ADDL. SMALL CAUSES AND ACMM, MAYOHALL UNIT, BENGALURU; 2. TO HOLD THAT PETITIONER HAS SATISFIED THE DEFAULT IMPRISONMENT GIVEN IN C.C.NO.15234/2021, C.C.NO.15235/2021 AND C.C.NO.15236/2021, DATED 14.12.2023 PASSED BY THE HON’BLE XVII ADDL. SMALL CAUSES AND ACMM, MAYOHALL UNIT, BENGALURU, AT ANNEXURE-A, A1 AND A2 BY SERVING THE SENTENCE FOR BEYOND 3 MONTHS ARISING OUT OF SAME TRANSACTION AND SOLITARY STATUTORY DEMAND NOTICE DATED 11.09.2020 ISSUED TO IT; 3. DIRECT THAT IN TERMS OF SECTION 65 OF THE INDIAN PENAL CODE, NOW SECTION 24 OF THE BHARATIYA NYAYA SANHITA, 2023, SINCE THE DEFAULT SENTENCE CANNOT BE MORE THAN ONE FOURTH OF THE MAXIMUM PUNISHMENT IN AN OFFENCE, THE PETITIONER MAY BE RELEASED IMMEDIATELY UPON COMPLETION OF 6 MONTHS FROM 29.09.2025, i.e., 29.03.2026; 4. ISSUE A DIRECTION TO THE RESPONDENT NO.2 TO IMMEDIATELY RELEASE THE PETITIONER FROM JUDICIAL CUSTODY IN THE INTEREST OF JUSTICE.
THIS CRIMINAL PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 24.04.2026, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-
CAV ORDER
The petitioner–accused is before this Court, seeking his immediate release from judicial custody, by way of a reduction in the default sentence of imprisonment, imposed for non-payment of the fine amount awarded by the trial Court, upon his conviction for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (‘the Act’ for short) in C.C.No.15234 of 2021, C.C.No.15235 of 2021, and C.C.No.15236 of 2021.
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
2. Facts in brief, germane, are as follows:
2.1. On 22-12-2017 the 3rd respondent and the petitioner enter into a loan agreement, in terms of which the 3rd respondent agreed to lend an amount of Rs.10 crores to the petitioner. An amount of Rs.5,96,00,000/- was disbursed immediately to the 3rd respondent in terms of the agreement. By 15-08-2020 the petitioner was required to repay the outstanding amount. In furtherance of such repayment along with interest, the petitioner issued three cheques for an amount of Rs.50 lakhs, Rs.3.5 crores and Rs.5 crores for repayment of the loan amount along with interest. All the three cheques presented on the same day get dishonoured for want of sufficient funds. On 11-09-2020, the 3rd respondent/Company issued a statutory demand notice under Section 138 of the Act following the dishonour of the cheques. In response, the petitioner informs the 3rd respondent of his financial inability to repay the loan amount and the severe hardships faced by him and his family. Subsequently, the 3rd respondent initiates proceedings before the concerned Court by filing three separate complaints. Three separate criminal cases were registered on cognizance being taken, in C.C.No.15234 of 2021, 15235 of 2021 and 15236 of 2021. All the three cheques were issued out of a single transaction. The petitioner was convicted for the offence punishable under Section 138 of the Act and sentenced in the following manner:
(i) In C.C.No.15234/2021, filed for the dishonour of cheque No.000253 for an amount of Rs.50 lakhs, the petitioner was directed to pay a fine of ₹61,67,000/-, of which ₹10,000/- was payable to the State as compensation under Section 357(1)(b) Cr.P.C. In default of payment of the fine, he was to undergo simple imprisonment for a period of 3 months.
(ii) In C.C.No.15235/2021, filed for the dishonour of cheque No.000254 for an amount of Rs.3.5 Crores, the petitioner was directed to pay a fine of ₹4,31,66,670/-, of which ₹10,000/- was payable to the State as compensation under Section 357(1)(b) Cr.P.C. In default of payment of the fine, he was to undergo simple imprisonment for a period of 3 months.
(iii) In C.C.N
