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'Poverty Can't Be Ground for Jail': Rajasthan HC Frees Man Locked Up Over Unpaid Cheque Case Costs
In a powerful defense of personal liberty, the has ruled that no one can be imprisoned solely for lacking the money to pay court-imposed costs in a settled cheque bounce dispute. Justice Farjand Ali ordered the immediate release of Santosh Dangi, who had been jailed despite amicably resolving his case under . This decision underscores that economic hardship cannot override constitutional protections.
Cheque Bounce to Custody: The Unlikely Path
Santosh Dangi, owner of Hopes Square Studio in Udaipur, faced conviction by the on , in a Section 138 case filed by over a bounced cheque. His appeal was dismissed on , but during revision proceedings (S.B. Criminal Revision No. 1457/2024), the parties settled amicably.
On , a coordinate bench allowed compounding, quashed the conviction and sentence, but conditioned it on Dangi depositing 15% of the cheque amount as costs—following Supreme Court guidelines in Damodar S. Prabhu v. Sayed Babalal H (2010) 5 SCC 663. Unable to pay, Dangi faced an arrest warrant on , leading to his custody. He then filed this petition under seeking waiver of the condition.
As reported in , titled , the core issue was clear: with the dispute settled and the complainant satisfied, could jail time persist purely due to financial incapacity?
Petitioner's Plea: Liberty Over Ledger
Dangi's counsel, , argued that the settlement fully resolved the matter, leaving no grievance for the complainant. Incarceration stemmed solely from non-payment of costs, rendering it a disproportionate violation of 's right to life and liberty. There was no , just genuine poverty—no assets to liquidate, no deliberate evasion.
The public prosecutor, for the State, defended the original order, insisting non-compliance triggered consequences per Damodar S. Prabhu guidelines, meant to deter delayed settlements.
Unpacking the Scales of Justice: Costs vs. Constitution
Justice Farjand Ali dissected the tension between regulatory costs and fundamental rights. The Damodar guidelines promote early compounding via graded costs, but these are flexible, not rigid penalties. Recent Supreme Court clarification in Rajeev Khandelwal v. State of Maharashtra (SLP (Crl.) No. 14340/2025, ) emphasized case-specific application, factoring in the accused's finances and complainant's stance—especially when settlement is unopposed.
Drawing from Maneka Gandhi v. Union of India (1978) 1 SCC 248, any liberty deprivation must be . Echoing Jolly George Varghese v. Bank of Cochin (1980) 2 SCC 360, jail for debt is barred absent wilful refusal with means. Section 138 offences are compensatory, not punitive; post-settlement, costs can't morph into coercive tools.
The court clarified this wasn't a review (barred by ) but to avert abuse, given subsequent events like proven incapacity.
Court's Sharp Words: Quotes That Cut Through
Key observations from the judgment illuminate the ruling:
"The law, while empowered to curtail liberty in accordance with established procedure, cannot permit such curtailment to rest solely on economic incapacity, for poverty cannot be transmuted into a ground for incarceration. Liberty, though subject to lawful restraint, cannot be rendered contingent upon the ability to pay."
"The costs so contemplated are regulatory and deterrent in nature. They are ancillary to the process of compounding and cannot be equated with a substantive penal consequence."
"Once the complainant stands satisfied, continuation of incarceration solely on account of non-payment of costs would be disproportionate and would defeat the very object of compounding."
"Where a prosecution under Section 138... stands settled and the complainant has no subsisting grievance, continued incarceration... cannot be sustained in the absence of ."
These underscore flexibility in Damodar application, prioritizing equity.
Release Ordered: A Precedent for the Poor?
The petition succeeded fully. The , cost condition was waived outright, reviving the compounding order. The magistrate's , warrant and custody order were quashed. Dangi was directed for immediate release if not needed elsewhere.
This ruling signals courts must scrutinize compounding costs against financial reality in NI Act cases, preventing "poverty traps." It bolsters safeguards, potentially easing burdens in thousands of cheque disputes annually, where settlements are common but means vary widely.
