Cheque bounce cases : Karnataka HC says fine can't be double the cheque amount

Bengaluru: In cheque bounce cases under the Negotiable Instruments (NI) Act, a trial Magistrate has no power or jurisdiction to impose a fine amount more than double the cheque amount, high court has ruled in a recent judgement. Justice V Srishananda said this while modifying the order passed by a JMFC court at KR Nagar.

The petitioner AM Harish Gowda filed a revision petition before the high court challenging the order of conviction. The case of the complainant Chaluvaraju was that Harish Gowda had borrowed Rs two lakh from him in March 2015. The cheque issued by Harish Gowda, drawn on Navanagara Urban Co-operative Bank Ltd, KR Nagar branch, was dishonored for insufficient funds.

Chaluvaraju filed a complaint under section 138 of the NI Act and in October 26, 2016, the JMFC court at KR Nagar convicted Harish Gowda and directed him to pay Rs 4.3 lakh as fine, with Rs 4 lakh payable to Chaluvaraju and the remaining Rs 30,0000 payable to the state. This order was upheld by the district court.

It was argued on behalf of Harish Gowda that while he had issued the cheque to one Prabhakar, the same was misused by the complainant to file a false case. On this contention the court noted that the presumption is in favour of the complainant since no positive action like police complaint or issuing legal notice has been taken by Harish Gowda over the alleged misuse of the cheque.

Insofar as the fine amount, Justice Srishananda noted that there is no foundation made by the complainant to seek double the cheque amount as fine amount in the complaint averments or in the evidence. “Admittedly, cheque is dated April 29, 2015 and thereafter, the conviction order came to be passed on October 26, 2016. Under the circumstances, imposing double the cheque amount as fine is uncalled for. Further, it is also noticed that the trial court has ordered that a sum of Rs.30,000 is to be paid as the defraying expenses to the State..The lis is between the two private parties and therefore, no State machinery is involved. Further, the trial Magistrate has no power to impose a fine more than double the cheque amount,” the court said.

The court modified the order and directed the petitioner Harish Gowda to pay Rs 3.25 lakh to the complainant, instead of Rs 4.3 lakh fine imposed by the trial magistrate.