Section 138 NI Act | Territorial Jurisdiction & Fine Imposition Clarified : Calcutta High Court

The Calcutta High Court's recent judgment in Arun Kumar Dev v. State of West Bengal provides crucial clarifications on Section 138 of the Negotiable Instruments Act, particularly regarding territorial jurisdiction and the limits of fine imposition. The Court affirmed concurrent findings of lower courts while addressing key procedural and evidentiary standards that practitioners must now consider in similar cases.

Background & Facts

The Dispute

The petitioners, a married couple, obtained a loan of ₹12,00,000 from the complainant between January 2009 and August 2013. To discharge this liability, they issued four cheques drawn on State Bank of India, Baruipur branch, which were presented at Indian Overseas Bank, Ballygunge branch on August 6, 2014. All cheques were dishonoured for insufficient funds on August 12, 2014. Despite receiving a demand notice on September 3, 2014, the petitioners failed to repay the amount within the stipulated 15-day period.

Procedural History

The case progressed through multiple judicial forums:

• April 28, 2017: Learned Additional Chief Judicial Magistrate convicted the petitioners under Section 138 NI Act, sentencing them to one year of simple imprisonment and a fine of ₹24,00,000 (twice the cheque amount).
• February 13, 2025: Learned Additional District and Sessions Judge affirmed the conviction and sentence in Criminal Appeal No. 6 of 2017.
• 2025: Petitioners filed the present revisional application under Section 482 CrPC challenging the concurrent findings.

Relief Sought

The petitioners sought to set aside the conviction and sentence on two primary grounds:

1. Lack of territorial jurisdiction, as the cheques were issued from Ballygunge but the complaint was filed in Baruipur.
2. Excessive fine imposed, which they contended was not sustainable in law.

The Legal Issue

The Court addressed two critical questions:

1. Whether the trial court lacked territorial jurisdiction under Section 142 of the Negotiable Instruments Act given the cheque presentation and dishonour occurred in a different jurisdiction.
2. Whether the fine imposed, amounting to twice the cheque value, was legally tenable under Section 138 NI Act.

Arguments Presented

For the Petitioners

The petitioners' counsel raised the following contentions:

• Territorial Jurisdiction: The complaint was filed in Baruipur, but the cheques were issued from Ballygunge SBI branch. The amendment to Section 142 NI Act, which came into effect on December 26, 2015, was not applicable retrospectively.
• Excessive Fine: The fine of ₹24,00,000 was twice the loan amount, which was not justified as the complainant failed to prove the source of income or financial capacity to lend ₹12,00,000 in cash.
• Evidentiary Deficiencies: No agreement was executed between the parties, and the complainant did not adduce evidence to establish the loan transaction or his capacity to lend.

For the Respondent

The respondent's counsel countered with the following arguments:

• Delay Tactics: The petitioners were attempting to delay the conviction, having failed to comply with the mandatory deposit of 20% of the fine amount during the appeal.
• Limited Revisional Power: The High Court's power under Section 482 CrPC is limited and cannot interfere with concurrent findings of fact unless perversity is established.
• Presumption Under Section 139 NI Act: The complainant had discharged the initial burden by proving the cheque issuance, and the petitioners failed to rebut the presumption of liability.

The Court's Analysis

The Court conducted a detailed examination of the legal principles governing Section 138 NI Act and the procedural aspects of the case.

Territorial Jurisdiction

The Court observed that the amendment to Section 142 NI Act, which clarified territorial jurisdiction, came into effect on December 26, 2015, and was not applicable to the present case. The petitioners had not raised this issue at any stage before the trial or appellate courts, and the concurrent findings of guilt were based on established facts. The Court relied on the principle that Section 482 CrPC cannot be invoked to upset concurrent findings unless perversity is demonstrated:

"It is a settled law that the High Court under inherent powers under Section 482 of the Cr.P.C corresponding to Section 528 of BNSS will not upset the concurrent findings of the trial as well as the appellate Court unless found perversity."

Presumption Under Section 139 NI Act

The Court reiterated the legal presumption under Section 139 NI Act, which presumes that a cheque is issued for the discharge of a debt or liability unless the contrary is proved. This presumption is rebuttable, and the burden shifts to the accused to adduce cogent evidence to rebut it. The Court cited the Supreme Court's decision in Lakshmi Dyechem v. State of Gujarat, which held:

"In view of Section 139, it has to be presumed that the cheque was issued in discharge of a debt or other liability, but the presumption could be rebutted by adducing evidence."

In this case, the petitioners failed to rebut the presumption. The complainant proved the cheque issuance, and the petitioners admitted to endorsing their signatures on the cheques. The Court noted that the petitioners' defence, including the claim that the complainant was an unlicensed moneylender, was not substantiated by any evidence.

Fine Imposition

The Court examined the fine imposed under Section 138 NI Act, which allows for a fine of up to twice the cheque amount. The petitioners contended that the fine of ₹24,00,000 was excessive, but the Court held that the trial court had acted within its statutory powers. The Court observed:

"The learned Magistrate directed the petitioners to pay a fine of ₹24 lakhs, which may extend to twice the amount of the cheque or both, and no ground of perversity or illegality can be found from the four corners of the judgements."

The Verdict

The Calcutta High Court dismissed the revisional application, affirming the conviction and sentence imposed by the lower courts. The Court held that:

1. The petitioners failed to establish lack of territorial jurisdiction or perversity in the concurrent findings.
2. The presumption under Section 139 NI Act was not rebutted by the petitioners.
3. The fine imposed was within the statutory limits prescribed under Section 138 NI Act.

What This Means For Similar Cases

Territorial Jurisdiction Must Be Raised Timely

Practitioners must ensure that jurisdictional objections are raised at the earliest stage of proceedings. The Court's observation that the petitioners did not challenge jurisdiction before the trial or appellate courts underscores the importance of timely objections. Failure to do so may preclude later challenges under Section 482 CrPC.

Burden of Rebutting Presumption Is Strict

• The presumption under Section 139 NI Act places a significant burden on the accused to adduce cogent evidence to rebut the presumption of liability.
• Mere assertions, such as the complainant being an unlicensed moneylender, are insufficient without supporting evidence.
• Practitioners must prepare a robust defence to counter the presumption, including documentary evidence and witness testimony.

Fine Limits Are Statutory, Not Discretionary

The Court's affirmation of the fine imposed highlights that:

• Section 138 NI Act permits fines up to twice the cheque amount, and courts are not required to limit fines to the exact cheque value.
• Practitioners should not challenge fines solely on the ground of quantum unless there is clear illegality or perversity in the lower courts' findings.

Compliance with Appellate Directions Is Mandatory

The Court noted the petitioners' failure to deposit 20% of the fine amount during the appeal, which weighed against their revisional application. Practitioners must ensure compliance with all procedural directions to avoid adverse inferences during higher court proceedings.