Anilkumar S/o Manohar Devadharv.Praveen S/o Adivayya Hiremath

Legal Analysis: Anilkumar S/o Manohar Devadhar vs. Praveen S/o Adivayya Hiremath

Citation: 2026 INSC 452
Court: Supreme Court of India
Bench: Justice Dipankar Datta and Justice Satish Chandra Sharma
Date of Decision: May (date not specified, 2026)
Nature of Judgment: Criminal Appeal under Article 136 against High Court order modifying sentence in Section 138 NI Act case.

Synopsis of the Judgment

The respondent issued two cheques (₹2 lakhs and ₹50 lakhs) to the appellant, which were dishonoured. The trial court convicted him under Section 138 NI Act and sentenced him to 2 years imprisonment with fine of double the cheque amount (₹4 lakhs and ₹1 crore). The appellate court affirmed. The High Court in revision, however, modified the sentence by reducing the fine to the cheque amount (₹2 lakhs and ₹50 lakhs) and setting aside the default imprisonment entirely, effectively letting the respondent off without any punishment. The Supreme Court held that the High Court’s order was “wholly perverse and manifestly erroneous” because it neither imposed any prison term nor awarded interest for the 10-year delay. The parties eventually settled: the respondent agreed to pay ₹45 lakhs (reduced from ₹52 lakhs) by 31.08.2026. The Supreme Court set aside the High Court’s order, recorded the settlement, and directed that if payment is not made, the appeal may be revived for sending the respondent to prison.

1. Basic Information of the Judgment

Field Details Case Title Anilkumar S/o Manohar Devadhar vs. Praveen S/o Adivayya Hiremath Criminal Appeal No. Arising out of SLP(Crl.) 2786-87/2025 Bench Justice Dipankar Datta and Justice Satish Chandra Sharma Date of Decision 2026 (exact date not specified) Citation2026 INSC 452 Appeal From Common judgment and order dated 27.01.2025 of Karnataka High Court (Dharwad Bench) in Crl.R.P. Nos. 100016-100017/2017

2. Legal Framework

Laws Involved:

• Negotiable Instruments Act, 1881: Section 138 (dishonour of cheque), Section 148 (deposit of amount for appeal)

• Code of Criminal Procedure, 1973: Sections 397, 401 (revisional powers of High Court)

• Constitution of India, 1950: Article 136 (special leave to appeal)

Precedents Cited: None explicitly, but the Court relied on the principle that revision is not appellate power; interference with sentence requires justification; and a convict cannot be let off without punishment when the offence is proved.

3. Relevant Facts

• Cheques issued: Respondent issued two cheques – ₹2,00,000 and ₹50,00,000 – to the appellant.

• Dishonour and procedure: Cheques dishonoured; appellant followed statutory notice procedure; respondent did not comply.

• Trial court (JMFC, Dharwad): Convicted respondent under Section 138 NI Act; sentenced to 2 years imprisonment with fine of Rs.4,00,000 (double of ₹2 lakhs) and Rs.1,00,00,000 (double of ₹50 lakhs). Default imprisonment: 2 years.

• Appellate court (IV Additional District & Sessions Judge, Dharwad, 25.01.2017): Confirmed conviction and sentence.

• High Court in revision (27.01.2025): Modified sentence – reduced fine to cheque amount (₹2,00,000 and ₹50,00,000); set aside the default imprisonment entirely. The complainant had already withdrawn the cheque amount deposited before the High Court.

• Supreme Court: Noted that the High Court mistakenly exercised appellate power instead of revisional power; the order let the respondent off without any penalty despite concurrent findings of guilt. The High Court’s order was “perverse and indefensible.”

4. Issues

1. Whether the High Court, in exercise of its revisional jurisdiction under Sections 397/401 CrPC, could modify the sentence by completely removing the imprisonment component and reducing the fine to the cheque amount without any interest, effectively imposing no punishment on a proved offender under Section 138 NI Act?

2. Whether such modification, after concurrent findings of guilt by two courts below, was perverse and warranted interference by the Supreme Court?

5. Ratio Decidendi

A. Revision is not appellate power (Paras 7-8):
The High Court mistakenly assumed it was exercising appellate power. In revision, the court cannot freely interfere with a concurrent sentence unless it is grossly disproportionate or perverse. Here, the trial court had imposed a fine double the cheque amount (statutorily permissible) with imprisonment. The appellate court affirmed. The High Court’s reduction to the cheque amount without any imprisonment or interest was “wholly perverse and manifestly erroneous.”

B. No punishment for a proved offence is unacceptable (Para 8):
The respondent was proved guilty. The High Court’s order resulted in him suffering no penalty for committing the offence, even though the complainant had to wait 10 years for the cheque amount to be returned (without interest). This is unjust and defeats the object of Section 138 NI Act.

C. Settlement recorded (Paras 9-11):
The respondent proposed to pay ₹45,00,000 (reduced from ₹52 lakhs) towards full and final settlement by 31.08.2026. The appellant agreed. The Supreme Court did not delve further into the merits but recorded the undertaking.

D. High Court’s order set aside (Para 12):
The impugned order was set aside. The appeals were allowed.

E. Conditional revival (Para 13):
If the respondent fails to pay ₹45 lakhs by 31.08.2026, the appellant may apply for revival of the appeals, whereupon the Court may consider sending the respondent to prison.

6. New Legal Principles Established / Reiterated

• Revisional court’s power to alter sentence is limited. It cannot reduce the sentence to a nullity (no imprisonment, no interest, only return of principal) when the trial court’s sentence was within the statutory framework and affirmed on appeal.

• Interest or compensation is essential when the fine is reduced to the cheque amount because the complainant loses the time value of money. The High Court erred by not awarding any interest for the 10‑year period.

• Default imprisonment cannot be set aside unless the fine is paid or there is a compelling reason. In this case, the High Court set aside the default imprisonment entirely without any payment – a clear error.

• Supreme Court may record a settlement in criminal appeals under Article 136, but will keep the option of revival if the settlement fails, to avoid a second round of litigation.

7. Court’s Analysis and Examination of Concepts

• The Court noted that the High Court’s reasoning was that the trial court had not given reasons for imposing a fine double the cheque amount. However, Section 138 NI Act permits a fine up to twice the cheque amount. The trial court’s discretion was not shown to be arbitrary.

• The High Court, while reducing the fine to the cheque amount, did not impose any interest or compensation, nor did it direct any imprisonment. The respondent, therefore, suffered no consequence for the proven dishonour.

• The Court observed that the High Court “mistakingly assumed that it was exercising appellate power and not revisional power.” This is a significant observation cautioning High Courts against expanding revisional jurisdiction.

• The appellant agreed to a reduced settlement (₹45 lakhs instead of ₹52 lakhs) only after the Court indicated that the High Court’s order was untenable. The Court recorded this settlement but guarded against default.

8. Critical Analysis

Strengths: The judgment corrects a serious error where the High Court effectively nullified the punishment for a proved offence. It reiterates that revisional courts cannot rewrite sentences without any penal consequence. The conditional revival clause ensures that the settlement is honoured; otherwise, incarceration is possible.

Potential concerns: The Court did not explicitly restore the original sentence of double fine or imprisonment; instead, it accepted a settlement for a lower amount. However, the complainant agreed to the settlement, so the outcome is consensual. The judgment also does not specify the interest rate if the original fine amount had been maintained – but that was not necessary given the settlement.

Practical impact: This judgment will be cited to challenge High Court orders that reduce Section 138 NI Act sentences to mere return of principal without interest or imprisonment. It also serves as a warning to revisional courts not to overstep their jurisdiction.

9. Final Outcome

• Criminal Appeals allowed.

• Impugned judgment and order of Karnataka High Court dated 27.01.2025 set aside.

• The respondent (Praveen) undertakes to pay ₹45,00,000 to the appellant by 31.08.2026 towards full and final settlement.

• If payment is made on time, the matter stands closed.

• If payment is not made by 31.08.2026, the appellant may apply for revival of these appeals, whereupon the Court may consider sending the respondent to prison.

• The order of the High Court was held to be perverse and is set aside.

10. Practical Application (Use in Court)

For complainants in Section 138 cases: If the High Court in revision reduces the sentence to only the cheque amount without interest or imprisonment, immediately appeal to the Supreme Court. Cite this judgment to argue that such modification is perverse. Also, consider settlement options but ensure that the settlement amount includes some compensation for delay.

For accused in Section 138 cases: A settlement offer at the Supreme Court stage may be accepted, but you cannot escape payment entirely. If you fail to honour the settlement, the Court may revive the appeal and send you to prison.

For High Courts (revisional jurisdiction): Do not exercise revisional power to completely eliminate punishment when the trial court’s sentence is within the statutory limit and affirmed on appeal. If you reduce the fine to the cheque amount, at least award interest or impose some imprisonment (or ensure payment of compensation). Otherwise, the Supreme Court may treat your order as perverse.

11. Court Lines

“The High Court, mistakenly assuming that it was exercising appellate power and not revisional power, proceeded to interfere … however, while so interfering … the High Court did neither impose any prison term nor award interest with the result that the respondent does not stand to suffer any penalty for committing the proved offence.” (Para 7)

“Interfering with the exercise of discretion … ultimately letting off the respondent by merely asking him to pay the cheque amount without any prison term and without awarding any interest, prima facie, appeared to us perverse and erroneous, hence, indefensible.” (Para 8)

“The impugned judgment and order of the High Court, being wholly perverse and manifestly erroneous, stands set aside.” (Para 12)

“Should the respondent fail to make the payment to the appellant, as proposed and recorded supra, the appellant shall be at liberty to apply for revival of these appeals whereupon they may be revived for considering the desirability to send the respondent to prison straight away.” (Para 13)

12. Legal Strategy Insight

For complainants: If you receive a High Court order that reduces the sentence to merely the cheque amount (no interest, no imprisonment), do not accept it silently. File an SLP immediately. Argue that the revisional court has exceeded its jurisdiction and that the order is perverse. Even if you are willing to settle, keep the option of revival as a bargaining tool.

For accused: At the Supreme Court stage, a timely settlement offer that includes some additional amount (beyond the principal) may be accepted by the complainant to avoid further litigation. However, once the settlement is recorded, honour it strictly – otherwise the Court can revive and impose imprisonment.

For High Courts: When modifying a sentence under Section 138 NI Act, if you reduce the fine to the cheque amount, must award at least simple interest at bank rate for the period of delay, or impose a short imprisonment (e.g., for a few months) to ensure that the offence does not go unpunished. Also, do not set aside default imprisonment without the fine being paid.