Justice M. Nagaprasanna of the High Court of Karnataka has ordered the release of a 53-year-old convict who had been serving a default sentence for failing to pay massive fines in multiple cheque bounce cases.
The court ruled that a person convicted under Section 138 of the Negotiable Instruments Act (NI Act) cannot be jailed for more than six months for defaulting on fine payments. This decision, issued on June 9, 2026, establishes that default imprisonment must not exceed one-fourth of the maximum two-year sentence prescribed for the offence.
The petitioner, Dinesh Kripalani, a resident of Bellandur, Bengaluru, was taken into judicial custody on September 29, 2025. He had been sentenced to a total of nine months of simple imprisonment—three months for each of three separate cheque dishonour cases—after failing to pay fines totaling more than ₹11 crore.
By the time of the ruling, Dinesh Kripalani had already spent over six months behind bars, which the High Court found to be in violation of statutory safeguards and constitutional protections under Article 21.
The legal dispute began after Dinesh Kripalani entered a loan agreement with M/s Jupiter Capital Ltd in 2017 for ₹10 crore. Although only ₹5.9 crore was disbursed, the cheques he issued in 2020 to repay the balance and interest were dishonoured. While the Statutory limits on default imprisonment for cheque bounce
Justice M. Nagaprasanna clarified that Section 65 of the Indian Penal Code (IPC) and its successor, Section 8(3) of the Bharatiya Nyaya Sanhita (BNS), impose a strict ceiling on jail time for non-payment of fines. These laws mandate that default imprisonment cannot exceed one-fourth of the maximum term allowed for the crime. Since Section 138 of the NI Act carries a maximum two-year term, the default sentence is legally capped at six months per case. The trial court had originally directed Dinesh Kripalani to serve three consecutive three-month terms for the three cheques, which had all been dishonoured on the same day in August 2020. However, the High Court held that the total time spent in jail for failing to pay the fines could not be stretched beyond the half-year mark. But the court noted that this release does not absolve the petitioner of his financial debts. The trial court had imposed hefty fines on Dinesh Kripalani during his conviction on December 14, 2023. These figures were significantly higher than the original loan amount due to interest and statutory penalties. Because the dishonour of post-dated cheque cases often involve high stakes, the fines were structured as follows:Breakdown of fines and original default sentences
| Cheque Details | Cheque Amount | Fine Amount Imposed | Default Sentence |
|---|---|---|---|
| Cheque 1 (August 2020) | ₹50 Lakh | ₹61.7 Lakh | 3 Months Simple Imprisonment |
| Cheque 2 (August 2020) | ₹3.5 Crore | ₹4.3 Crore | 3 Months Simple Imprisonment |
| Cheque 3 (August 2020) | ₹5 Crore | ₹6.2 Crore | 3 Months Simple Imprisonment |
Asset recovery and the right to liberty
The High Court emphasized that while the petitioner’s physical liberty must be protected under Article 21, the complainant’s right to recover the money remains intact. Justice Nagaprasanna clarified that proceedings under Section 421(1) of the Code of Criminal Procedure (CrPC) for the attachment and recovery of the petitioner’s properties shall continue independently.
This means the state can still seize assets to satisfy the ₹11 crore debt despite the convict’s release from prison.
And this distinction is vital for commercial lenders. While they cannot use the threat of indefinite jail time to coerce payment beyond six months, they retain all civil and criminal avenues for asset attachment. This brings Karnataka’s judicial approach in line with previous rulings from the Delhi and Bombay High Courts regarding the proportionality of sentencing in Negotiable Instruments cases.
So, the ruling reinforces a balance between punitive measures and individual rights. Earlier in 2025, the Karnataka High Court also clarified other aspects of these disputes, such as when India tightens cheque dishonor laws to allow complainants to appeal acquittals in Sessions Courts rather than jumping straight to the High Court. These collective rulings aim to streamline the often-backlogged NI Act litigation process.
Frequently Asked Questions
Why can’t a cheque bounce convict be jailed for longer for not paying a fine?
Under Section 65 of the IPC and Section 8(3) of the BNS, imprisonment for defaulting on a fine cannot exceed one-fourth of the maximum punishment for the offence. Since the NI Act has a two-year maximum jail term, the default period is limited to six months.
Does the release of the convict mean the fine is waived?
No, the fine is not waived. The High Court specifically stated that recovery proceedings under Section 421(1) of the CrPC for the attachment and sale of the convict’s property will continue independently of their release from jail.
What happens if there are multiple cheques in one transaction?
In this case, despite there being three cheques, the High Court ruled that the petitioner could not be held in default imprisonment beyond six months once he had already served that amount of time for non-payment, as the total period must remain proportional to the statutory maximum.