Calcutta High Court Upholds Conviction for Cheque Dishonour in Commercial Dispute

Super Inducto Steels Limited's appeal dismissed; Rs. 6 lakh penalty and imprisonment confirmed under Section 138 of the Negotiable Instruments Act

In a significant judgment dated November 14, 2025, the Calcutta High Court, presided by Justice Ajay Kumar Gupta, affirmed the conviction of Super Inducto Steels Limited and its director under Section 138 of the Negotiable Instruments Act, 1881, for issuing a dishonoured cheque due to insufficient funds. The petitioners had challenged their conviction and sentencing by the lower courts, arguing procedural lapses and insufficient evidence. However, the High Court dismissed the appeal, upholding the previous rulings that ordered the petitioners to pay Rs. 6 lakhs along with 9% interest per annum or face three months of simple imprisonment.

The case originated from a commercial transaction dating back to March 1999, where Annapurna Cast Ltd supplied iron moulds to Super Inducto Steels Limited. A cheque issued by the petitioners for Rs. 3,95,724 was dishonoured due to insufficient funds, prompting Annapurna Cast Ltd to initiate legal proceedings under Section 138. Despite the petitioners' claims of partial payment and procedural errors, the courts found them guilty, leading to the appeal that was subsequently dismissed by the High Court.

Justice Gupta emphasized the limited scope of the High Court's supervisory jurisdiction under Article 227 of the Constitution and Section 482 of the Criminal Procedure Code, underscoring the appellate court's role in correcting patent errors rather than reassessing evidence or substituting findings. The court also addressed the issue of the company's name change, ruling that the proceedings remained valid despite the complaint being filed under the old name.

The judgment reinforces the legal framework ensuring the credibility of cheque-based transactions and highlights the stringent application of Section 138 to deter financial dishonesty. The decision is a reminder of the judiciary's role in maintaining the integrity of commercial dealings and the legal obligations of companies in financial transactions.

Bottom Line:

Section 138 of the Negotiable Instruments Act, 1881 aims to ensure the credibility of cheque-based transactions and prevent dishonesty by penalizing dishonour of cheques due to insufficient funds or similar reasons.

Statutory provision(s):  

- Negotiable Instruments Act, 1881, Section 138  

- Criminal Procedure Code, 1973, Section 482  

- Constitution of India, 1950, Article 227  

- Companies Act, 1956, Section 23 (1)

Super Inducto Steels Limited v. Annapurna Cast Ltd, (Calcutta) : Law Finder Doc Id # 2808710