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Satish P. Bhatt vs The State of Maharashtra & Anr.

Not available · 2024 INSC 16Decided 3 Jan 2024
Not available
Justice Vikram Nath · Justice Rajesh Bindal

Background

The appellant and an intervenor, both directors of a company, were convicted under Section 138 of the Negotiable Instruments Act (cheque dishonour) with a cumulative liability of about Rs. 5 crore. Before the High Court, they gave an undertaking to pay the complainant a settled amount of Rs. 4.635 crore in instalments, in exchange for suspension of their sentence and bail, with an explicit condition that default would result in automatic cancellation without any further court order. They fell short by about Rs. 83.10 lakh, and the High Court accordingly cancelled the bail and suspension of sentence.

Decision Breakdown

The Supreme Court upheld the High Court's cancellation. It declined to get drawn into the appellant's and intervenor's dispute over how the settlement amount should be split between them (60:40 vs. equally), holding that the complainant was not a party to that internal arrangement and was only entitled to receive the full settled amount. Since the total amount agreed had admittedly not been paid, and the order clearly provided for automatic withdrawal of bail on default, the Court found no illegality in the High Court's action. It dismissed the appeal, imposed an additional Rs. 5 lakh cost, and directed both the appellant and intervenor to surrender within four weeks to serve their sentence.

Lesson Learnt

When bail or suspension of sentence is granted on the basis of a settlement with a "pay-or-your-bail-is-automatically-cancelled" condition, courts will enforce that condition strictly: the complainant's right to full payment does not depend on, and cannot be defeated by, disputes between co-accused about their internal shares of the amount owed.

Official source (sci.gov.in)View Judgment (PDF)

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