'Poverty Can't Be Ground For Incarceration': Rajasthan High Court Releases Convict Kept In Jail For Not Paying Costs Despite Settlement
The Rajasthan High Court has held that when prosecution under Section 138 Negotiable Instruments Act stood settled and the complainant had no subsisting grievance, continued incarceration of the accused solely due to non-compliance of condition of costs for impounding, could not be sustained in absence of willful default.
The bench of Justice Farjand Ali held that the costs contemplated by the Supreme Court in the case of Damodar S. Prabhu v. Sayed Babalal H. were regulatory in nature that could not be enforced in a manner that resulted in deprivation of personal liberty due to financial incapacity.
“The offence under Section 138 of the Act of 1881 is primarily compensatory in character. Once the complainant stands satisfied, continuation of incarceration solely on account of non-payment of costs would be disproportionate and would defeat the very object of compounding. To permit such a consequence would be to allow a regulatory condition to assume the character of a coercive deprivation of liberty, which is impermissible.”
In this background, while underscoring that the law could not permit curtailment of liberty solely on account of economic incapacity, the Court said:
“…poverty cannot be transmuted into a ground for incarceration. Liberty, though subject to lawful restraint, cannot be rendered contingent upon the ability to pay.”
The Court was hearing a petition seeking modification of a condition imposed by the coordinate bench of the Court while permitting compounding of a cheque dishonour case.
The petitioner was convicted in a cheque dishonour case against which an appeal was filed which was dismissed. When the revision petition was pending, the parties settled the dispute amicably. The Court permitted the compounding, set aside the conviction, while imposing a cost of 15% of the cheque amount on the petitioner.
When the petitioner was unable to pay the cost, he was again taken into custody and was in prison since then. Hence, the petition was filed contending that deprivation of liberty was disproportionate and violative of Article 21 of the Constitution.
The Court highlighted that the petitioner's incarceration was a direct consequence of his inability to pay the cost imposed by the Court.
The Court observed that the costs contemplated in the Damodar case were regulatory and deterrent in nature, and ancillary to the process of compounding. It could not be equated with the substantive penal consequences and their applicability required flexibility.
Reference was made to another Supreme Court case of Rajeev Khandelwal v. State of Maharashtra & Anr., in which the Apex Court held that guidelines under the Damodar case had to be applied in light of facts of each case, including financial capacity of the accused and the stand of the complainant.
“It was further observed that where the complainant has no objection to the settlement and the accused demonstrates inability to comply, insistence on payment of such costs would be unjustified.”
Accordingly, the petition was allowed, and the condition imposed was set aside. The petitioner was directed to be released.
Title: Santosh Dangi v Firm & Anr.
Citation: 2026 LiveLaw (Raj) 116