20% Deposit Isn’t Automatic in Cheque Bounce Appeals: Right to Appeal Can’t Be Priced Out: Punjab & Haryana High Court Checks Mechanical Use of Section 148 NI Act

“Imposing Deposit Without Hearing the Appellant Is Legally Unsustainable”, Punjab and Haryana High Court examining the legality of a conditional suspension of sentence in an appeal arising out of a conviction under Section 138 of the Negotiable Instruments Act, 1881.

The Court held that while Section 148 of the NI Act empowers an appellate court to impose a condition of depositing 20% of the compensation, such a condition cannot be imposed mechanically and without granting the appellant an opportunity to demonstrate exceptional circumstances. Setting aside the impugned condition, the High Court remanded the matter to the appellate court for fresh consideration after hearing the petitioner, while protecting the suspension of sentence already granted.

The proceedings originated from a complaint filed by HDFC Bank alleging dishonour of a cheque issued by the petitioner Kamlesh Devi. The cheque bearing No. 000042 dated 01.08.2018 for an amount of Rs.10,70,000/-, drawn on HDFC Bank, Ding Mandi Branch, was returned unpaid with the remarks “insufficient funds”.

Following trial, the Judicial Magistrate Ist Class, Fatehabad, by judgment dated 12.01.2023, convicted the petitioner under Section 138 of the NI Act, and by order dated 16.01.2023, sentenced her to one year of simple imprisonment along with compensation of Rs.18,00,000/-, payable within two months.

Aggrieved, the petitioner preferred an appeal. The Additional Sessions Judge, Fatehabad, by order dated 15.02.2023, suspended the sentence under Section 389 CrPC, but subjected the suspension to a condition requiring deposit of 20% of the compensation amount within 60 days. This conditional suspension became the subject matter of challenge before the High Court.

“Section 148 Empowers, But Does Not Compel”: Legal Issue and Court’s Focus

The principal legal issue before the High Court was whether the appellate court was justified in imposing a condition of 20% deposit of compensation as a precondition for suspension of sentence, without examining whether the case fell within the exceptional category warranting waiver or relaxation, as contemplated under Section 148 of the NI Act.

Justice Sukhvinder Kaur examined the interplay between Section 389 CrPC, which governs suspension of sentence, and Section 148 of the NI Act, which allows the appellate court to direct deposit of a minimum of 20% of the fine or compensation. The Court emphasized that Section 148 is discretionary and not mandatory in every case.

“Purposive Interpretation Requires Judicial Application of Mind”: Reliance on Supreme Court Precedent

The High Court placed strong reliance on the Supreme Court judgment in Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd., 2023(4) RCR (Criminal) 296, extracting and endorsing the ratio that:

“Normally, the Appellate Court will be justified in imposing the condition of deposit as provided in Section 148. However, in a case where the Appellate Court is satisfied that the condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of the right of appeal of the appellant, exception can be made for the reasons specifically recorded.”

The High Court reiterated that the appellate court must actively consider whether the case falls within such an exception, and if so, record reasons for waiving or relaxing the deposit requirement.

“No Opportunity, No Condition”: Violation of Natural Justice

A critical factor that weighed with the Court was the absence of any opportunity afforded to the petitioner to explain financial hardship or other exceptional circumstances before the condition was imposed.

Justice Kaur noted that: “While imposing condition of depositing 20% of the compensation amount, the learned Appellate Court has not afforded any opportunity to petitioner to make submissions regarding the exceptional circumstances.”

The Court held that imposing a monetary condition affecting the statutory right of appeal, without hearing the appellant on waiver or relaxation, renders the order legally unsustainable. Such an approach, the Court observed, defeats the very safeguards built into Section 148 NI Act, as interpreted by the Supreme Court.

Decision and Directions of the High Court

Consequently, the High Court allowed the criminal revision and set aside that part of the appellate court’s order which directed deposit of 20% of the compensation amount.

The matter was remanded to the lower appellate court with a direction to:

• Grant the petitioner an opportunity to make submissions on exceptional circumstances, and

• Reconsider afresh whether the requirement of depositing 20% compensation ought to be waived or relaxed, in accordance with law laid down in Jamboo Bhandari.

Significantly, the Court clarified that: “The order of suspension of sentence would not be disturbed in any manner,”

thereby ensuring that the petitioner’s liberty during pendency of the appeal remained protected.

This ruling reinforces an important procedural safeguard in cheque dishonour litigation — that Section 148 of the NI Act is a tool of judicial discretion, not a rigid formula. By setting aside a mechanically imposed deposit condition, the Punjab and Haryana High Court has reaffirmed that the right of appeal cannot be curtailed without due consideration of individual circumstances and without adherence to principles of natural justice.

The judgment serves as a reminder to appellate courts that financial conditions attached to suspension of sentence must follow reasoned application of mind, ensuring that justice remains accessible and not contingent solely on the appellant’s capacity to pay.

Date of Decision: 10 December 2025