Appellate Court’s Discretion in Section 148 of N.I. Act Requires Reasoned Orders – Kerala High Court

The Kerala High Court clarified the interpretation of Section 148 of the Negotiable Instruments Act, 1881 (N.I. Act), which addresses the appellate court’s power to order payment pending an appeal against a conviction under Section 138 of the N.I. Act.

The bench comprising Dr. Justice A.K. Jayasankaran Nambiar and Dr. Justice Kauser Edappagath dealt with the matter arising out of CRL.M.C.NO.1077 OF 2024 & CRL.M.C.NO.558 OF 2024, involving the parties P. Sreenivasan (Petitioner) versus Babu Raj & State of Kerala (Respondents).

The judgment focused on whether the appellate court is mandated to provide reasons when exercising its discretion under Section 148 of the N.I. Act.

The issue emerged from the differing interpretations of the law in previous judgments, specifically in the context of Section 148 of the N.I. Act. The case revolved around the interpretation and application of this section concerning the appellate court’s discretion in ordering payments pending an appeal against a conviction under Section 138 of the N.I. Act.

Appellate Court’s Discretion: The court noted that under Section 148 of the N.I. Act, the appellate court has the discretion to order the appellant to deposit a portion of the fine or compensation or to waive such a deposit. This discretion must be exercised with reasons provided for the decision.

Minimum Deposit Requirements: If the appellate court decides to demand a deposit, the amount cannot be less than 20% of the fine or compensation awarded by the trial court. The court emphasized that reasons must be provided if any amount more than this minimum is demanded.

Interpretation in Light of Precedents: The court interpreted Section 148 by referring to the Supreme Court judgments in Surinder Singh Deswal @ Col. S.S. Deswal and Others v. Virender Gandhi and Jamboo Bhandari v. M.P.State Industrial Development Corporation Ltd.

Remanding Cases for Fresh Orders: Due to the absence of reasons in the appellate court’s orders in the current cases, the High Court set aside these orders, remanding the cases for fresh adjudication with the directive that the appellate court issue new orders in line with the guidance provided.

Conclusion: The High Court emphasized the need for reasoned orders from the appellate court while exercising its discretion under Section 148 of the N.I. Act, thus balancing the interests of justice with procedural fairness.

Date of Decision: March 21, 2024
Sreenivasan Vs. Babu Raj & State of Kerala