Financial Difficulty Not an ‘Exceptional Circumstance’ to Bypass Statutory Deposit under Section 148 NI Act: Punjab & Haryana High Court

“The right to appeal cannot be treated as an escape route from statutory compliance—Section 148 NI Act makes the 20% deposit the rule, not the exception,” ruled the Punjab & Haryana High Court, dismissing a revisional petition challenging the condition imposed by an appellate court directing deposit of 20% of the compensation amount as a precondition to suspending sentence in a cheque bounce case.

Justice Sumeet Goel held that the petitioner’s plea of financial hardship does not qualify as an exceptional circumstance warranting waiver of the mandatory deposit under Section 148 of the Negotiable Instruments Act, 1881. The Court further reaffirmed that statutory safeguards under the 2018 amendment aim to balance the rights of the accused with the complainant’s right to timely justice.

“Section 148 NI Act Is Not a Hollow Discretion—It Presumes Deposit as the Norm Unless Exception Is Proven”

“The appellate court has discretion under Section 148, but it is not unfettered. The power to waive the 20% deposit is reserved only for rare and exceptional circumstances, which must be substantiated through cogent material. Financial difficulty alone cannot undo the legislative mandate,” Justice Goel firmly observed while declining to quash the impugned order passed by the Additional Sessions Judge, Ludhiana on August 26, 2025.

The Court clarified that Section 148, inserted via the 2018 amendment, reflects legislative intent to deter frivolous appeals and protect complainants from delays. It further noted that the condition of deposit is now the statutory default unless the accused can establish compelling reasons for exemption, supported by objective material evidence.

Cheque Bounce Conviction Challenged Without Paying Statutory Deposit

Jagir Singh, convicted under Section 138 of the Negotiable Instruments Act, had appealed against the trial court’s conviction. While the appellate court suspended his sentence, it made the suspension conditional upon deposit of 20% of the compensation amount as mandated by Section 148 NI Act. The petitioner challenged this condition before the High Court, claiming that he was financially incapable of making the deposit, and that this condition violated his right to appeal.

The High Court categorically rejected this plea, holding that financial hardship is not synonymous with exceptional circumstance, and upheld the appellate court’s direction.

 “Statutory Compliance Cannot Be Waived Without a Justifiable Exception”

In a detailed analysis of the law and precedent, Justice Sumeet Goel held:

“Under Section 148 NI Act, the convict bears the onus of establishing that compelling and exceptional circumstances exist for waiving the condition of deposit. In the absence of such demonstration, the appellate court is not only justified but expected to impose the condition.”

The Court took guidance from two recent Supreme Court rulings:

1. Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd., , where the Apex Court clarified that waiver of the 20% deposit must be backed by recorded reasons based on exceptional circumstances.
2. Muskan Enterprises v. State of Punjab, where the Supreme Court reiterated that “discretion to waive deposit must be exercised cautiously and sparingly”, and only when justice demands it in extraordinary factual contexts.

In both cases, the Supreme Court emphasized that deposit of 20% is the legislative rule, and any deviation must be reasoned, not assumed.

“No Document, No Evidence—Just A Plea of Poverty” Is Not Enough, Says High Court

Rejecting the petitioner’s plea for waiver based on financial difficulty, the Court found that no documentary evidence, affidavit, or financial disclosure was produced to substantiate the claim.

Justice Goel ruled:

“Bald assertions of financial difficulty do not meet the threshold of exceptional circumstances. The petitioner has failed to place even a shred of credible material to justify exemption from the mandatory deposit. Legislative intent cannot be diluted by mere convenience.”

The Court also rejected the argument that the condition of deposit amounted to a denial of the right to appeal, stating:

“The appellate right is preserved. Section 148 only ensures that such right is not abused. The condition imposed here does not extinguish the appeal—it regulates its progression in line with statutory mandate.”

Impugned Order Found Legally Sound—Petition Dismissed

The Court ultimately upheld the order dated 26.08.2025, stating:

“No legal infirmity is found in the appellate court’s decision to impose the condition of 20% deposit. The petitioner has not made out a case for intervention under revisional jurisdiction.”

The revision petition was accordingly dismissed. The Court also noted that:

“Nothing said hereinabove shall be deemed to be an expression of opinion upon merits of the appeal pending before the learned Sessions Court.”

Procedural Safeguards for Complainants Cannot Be Sacrificed at the Altar of Vague Hardship Claims

In a time when cheque dishonour litigations often languish for years, this judgment strengthens the protective armour of Section 148, ensuring complainants are not left remediless during long appeals.

By dismissing the revisional plea and affirming the mandatory character of the 20% deposit, the High Court signaled a firm stance against casual or evasive appellate strategies that delay justice and undermine legislative reforms.

“To waive what the law presumes as mandatory, the petitioner must first satisfy the court with something more than sympathy—he must bring evidence. In the absence of such material, the rule holds. Section 148 is not a paper tiger—it has legislative teeth,” the Court concluded.

Date of Decision: November 7, 2025