In Cases of Financial Distress, Imposing A Mandatory Deposit Under Negotiable Instruments Act May Jeopardize Appellant’s Right To Appeal: Rajasthan High Court

The Rajasthan High Court recently granted relief to Asha Devi, a daily-wage worker, by setting aside the condition to deposit 20% of the fine amount for suspension of her sentence in an appeal under Section 138 of the Negotiable Instruments Act (NI Act), 1881. The court, emphasizing the financial hardship of the petitioner, observed that a strict application of the pre-deposit condition could obstruct access to justice and deprive the appellant of her right to appeal.
Asha Devi was convicted under Section 138 of the NI Act for issuing a dishonored cheque and sentenced to a fine and imprisonment. Upon filing an appeal, she sought suspension of her sentence, but the Sessions Court required her to deposit 20% of the fine amount per Section 148 of the NI Act. Given her financial circumstances as a daily-wage worker, she contended that paying the deposit was impossible and sought relief from this condition.
Under Section 148 of the NI Act, appellate courts may suspend a sentence for cheque dishonor convictions on the condition that at least 20% of the fine or compensation amount be deposited. This requirement aims to balance the complainant’s interest with the defendant’s rights. However, the Supreme Court in Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd. highlighted that the condition is not absolute and may be waived in exceptional cases where it would unfairly restrict the appellant’s access to justice.
The High Court acknowledged the petitioner’s financial hardship, emphasizing that enforcing the deposit would likely prevent her from pursuing her appeal. Justice Monga stated:
“Looking at the financial condition of the petitioner, directing her to deposit 20% of the amount as per the impugned order shall result in jeopardizing her appeal, as it would risk dismissal due to non-compliance with the deposit condition.”
The court, guided by the Supreme Court’s judgment in Jamboo Bhandari, ruled that the condition of pre-deposit could be modified in light of the appellant’s inability to pay. The bench observed that the purpose of the 20% deposit is to deter frivolous appeals, not to deny justice to those in genuine financial distress.
Justice Monga clarified that while Section 148 of the NI Act encourages pre-deposits, it is not inflexible. The court may exempt an appellant from this requirement if it risks denying them the right to appeal. He quoted:
“The Apex Court has held that the condition of deposit under Section 148 is not absolute. The appellate court may exercise discretion when the condition threatens the appellant’s right to appeal.”

In light of the petitioner’s circumstances, the court ordered that the condition of pre-deposit be waived, and directed the Sessions Judge to proceed with the hearing of the appeal without requiring the deposit.
The Rajasthan High Court modified the Sessions Court’s order, setting aside the pre-deposit condition and allowing the appeal to proceed without it. This decision reiterates the court's commitment to ensuring access to justice, especially for financially disadvantaged appellants.
“The impugned order is modified. The condition of pre-deposit of 20% of interim compensation is set aside. The Sessions Judge shall proceed with the hearing of the appeal without insisting on pre-deposit.”
Conditional Suspension of Sentence under NI Act: While Section 148 mandates a 20% deposit for appeal in cheque dishonor cases, appellate courts retain discretion to waive this requirement in cases of financial hardship.
Right to Appeal and Access to Justice: The court emphasized that procedural conditions should not obstruct an individual’s right to appeal, particularly when financial hardship is evident.
Guidance from Supreme Court: The court relied on the Jamboo Bhandari judgment, which underscores that the condition of pre-deposit can be relaxed to prevent undue hardship.
 

Date of Decision: October 23, 2024