U/S 138 N.I. Act: Deposit Compensation Not an Absolute Rule in Cheque Bounce Cases: Punjab and Haryana High Court

In a significant judgment, the Punjab and Haryana High Court has set aside an order from the Moga Sessions Court in the case of Chamkaur Singh vs. The Moga Central Co-Op. Bank Ltd. This landmark decision underscores the flexibility in the legal requirement to deposit 20% of compensation in cheque dishonor cases under Section 138 of the Negotiable Instruments Act, 1881.

Hon’ble Mr. Justice Deepak Gupta, presiding over the case, emphasized, “Deposit of minimum 20% amount is not an absolute rule, not accommodating any exception.” This observation came in the context of a revision petition filed by Chamkaur Singh, challenging the appellate court’s order mandating the deposit of 20% of the compensation amount awarded by the trial court.

The case, marked under CRR-2600-2023, initially saw the petitioner convicted and sentenced to rigorous imprisonment, along with a directive to pay a substantial compensation amount. The appellate court, while suspending the sentence under Section 389 CrPC, had ordered Singh to deposit 20% of the compensation, citing the precedent set by the Supreme Court in Surinder Singh Deshwal @ Col. S.S. Deswal and others Vs. Virender Gandhi and another.

Chamkaur Singh, claiming financial hardship due to losses incurred during the Covid period, appealed for an exemption from this deposit. His plea was supported by a reference to another Supreme Court judgment in Jamboo Bhandari Vs. M.P. State Industrial Development Corporation Ltd. And others, which allows for exceptions in cases with extraordinary circumstances.

Justice Gupta’s ruling highlighted that while the appellate court is generally justified in imposing the condition of deposit as per Section 148 of the NI Act, it must also consider if the imposition of such a condition would be unjust or amount to deprivation of the right of appeal. The High Court directed that the case be remanded back to the appellate court for reconsideration, specifically focusing on whether the petitioner’s circumstances warrant an exemption from the deposit requirement.

Bench: Hon’ble Mr. Justice Deepak Gupta

CHAMKAUR SINGH VS The Moga Central Co-Op. Bank Ltd.