High Court upholds mandatory 20% deposit in cheque bounce appeals

The Punjab and Haryana High Court has reaffirmed that the mandatory deposit of 20% of the compensation amount in cheque bounce cases under Section 148 of the Negotiable Instruments Act, 1881, must be adhered to unless exceptional circumstances are proven. Justice Sumeet Goel made the observation while dismissing a petition seeking waiver of the deposit condition, stating that financial difficulties alone were insufficient justification.

The case stemmed from an October 4, 2024, order by an Additional Sessions Judge’s court, which suspended the sentence of a convict on the condition that 20% of the compensation amount be deposited within two months.

The petitioner’s counsel argued that financial hardship made it impossible to deposit the amount and claimed that the court had not provided adequate opportunity before imposing the condition. He further asserted that the condition effectively deprived the petitioner of the right to appeal and sought its quashing.

Justice Goel, however, emphasised that the onus of demonstrating exceptional circumstances to waive the deposit lay with the convict. He underlined the legislative intent of the provision, which seeks to expedite justice and alleviate the complainant's hardship due to prolonged litigation. “Under Section 148 of the Negotiable Instruments Act, the requirement to deposit the compensation amount as a condition for appeal is generally mandatory, emphasising its status as a rule,” he stated.

Justice Goel clarified that while appellate courts have discretion to waive the deposit, this can only be done in exceptional cases supported by compelling evidence. “The ground pleaded by the petitioners that they are facing financial difficulty cannot be said to be a ground sufficient enough for carving out an exception from the mandate contained in Section 148 of the Negotiable Instruments Act, 1881,” he asserted.

Rejecting the petitioner’s plea, Justice Goel concluded: “It also cannot be said, in the facts and circumstances of the present case, that imposition of the condition of deposit of 20% of the amount of compensation as awarded by the trial magistrate can be said to be unjust or would amount to effectively taking away the right of appeal of petitioners, especially petitioner.”

The court upheld the Additional Sessions Judge’s order, reinforcing the mandatory nature of the deposit requirement to balance justice for complainants and prevent frivolous appeals.