Punjab and Haryana High Court upholds mandatory deposit in cheque dishonour case appeals

The Punjab and Haryana High Court has ruled that the mandatory deposit of 20 per cent of the compensation amount, as required in cheque bounce cases under Section 148 of the Negotiable Instruments Act, 1881, must be adhered to unless exceptional circumstances are proven. The assertion came as Justice Sumeet Goel dismissed a petition seeking directions to waive off the condition after observing that financial difficulties alone did not justify exemption.

The case has its genesis in an order dated October 4, 2024, passed by an Additional Sessions Judge’s court. It suspended the sentence of a convicted subject to depositing 20 per cent of the compensation amount within two months.

Appearing before Justice Goel’s court, his counsel contended that the petitioner was not in a position to deposit the amount following financial difficulty. He added that due and requisite opportunity was not afforded to the petitioner before passing of the impugned order, wherein condition was stipulated by the court.

He further contended that imposition of such condition would effectively amount to taking away the right of appeal. As such, the impugned order was required to be quashed to the extent of imposing the condition.

Referring to the submissions, Justice Goel asserted the onus of demonstrating exceptional circumstances to persuade the appellate court to waive the mandatory deposit of compensation was on the convict. Considering the legislative intent behind the provision to expedite justice and alleviate the complainant’s hardship due to prolonged litigation, it was generally appropriate for the appellate court to impose the condition when an appeal was filed against a conviction under Section 138 of the Act.

It ensured that the complainant was not unjustly deprived of compensation, while safeguarding the appellate process from frivolous or dilatory tactics. “Under Section 148 of the Negotiable Instruments Act, the requirement to deposit the compensation amount as a condition for appeal is generally mandatory, emphasizing its status as a rule,” the court asserted. 

Justice Goel added the appellate court had the discretion to waive the condition only in exceptional circumstances required to be demonstrated through “compelling and substantiated material” provided by the appellant-convict. 

“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,” Justice Goel added

Rejecting the petitioner’s plea, Justice Goel asserted: “It also cannot be said, in the facts and circumstances of the present case, that imposition of the condition of deposit of 20 per cent 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.”