No deposit needed to file appeal in cheque bounce cases, rules High Court

The Punjab and Haryana High Court has held that the deposit of 20 per cent of the compensation amount in cheque dishonour cases under Section 148 of the Negotiable Instruments Act cannot be made a precondition either for filing or for deciding an appeal against conviction.

The Division Bench, at the same time, clarified that an appellate court might impose such a condition while suspending a sentence, and non-compliance with that direction could lead to the vacation of the suspension, but not to the denial of the right of appeal.

The judgment from the “Larger Bench” of Justice Anoop Chitkara and Justice Sanjay Vashisth came on a reference to resolve four legal propositions regarding the scope and operation of Section 148 dealing with interim compensation in cheque dishonour appeals.

The court ruled that the legislative provision, though aimed at protecting commercial transactions, “cannot be stretched to rewrite the law by treating deposit as a mandatory prerequisite for hearing an appeal.”

The Bench held it was within the appellate court’s powers to impose a condition for deposit while considering suspension of sentence.

“After analysing the statutory provision vis-à-vis the judicial precedents referred to above, the answer to the first proposition is that the imposition of a condition to deposit 20% of the compensation amount awarded by the Trial Court is sustainable while deciding the application for suspension of sentence in an appeal when the judgment of conviction and order of sentence is still awaiting confirmation,” the Court observed.

The Bench also held that non-compliance with such a condition could result in the vacation of the suspension of sentence.

Referring to Supreme Court rulings, the Judges asserted: “The Appellate Court that has suspended the sentence on a condition, after observing non-compliance, could reasonably hold that the suspension stood vacated due to the non-compliance… non-compliance with the suspension condition is enough to declare that the suspension has been vacated.”

The Court also drew a clear line between the suspension of sentence and the broader right of appeal. “The right of bail cannot be taken away by the Appellate Court, where final adjudication of the appeal is pending, due to non-compliance with the direction of paying 20 per cent of the compensation amount under Section 148 of the NI Act,” the Bench categorically held. The court added that conditions imposed must be “just conditions” and not disproportionate burdens on the appellant.

The Bench unambiguously ruled that deposit was not a precondition for deciding an appeal. “It is clear that non-deposit of 20 per cent of the compensation or fine amount would not disentitle the accused from availing any of his substantive rights, including the right of appeal… Thus, to get the appeal decided, there cannot be any precondition for depositing the amount ordered under Section 148 of the NI Act by the Appellate Court,” the Bench asserted.

The Judges added that the provision was ineffective against juristic persons. “Suspending the sentence based on the deposit does not affect juristic persons because they cannot be imprisoned and thus cannot seek a suspension of sentence or appeal, as these are statutory rights that cannot be subjected to the deposit.”

The Bench added the convict must comply with the directions, if any, to deposit the compensation amount if the appeal was not decided within 60 days, with a possible extension of 30 days.

Takeaway at a glance

Deposit of 20 per cent under Section 148 NI Act may be required for suspension of sentence, but not for filing or deciding an appeal.

Non-compliance can vacate suspension, but cannot take away the right of appeal.

Right to bail and appeal are substantive rights, not to be fettered by deposit conditions.

Section 148 fails proportionality test; affects poor litigants while leaving juristic persons untouched.