S. 148 NI Act | Don't Impose Condition Of Deposit Of Minimum 20% Compensation/ Fine Amount 'Mechanically': Madras HC To District Courts

The Madras High Court has directed the District Courts across the State of Tamil Nadu to not mechanically impose a condition of deposit of 20% of the compensation amount/cheque amount u/s.148 of the Negotiable Instruments Act.

For context, in an appeal against conviction for dishonour of cheque under Section 138 NI Act, the appellate court, as per Section 148 NI Act, has the power to grant suspension of sentence pending appeal with imposition of a condition for payment of a minimum 20% of compensation/fine amount as ordered by the trial court.

"While dealing with an application for suspension of sentence or for grant of bail when an appeal is filed against the conviction for offence u/s.138 of the Negotiable Instruments Act, the Courts must not mechanically impose a condition of deposit of 20% of the compensation amount/cheque amount u/s.148 of the Negotiable Instruments Act. When any ground has been raised by the appellant for reducing the percentage or for exempting the deposit of such amount, it has to be dealt with by the appellate Court and a reasoned order must be passed if the Court wants to direct the appellant to deposit 20% of the compensation amount/cheque amount," a bench of Justice N. Anand Venkatesh observed.

This order was issued by the single judge while disposing of a plea filed under section 482 CrPC challenging one of the conditions imposed on the petitioner by the Court- to deposit 20% of the cheque amount - while suspending the sentence imposed against him u/s.138 of the Negotiable Instruments Act.

The petitioner's counsel argued that the petitioner had already filed an insolvency petition before the concerned Court and the respondent/complainant after being aware of the same misused the cheque and deposited it in the bank.

Therefore, it was contended that even without considering the same, the Court below had mechanically imposed the condition of a deposit of 20% of the cheque amount.

Taking note of the facts and circumstances of the case, the Court, at the outset, referred to the Apex Court's ruling in the case of Jamboo Bhandari vs. MP State Industrial Development Corporation Ltd [2023 LiveLaw (SC) 776] wherein it was held that a deposit of minimum 20% amount u/s 148 of NI Act as a condition to suspend sentence is not an absolute rule.

In this regard, the Court also referred to Kerala High Court's recent ruling in the case of Baiju v State of Kerala 2023 LiveLaw (Ker) 712 wherein it was held that the appellate court has to pass a speaking order by applying its mind for ordering deposit of minimum 20% compensation/fine amount u/s 148 of NI Act as a condition to suspend sentence.

In light of the above judgments, the court observed that there is an element of application of mind that is involved while directing a deposit of 20% of the amount as contemplated under this provision and that if the accused person can make out a ground for reduction of this percentage or exemption of deposit, the same has to be considered by the appellate Court before directing deposit of compensation amount as a condition while suspending the sentence/ granting bail.

Against this backdrop, opining that the lower Court ought to have applied its mind on this ground that was raised by the petitioner and passed a reasoned order and the same had not been done in this case, the court remanded the matter back to the file of Principal District and Sessions Judge, Erode, to deal with the issue regarding exemption sought for by the petitioner in depositing 20% of the compensation amount.

With this, the petition was disposed of.

Case title - CR Balasubramanian vs. P Eswaramoorthi [Crl.O.P.No.947 of 2024]

Case Citation: 2024 LiveLaw (Mad) 44

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