S.148 NI Act | Requirement To Deposit Minimum 20% Of Fine In Appeal Against Conviction U/S 138 Is Mandatory: Rajasthan HC

The court dealt with the question whether the usage of word 'may' in section 148 of Negotiable Instruments Act provides a discretion to the Court to impose or not to impose the condition of depositing minimum 20% of the fine amount.

Section 148 provides that in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court.

Essentially, the present petition was filed under Section 482 of CrPC, challenging the order passed by Additional Sessions Judge, Bilara ( "Appellate Court") whereby the application of the petitioner for suspension of sentence was allowed and the petitioner was directed to deposit 20% of the fine amount (Rs.2,65,800/- out of Rs.13,29,000/-). The said order also required the petitioner to furnish a bail bond of Rs.30,000/- in an appeal that was filed by the petitioner against his conviction under Section 138 of the Negotiable Instruments Act, 1881.

Justice Dinesh Mehta, observed,

"In the opinion of this Court, if modal auxiliary verbs or imperative words such as 'may', 'should' etc. are followed by the provision/expression prescribing lower bar/limit such as 'minimum', 'not below', etc. then, these words ('may', 'should'), are required to be read as 'shall'."

The court further observed that if the word 'shall' is followed by provision/words providing upper cap/upper limit by usage of words 'maximum' or 'not above', etc. then, the expression 'may' or 'shall' confer the discretion upon the Court/Authorities and hence, the words 'may' or 'shall' would be read as 'may'.

The court opined that it is a settled position of law that a statute does not take a mandatory or directory character merely by virtue of the words 'shall' or 'may'. The court also opined that for determining whether the provision is directory or mandatory it must first be ascertained whether by contriving it discretionary or mandatory, the object which the statute wanted to achieve as envisaged by the legislature in the statement of objects and reasons is achieved or not.

The court noted that a purposive interpretation of section 148 of the Act is necessary and the same would warrant that the expression 'may' as contained in section 148 of the Act be read as 'shall'. Read this way, the provision would mean that the Court 'shall' order the convict to pay minimum of 20% amount of fine in an appeal against conviction under section 138 of the Act and resultantly, the plight of the drawee would be eased (as intended by the legislature while enacting section 148 of the Act) which otherwise would have been aggravated due to prolonged judicial proceedings, added the court.

It was opined by the court that 'May' generally indicates discretion whereas 'shall' used in a statute generally makes the provision mandatory. The court also opined that if the provisions of section 148 of the Act are carefully examined, it transpires that the expression 'may' is followed by "sum which shall be minimum of twenty percent of the fine amount." If the word 'may' used in section 148 of the Act is construed to be conferring discretion then, the latter part of the provision (sum which shall be minimum of twenty percent of the fine amount ) will become redundant, added the court.

The court observed that if section 148 is regarded to be discretionary, to the effect that the Court may do away with the deposit, then, the Court would render defunct the very requirement of deposit pendente lite appeal. The court added that because as per section 148 of the Act, such amount cannot be less than 20% of the fine amount and any other percentage of amount (being less than 20%) would be in direct contravention of the express provision which postulates that a minimum of 20% of fine amount has to be deposited.

Further, the court opined that if at all any discretion exists, then, the same is for directing the deposit to be between 20% to 100% of the fine amount and not between 0%- 20% or not issuing any direction to deposit at all. Because not directing any amount to be deposited would be tantamount to depositing 0% of the fine amount and the same being less than 20% of the fine amount is impermissible as per the mandate of section 148 of the Act, added the court. The court remarked. "Had the legislature intended to make the exercise of power under section 148 discretionary, it would not have imposed the duty upon the Court to direct deposit of a minimum 20% of fine amount."

The court ruled,

"Similarly if the term 'shall' is followed by a provision/words providing for maximum limit/cap then, the Court/Authority can direct to not deposit any amount (0% of the fine amount), because, the leeway is between 0% to maximum percentage. Hence, in spite of the usage of word 'shall' it will be a discretion available with the Court/Authority to not require the appellant to deposit any amount."

While rejecting the petitioner's reliance on Dilip Singh v. State of Madhya Pradesh & Anr., the court observed that in the present case the dispute is civil in nature with criminal overtones and unlike section 438 of the Code, there exists a specific statutory requirement under section 148 of the Act for a deposit of minimum 20% of the fine amount during pendency of an appeal against conviction under section 138 of the Act.

In addition to this, the court, while dismissing the petition, ordered,

Having regard to the fact that the petitioner preferred the present petition on 06.01.2022 and the same remained pending consideration before the Court, a liberty is given to the petitioner to deposit the fine amount (as ordered by the Appellate Court on 08.11.2021) on or before 31.03.2022. 27. In case the amount of Rs.2,65,800/- is not deposited by 31.03.2022, the legal consequences shall follow."

Relying on Dilip Singh, the counsel for the petitioner argued that the Appellate Court was not justified in requiring the petitioner to deposit 20% of the fine amount, because putting such a condition has taken away petitioner's right of liberty. He also argued that Section 148 of the Act uses the expression "may" and, therefore, the Appellate Court was not justified in imposing such an onerous condition particularly when the amount of fine was exorbitant and there was a discretion with the Appellate Court to not direct the petitioner to deposit such amount.

Adv. Dinesh Vishnoi appeared on behalf of the petitioner.

Case Title: G.k. Construction Company, Through Its Owner Govind Katariya v. Balaji Makan Samagri Stores, Through Its Proprietor Mallaram Patel

Citation: 2022 LiveLaw (Ra) 92