Gujarat High Court: In a criminal revision application challenging the order dated 17-8-2024 (‘impugned order’) wherein the Appellate Court, in exercise of its power under Section 148 of the Negotiable Instruments Act, 1881 (‘the Act’), had directed the appellant to deposit 20 percent of the compensation payable by it, the Single Judge Bench of R.T. Vachhani, J, upheld the impugned order and held that the Appellate Court had the jurisdiction to exercise discretion under Section 148 of the Act in imposing the condition of deposit of 20 percent of compensation amount.
Background
The petitioner, aggrieved by the order dated 17-8-2024, had sought to keep the execution of the sentence in abeyance and had simultaneously moved an application under Section 389 (3) of the Code of Criminal Procedure, 1973 (‘CrPC’). The Appellate Court directed the petitioner to deposit 20 percent of the compensation amount under Section 148 of the Act. Hence, the instant revision application had been filed.
The issue for consideration before the Court was whether the imposition of condition by the appellate Court to deposit 20 percent of the compensation amount awarded by the trial Court was sustainable or not?
The petitioner had averred that once the order for suspension of sentence had been passed, the first appellate Court was not justified in ordering a deposit of 20 percent of the compensation amount.
Analysis, Law and Decision
The Court relied on two Supreme Court decisions wherein the imposition of deposit amount under Section 148 of the Act had been in contention. In the case of Jamboo Bhandari v. M.P. SIDC Ltd., (2023) 10 SCC 446, the Supreme Court had held that while the appellate Courts would ordinarily be permitted to direct the appellant to deposit 20 percent of the amount awarded, there could be exceptional circumstances. Such circumstance would apply only when they would unfairly hinder or effectively block the appellant’s right to appeal. The Supreme Court had further stated that such exceptions must be backed by properly recorded reasons.
The Court further noted that in the second case of Muskan Enterprises v. State of Punjab, 2024 INSC 1046, the Supreme Court had laid to rest the controversy on the usage of ‘may’ and ‘shall’ under Section 148 of the Act. According to the Supreme Court, the usage of the word ‘may’ grants the appellate Court the discretion to decide whether to order the deposit or not. But as soon as the appellate Court exercises its discretion, the mandate of ‘shall’ kicks in, i.e., the Court must necessarily direct deposit of at least 20 percent of the amount awarded.
The Court further opined that the purpose of Section 148 of the Act is to offer some interim relief to complainants in cheque dishonour cases while the appeal is pending. Furthermore, the Courts are required to exercise discretion while being mindful of the specific facts of each case.
Thus, the Court held that the first Appellate Court was well within its jurisdiction to direct the appellants to deposit 20 percent of the compensation amount and accordingly dismissed the revision petition.
[Mahadev Enterprise v. State of Gujarat, Crl. Rev. Appl. No. 1409 of 2024, decided on 22-9-2025]
Advocates who appeared in this case:
For the Appellant: Vicky B. Mehta, Advocate
For the Respondent: H.K. Patel, APP, Nrup H. Panchal, Parichay N. Ashar, Advocates
Buy Code of Criminal Procedure, 1973 HERE
