NI Act | 20% Compensation Deposit Is General Rule In Cheque Dishonour Appeals, Convict Must Prove Exceptional Circumstances For Waiver: Punjab & Haryana High Court
Deekshitha Sharmile
The High Court of Punjab and Haryana Single Bench of Justice Sumeet Goel, while noting that a convict must demonstrate special or compelling circumstances to seek waiver of the statutory deposit requirement under the Negotiable Instruments Act, held that directing an appellant-convict to deposit a minimum of 20% of the compensation awarded by the trial court constitutes the general rule at the appellate stage. The court, however, set aside such a condition imposed on a senior citizen convicted in a cheque dishonour case, finding that his advanced age, deteriorating medical condition supported by medical records, and the appellate court's failure to record any reasons while imposing the deposit condition collectively justified an exception in his favour.
The dispute arose from a complaint under Section 138 of the Negotiable Instruments Act, 1881, concerning dishonour of a cheque issued towards repayment of a loan. The trial court convicted the accused and sentenced him to ten months’ simple imprisonment, directing payment of compensation of Rs. 80,00,000, with a further three months’ imprisonment in default.
The accused preferred an appeal before the Sessions Court, which admitted the appeal but imposed a condition requiring deposit of 20% of the compensation amount for suspension of sentence. The petitioner challenged this order before the High Court, contending that the condition was imposed without reasoning, that he was a senior citizen of 69 years suffering from serious medical ailments, and that he lacked financial capacity to comply. Medical records were submitted to substantiate these claims. The respondent opposed the petition, arguing that the cheque was dishonoured with the remark “Exceeds Arrangement” and that the petitioner had failed to repay the loan despite repeated demands. The State submitted that it was not a contesting party, as the matter arose from a private complaint.
Justice Sumeet Goel recorded that Section 148 of the Negotiable Instruments Act empowers the appellate court to direct deposit of a minimum of 20% of the fine or compensation awarded by the trial court. The Court observed: “The provision uses the expression ‘may order the appellant to deposit such sum which shall be a minimum of twenty per cent’, thereby conferring discretion upon the appellate Court, though subject to the statutory minimum prescribed.”
The Court stated: “The legislative intent behind insertion of Section 148 is to address the mischief of prolonged litigation in cheque dishonour cases and to ensure that the complainant is not deprived of the fruits of the decree during pendency of appellate proceedings.”
Referring to the Supreme Court’s decision in Jamboo Bhandari, the Court quoted: “Normally, Appellate Court will be justified in imposing the condition of deposit as provided in Section 148. However, in a case where the Appellate Court is satisfied that the condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of the right of appeal of the appellant, exception can be made for the reasons specifically recorded.”
The Court further noted: “The convict bears the onus of demonstrating special, exceptional or compelling circumstances to persuade the appellate Court to waive or relax the statutory requirement of deposit under Section 148 of the Negotiable Instruments Act.”
On examining the impugned order, the Court stated: “A perusal of the aforesaid impugned order reveals that the same is bereft of any reasoning while directing the petitioner to deposit 20% of the compensation amount awarded by the learned trial Court.”
The Court recorded: “This Court is of the considered view that the petitioner has placed on record material indicating circumstances beyond his control which ex facie render him unable to deposit 20% of the compensation amount, particularly in view of his advanced age and medical condition, duly supported by medical records.”
The Court directed: “The impugned order dated 04.06.2025 (Annexure P-2) passed by the learned Additional Sessions Judge, Nuh is modified only to the extent of setting aside the condition of deposit of 20% amount of compensation as awarded by the learned trial Court, by the petitioner. The Appellate Court is directed to decide the main appeal, pending before it, at the earliest, preferably within a period of 04 weeks from the date of receipt/ production of copy of this order.”
“Pending application(s), if any, shall also stand disposed off. Nothing said hereinabove shall be deemed to be an expression of opinion upon merits of the appeal pending before the learned Sessions Court.”
Advocates Representing the Parties
For the Petitioners: Mr. Vishal Sharda, Advocate
For the Respondents: Mr. Yashvardhan Goyal, Advocate for respondent No.1; Mr. Gurmeet Singh, AAG Haryana
Case Title: Arjun Walia vs. Tarun Batra and another
Neutral Citation: 2026:PHHC:024857
Case Number: CRM-M-38548-2025
Bench: Justice Sumeet Goel
