Punjab & Haryana High Court | Deposit Under Section 148 NI Act Not Mandatory for Bail | Appeal Under S.138 NI Act to Be Decided Within 90 Days If Convict Unable to Pay Compensation
Isabella Mariam
The High Court of Punjab and Haryana Division Bench of Justice Anoop Chitkara and Justice Sanjay Vashisth held that while appellate courts ordinarily may direct a convict under Section 138 of the Negotiable Instruments Act to deposit at least 20 percent of the cheque-amount compensation under Section 148 when seeking suspension of sentence, such payment is not mandatory in every case. In a significant observation, the Bench stated that if a convict is genuinely unable to make the deposit and thus cannot obtain bail, the appellate court must decide the appeal within 90 days.
The matter before the Punjab and Haryana High Court concerned two connected petitions filed by M/s Coromandel International Limited against Shri Ambica Sales Corporation and Shri Ambalica Agro Solutions. The petitions arose from proceedings under Section 138 of the Negotiable Instruments Act, 1881, relating to dishonour of cheques. The trial courts had convicted the petitioners and imposed sentences including compensation amounts payable to the complainants. The petitioners appealed against their convictions and sentences and sought suspension of sentence during the pendency of the appeals.
The principal legal issue was whether, while granting suspension of sentence in such appeals, the appellate court could make it a condition that the convicted appellants first deposit at least 20 percent of the compensation amount awarded by the trial court under Section 148 of the Negotiable Instruments Act. Another connected issue was whether non-compliance with such a direction could lead to cancellation of bail or continued incarceration. The petitioners contended that such a mandatory requirement curtailed their statutory right of appeal and their liberty, particularly when they were unable to meet the financial condition. They relied on earlier judgments, including G.J. Raja v. Tejraj Surana, which emphasized recovery of such amounts through statutory modes rather than linking it to bail.
The amicus curiae argued that the provisions relating to suspension of sentence in appeals—specifically Section 430 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (corresponding to Section 389 of the Code of Criminal Procedure, 1973)—operate independently of Section 148 of the Negotiable Instruments Act. He submitted that the appellate court retains discretion to waive or reduce the deposit requirement in appropriate cases, especially when the convict demonstrates financial hardship, and that bail should not be automatically denied for non-compliance.
The Bench considered statutory provisions including Sections 138, 143A and 148 of the Negotiable Instruments Act, as well as Sections 415 and 430 of the BNSS, 2023 (earlier Sections 374 and 389 of the CrPC), along with precedents such as Surinder Singh Deswal, Jamboo Bhandari, Muskan Enterprises, and others. The discussions reviewed the legislative intent behind the 2018 amendment introducing Section 148, which aimed to protect payees from delay tactics by convicted drawers of dishonoured cheques.
The Court examined how earlier rulings had treated the deposit requirement—sometimes as a mandatory rule and at other times as discretionary. It assessed the impact of non-payment on the continuation of bail and the right to appeal, taking note of circumstances where excessive financial conditions might effectively deny liberty. The Bench ultimately clarified the relationship between the statutory right to seek suspension of sentence and the discretionary power to require a deposit under Section 148.
The Division Bench examined the scope of Section 148 of the Negotiable Instruments Act, 1881, and its interaction with the appellate court’s power to suspend sentence under Section 430 of the BNSS, 2023. The Court “observed that Sections 430 BNSS and 148 NI Act do not overlap and are independent of each other… these statutory rights have not been taken away or even restricted by the non-obstante clause of Section 148 NI Act… and ‘none can be left remediless.’”
Referring to earlier rulings, the Bench “recorded that as per Jamboo Bhandari… normally the Appellate Court will be justified in imposing the condition of deposit of 20% as provided in Section 148 NI Act. However, in a case where the Appellate Court is satisfied that the condition of deposit of 20% would be unjust or imposing such a condition would amount to depriving the appellant of the right to appeal, an exception can be made for the reasons specifically recorded.”
The Court noted the clarification in Muskan Enterprises and stated: “We would, therefore, read ‘may’ as ‘may’ and ‘shall’ as ‘shall’, wherever they are used in Section 148… retention of the power of such court not to order any deposit in a given case (which in its view and for the recorded reasons is exceptional)… has to be conceded.”
On the issue of bail during appeal, the Bench “observed that 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% of the compensation amount under Section 148 of the NI Act… whenever an Appellate Court directs a deposit under Section 148… such conditions must be just conditions.”
Addressing situations of financial incapacity, the Court “stated that if a convict is genuinely unable to deposit the 20% amount and as a result cannot secure bail, then the appeal must be decided within a maximum period of 90 days.”
The Bench further “recorded that merely the non-deposit of the amount would not disentitle the accused from their substantive right of appeal… nor can the failure to deposit be treated as an automatic ground for cancellation of bail unless such a condition formed part of the suspension order and was found to be just and fair.”
In conclusion, the Court “observed that while imposition of 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, the exercise of such power remains discretionary and must be guided by fairness, the convict’s financial capacity, and the statutory purpose of Section 148 NI Act.”
The Court concluded: “Whenever the deposits are expensive than the liberty, and the Appellate Courts are convinced that the convicts are not in a position to deposit and likely to forego their liberty even when the first appeal is yet to be decided, the Appellate Courts must make efforts to prioritize hearing appeals filed against the convictions under Section 148 NI Act and decide those preferably within sixty days of filing, and not later than ninety days… However, the time of sixty days should be extended to the extent to which the decision of the appeal is delayed because of the complainant.”
“Registry to send copies of this order to all the Judicial Officers in the States of Punjab, Haryana, and the Union Territory of Chandigarh. The matters are sent back to the Single Bench.”
Advocates Representing the Parties
For the Petitioners: Mr. Ashok Singla, Advocate; Mr. Ankush Singla, Advocate.
Amicus Curiae: Mr. Deepender Singh, Advocate.
Case Title: M/s Coromandel International Limited v. Shri Ambica Sales Corporation; M/s Coromandel International Limited v. Shri Ambalica Agro Solutions.
Case Numbers: CRM‑M‑7799‑2025; CRM‑M‑8498‑2025.
Bench: Justice Anoop Chitkara; Justice Sanjay Vashisth.
