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Introduction
The evolution of cheque dishonour laws under the NI Act1, has increasingly prioritized compensatory justice for the complainant, moving away from purely punitive measures. A pivotal tool in this legislative endeavor is Section 148, empowering Appellate Courts to order a minimum 20% deposit pending appeal. The critical jurisdictional question recently addressed by Justice R. T. Vachhani of the High Court of Gujarat, in the matter of Mahadev Enterprise Thro Pruthvi Sanjaybhai Solanki & Anr. vs. State of Gujarat & Anr2., was whether a first appellate court could validly exercise this power subsequently to the initial order suspending the sentence, thereby reinforcing the mandatory nature of this compensatory requirement.
The High Court primarily held that the condition imposed by the first appellate court to deposit 20% of the compensation amount awarded by the trial court while suspending the sentence under Section 389 of the CrPC3 is sustainable and does not warrant interference. The Court also affirmed that this condition could be imposed subsequently to the initial order suspending the sentence. The ruling thus upheld the normal rule of mandatory minimum deposit pending appeal.
The factual matrix of the case involved a petitioner who was aggrieved and dissatisfied with an order of conviction and sentence passed by the trial court for an offence. The petitioner filed a criminal appeal and simultaneously moved an application for the suspension of the sentence. The first appellate court initially allowed the suspension of the sentence but subsequently directed the petitioner to deposit 20% of the compensation amount awarded by the trial court, leading to the filing and challenging this later order.
The petitioner’s contention centered on two main grounds: firstly, that the first appellate court, having already exercised its power under CrPC, could not subsequently impose the 20% deposit condition and secondly, that the use of the word “may” in Section 148(1) of the NI Act rendered the condition to deposit 20% discretionary and not mandatory. Conversely, the respondent’s contention was that a significant amount of time had elapsed since the conviction, and the petitioner’s belated willingness to deposit a lesser amount was not prudent. The respondent relied on a Supreme Court precedent to assert that the 20% deposit condition is the normal rule and that the first appellate court had correctly exercised its discretion to secure the complainant’s interest, especially as the final appeal disposal was pending.
NI Act Appeals: Mandatory Minimum Deposit vs. Appellate Discretion
In its deliberation, the Court substantially leveraged precedents set by different Courts.The Supreme Court in Jamboo Bhandari v. Madhya Pradesh State Industrial Development Corporation Ltd. and Ors4. and Muskan Enterprises & Anr. v. The State of Punjab & Anr5. discussed on the same notes. The Court noted that while Jamboo Bhandari (Supra) recognized the possibility of an exception to the 20% deposit rule if the Appellate Court is satisfied that the condition would be unjust or deprive the right of appeal, Muskan Enterprises (Supra) provided a crucial interpretation of Section 148. It affirmed the legislative intent by analyzing the concurrent use of “may” and “shall” in the section. It further clarified that while “may” refers to the Appellate Court’s discretion on whether to order any deposit at all, the term “shall” mandates that the deposit, if ordered, must be a minimum of 20% of the fine or compensation. This established that the power to order the deposit is discretionary, but the minimum quantum is mandatory.
After hearing both contentions, the Court removed the dichotomy by adhering to the principle laid down in the Supreme Court precedents, particularly Muskan Enterprises (Supra). The Court clarified that the first appellate court’s discretion lies in deciding if the case is an exceptional one that warrants waiving or reducing the deposit, but absent such exceptional circumstances, the normal rule of a minimum 20% deposit prevails. Crucially, the Court rejected the argument that the power under Section 148 of the NI Act could only be exercised simultaneously with the suspension of the sentence under Section 389 Cr.P.C. It held that the appellate court is competent to direct the deposit at a subsequent stage during the pendency of the appeal to achieve the compensatory purpose of Section 148. Finding no exceptional circumstances pleaded or demonstrated by the appellant, the Court concluded that the order to deposit 20% was a justifiable exercise of the first appellate court’s discretion and was therefore sustainable.
Conclusion
The judgment of Mahadev Enterprise (Supra) affirms the predominant judicial stance that the legislative intent behind Section 148 of the NI Act is to secure at least a minimum of 20% of the compensation for the complainant in appeals. The ruling clearly establishes that the word “may” in S. 148(1) confers discretion upon the Appellate Court to decide whether to impose the condition, but the word “shall” makes the minimum quantum (20% ) mandatory once the condition is imposed, in line with the Supreme Court’s reading of the provision. This underscores the pro-complainant and punitive-cum-compensatory objective of the provision.
This ruling, consistent with the Supreme Court’s prior decisions, effectively cements the legal standpoint for the future and makes it significantly more difficult for appellants convicted under S.138 of the NI Act to avoid depositing 20% of the awarded compensation pending appeal. First appellate courts will be less inclined to waive the deposit requirement, viewing the 20% as the normal rule and reserving a complete waiver only for demonstrably exceptional cases where failure to waive would unjustly deprive the right to appeal, with explicit reasons recorded. This certainty will expedite the recovery of at least a part of the compensation amount for complainants, achieving the legislative goal of providing interim relief during the protracted process of appeal.
The judgment, while settling the immediate issue, may give rise to future questions and necessitates practical suggestions for legal practitioners. What specific, objectively verifiable criteria will constitute an “exceptional case” sufficient to justify either a complete waiver or a reduction of the 20% minimum deposit, and how will courts standardize this evaluation? Also, Will the delay in disposing of the appeal (e.g., beyond the 60-day or 90-day period mentioned in S. 148(2)) become a factor that weighs against the appellant, potentially justifying a subsequent deposit order even if the sentence was initially suspended without condition?
Citations
Expositor(s): Adv. Shreya Mishra
