Section 148 of the Negotiable Instruments Act, 1881, introduced through the Negotiable Instruments (Amendment) Act, 2018, empowers appellate courts to direct appellants—convicted under Section 138 for cheque dishonor—to deposit a minimum of 20% of the fine or compensation awarded by the trial court during the pendency of an appeal. The primary objective of this provision is to ensure that the payee of a dishonored cheque is not unduly deprived of the compensation due to protracted legal proceedings.
However, judicial interpretations have clarified that this deposit requirement is not absolute and can be waived in exceptional circumstances to prevent injustice or the deprivation of the appellant’s right to appeal.
Supreme Court’s Interpretation:
In the landmark case of Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd. (2023), the Supreme Court elucidated that while appellate courts are generally justified in imposing the deposit condition under Section 148, there exists judicial discretion to waive this requirement in appropriate and exceptional cases. The Court emphasized that if enforcing the deposit condition would be unjust or effectively deprive the appellant of their right to appeal, the appellate court may dispense with this requirement, provided specific reasons are recorded for such a decision. Legal Vidhya+5
Allahabad High Court’s Stance:
Similarly, the Allahabad High Court, in the case of Shiv Chandra Pathak vs. State of U.P. (2024), addressed the discretionary power of appellate courts concerning the deposit condition under Section 148. The court underscored that while Section 148 aims to deter frivolous appeals and ensure prompt realization of compensation, appellate courts must exercise their discretion judiciously. The court highlighted that imposing the 20% deposit should not be automatic; instead, courts should consider the specific facts and circumstances of each case. If enforcing the deposit condition would result in injustice or impede the appellant’s right to appeal, the court has the authority to waive this requirement, ensuring that the appellant’s access to justice is not unduly hindered.
Key Takeaways:
- Judicial Discretion: Both the Supreme Court and the Allahabad High Court have affirmed that the 20% deposit requirement under Section 148 NI Act is not mandatory in all cases. Appellate courts possess the discretion to waive this condition in exceptional situations where its enforcement would be unjust or infringe upon the appellant’s right to appeal.
- Reasoned Orders: When deciding to waive or enforce the deposit condition, appellate courts are obligated to provide well-reasoned orders, articulating the rationale behind their decision to ensure transparency and uphold the principles of natural justice.
- Case-by-Case Assessment: Courts must evaluate the unique facts and circumstances of each case to determine whether the deposit condition should be imposed, ensuring that the application of Section 148 serves the interests of justice without causing undue hardship to appellants.
In conclusion, while Section 148 of the NI Act serves as a mechanism to ensure that payees of dishonored cheques receive timely compensation, courts have recognized the necessity of flexibility in its application. This approach ensures that the enforcement of the deposit condition does not result in injustice or the denial of the appellant’s fundamental right to appeal.
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