Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Mandatory Nature of Deposit - The Supreme Court and various courts have held that the deposit condition under Section 148 of the Negotiable Instruments Act (N.I. Act) is generally mandatory, requiring the appellant to deposit at least 20% of the fine or compensation during appeal proceedings. This is supported by interpretations in cases like Deswal v. Gandhi (2019 SCC 341) and subsequent judgments, emphasizing the purposive reading of the section ["Muskan Enterprises VS State Of Punjab - Supreme Court"], ["Ihome And Infrastructure Pvt. Ltd. vs State Govt. of NCT of Delhi - Delhi"], ["Deepak Kumar VS State of Haryana - Punjab and Haryana"].
Use of May vs. Shall - Although the section uses the word may, courts have construed this as implying a mandatory requirement in most cases, unless exceptional circumstances are recorded. The courts have clarified that the discretion to waive this deposit is limited and must be justified with special reasons ["Muskan Enterprises VS State Of Punjab - Supreme Court"], ["Jamboo Bhandari VS M. P. State Industrial Development Corporation Ltd. - Supreme Court"], ["Mahendra Rajoriya VS State of Rajasthan - Rajasthan"], ["Jaswinder Pal VS Resham Singh - Punjab and Haryana"].
Interpretation and Amendment Impact - The courts have extensively debated whether the language may confers discretion or mandates deposit. The dominant view is that Section 148 should be read as mandatory, especially after amendments, aligning with object and purpose of the legislation, and the section's non-obstante clause underscores its importance ["Jamboo Bhandari VS M. P. State Industrial Development Corporation Ltd. - Supreme Court"], ["Deepak Kumar VS State of Haryana - Punjab and Haryana"].
Exceptions and Discretion - Courts have acknowledged that deposit may be waived in extraordinary or exceptional cases, where the appellant demonstrates hardship or injustice. However, such exceptions are rare and require recorded reasons ["Ihome And Infrastructure Pvt. Ltd. vs State Govt. of NCT of Delhi - Delhi"], ["Muskan Enterprises VS State Of Punjab - Supreme Court"].
Implications for Appeal and Suspension of Sentence - The deposit condition is crucial for suspension of sentence during appeal, and failure to deposit can result in dismissal of the appeal or inability to seek relief, reinforcing the mandatory character of the provision ["Mahendra Rajoriya VS State of Rajasthan - Rajasthan"], ["Gulshan Arora VS State of NCT of Delhi - Delhi"].
Legal Consistency and Object of the Law - The interpretation aligns with the legislative intent to ensure compliance and expedite recovery of dues, with courts emphasizing purposive interpretation to uphold the section’s efficacy ["Muskan Enterprises VS State Of Punjab - Supreme Court"], ["Deepak Kumar VS State of Haryana - Punjab and Haryana"].
The consensus across courts is that Section 148 of the N.I. Act mandates a minimum deposit of 20% of the fine or compensation during appeal, with limited scope for waiver only in exceptional circumstances. The use of may has been interpreted contextually to mean shall unless justified reasons are recorded, ensuring the effectiveness of the appellate process and the enforcement of liabilities under the Act. This interpretation promotes compliance and aligns with legislative intent to facilitate quick recovery and uphold justice in cases involving dishonored cheques.
References:- Deswal v. Gandhi, 2019 SCC 341- Various judgments interpreting Section 148 (e.g., ["Jamboo Bhandari VS M. P. State Industrial Development Corporation Ltd. - Supreme Court"], ["Ihome And Infrastructure Pvt. Ltd. vs State Govt. of NCT of Delhi - Delhi"], ["Deepak Kumar VS State of Haryana - Punjab and Haryana"], ["Mahendra Rajoriya VS State of Rajasthan - Rajasthan"])
In the world of cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), appellants often face a critical hurdle: the mandatory deposit of 20% of the fine or compensation. But is this deposit truly mandatory, especially when compared to general provisions like Order 41 Rule 1(3) of the Code of Civil Procedure (CPC), which allows courts discretion in requiring deposits for stays? Gyan Prakash Agarwal VS Babu Khan - Allahabad (2019)
This question—Deposit under Order 41 Rule 1(3) of the Code of Civil Procedure is Mandatory—highlights a common misconception. While CPC provisions offer flexibility, special laws like the NI Act impose stricter conditions to curb delays in cheque bounce litigation. Let's dive into Section 148 of the NI Act, key judicial interpretations, exceptions, and practical advice.
Section 148, introduced via amendment effective September 1, 2018, states that in an appeal by the drawer (accused) against conviction under Section 138, the appellate court may order the appellant to deposit at least 20% of the fine or compensation awarded by the trial court. This is a precondition for admitting the appeal. Mithun Modak VS Deepak Kumar Sharma - Calcutta (2023)
Courts have repeatedly interpreted the word may as shall, making it mandatory. As held in various rulings, this provision prevents frivolous appeals and ensures victims receive interim relief. Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - Supreme Court (2019)Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)
Key features include:- Minimum Deposit: 20% of fine/compensation; appellate court can increase up to 50% under certain conditions.- Timing: Can be imposed at any stage, not just for sentence suspension. Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)Harsh Sehgal VS State And Another - Delhi (2022)- Consequences of Non-Compliance: Bail cancellation, appeal dismissal, or suspension. Mithun Modak VS Deepak Kumar Sharma - Calcutta (2023)
A pivotal question is whether Section 148 applies to complaints filed before the amendment. The Supreme Court has affirmed retrospective application to pending appeals from pre-amendment complaints, emphasizing the provision's role in expediting resolutions. Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)Nissar Puthalath VS Muhammed. C. K. - Kerala (2019)
The amended Section 148 applies retrospectively to complaints filed before the amendment came into effect on September 1, 2018. Mithun Modak VS Deepak Kumar Sharma - Calcutta (2023)
This aligns with the legislative intent to deter delay tactics in cheque dishonour cases.
Indian courts, including the Supreme Court, have solidified the mandatory character:1. Interpretation of 'May' as 'Shall': Despite using may, the context demands compulsion. Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - Supreme Court (2019)Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)2. Appellate Court's Powers: Deposit can be directed anytime during proceedings. Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)3. No Extension Beyond Limits: Under Section 148(2), compliance must occur within 90 days; courts cannot extend via inherent powers under Section 482 CrPC. The provision of Section 148(2) of the Negotiable Instruments Act is mandatory, and the Court cannot use its inherent power under Section 482. Surinder Singh VS Dharam Singh - 2023 Supreme(HP) 473
In one case, the High Court dismissed a petition seeking time extension, holding: The Appellate Court had no power to extend the time beyond 90 days as prescribed by Section 148(2). Surinder Singh VS Dharam Singh - 2023 Supreme(HP) 473
Often confused with Section 148, Section 143A allows trial courts to order interim compensation up to 20% during trial. However, courts have ruled it directory, not mandatory. Provision of sub-section (1) of Section 143A of Negotiable Instruments Act, 1881, which provides for grant of interim compensation, is directory and not mandatory. Rakesh Ranjan Shrivastava VS State Of Jharkhand - 2024 3 Supreme 130
Factors for discretion include:- Prima facie merits of complainant's case and accused's defense.- Accused's financial distress.- Nature of transaction and parties' relationship. Rakesh Ranjan Shrivastava VS State Of Jharkhand - 2024 3 Supreme 130
Non-payment doesn't bar defense but can lead to recovery as a fine, including property attachment. Rakesh Ranjan Shrivastava VS State Of Jharkhand - 2024 3 Supreme 130
Word 'may' ordinarily does not mean 'must'... But this is not an inflexible rule. Rakesh Ranjan Shrivastava VS State Of Jharkhand - 2024 3 Supreme 130
While predominantly mandatory, nuances exist:- Directory Views: Some courts treat Sections 143A/148 as directory, allowing time extensions in hardship cases. Solar4max Com VS Oxide Power Product Pvt Ltd. - Rajasthan (2020)- Pre-Deposit Waivers in Other Laws: Analogous to SARFAESI Act or DRT appeals, waivers may apply if no debt is due from appellant. If amount is not due from appellant no deposit is mandatory under provisions. St. Marys Kalmane & Arekal Estates, Chikmaglur VS Debt Recovery Appellate Tribunal - 2015 Supreme(Mad) 3498- Rent Deposit Parallels: In eviction laws like UP Urban Buildings Act, strict compliance with deposit rules (e.g., Rule 21(5)) is mandatory, similar to NI Act. Failure invalidates benefits. Dinkar Verma Alias Jay Singh VS Rajan Kumar Gupta - 2024 Supreme(All) 2073Kamlesh Kumar VS Sardar Manjeet Singh - 2024 Supreme(All) 1513
However, these exceptions are case-specific and not universally accepted for NI Act appeals.
The Appellate Court may require a convict to deposit a percentage of the imposed fine pending appeal, ensuring conditions for the recoverability of funds are established. K.K.RAMACHANDRAN vs C.NANDAKUMAR - 2025 Supreme(Online)(Ker) 56906
Section 148 NI Act generally imposes a mandatory 20% deposit for Section 138 appeals, applicable retrospectively, overriding discretionary CPC norms like Order 41 Rule 1(3). This balances victim compensation with accused rights, but non-compliance risks severe outcomes.
Key Takeaways:- Deposit is typically mandatory; 'may' reads as 'shall'. Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)- Retrospective to pre-2018 cases. Mithun Modak VS Deepak Kumar Sharma - Calcutta (2023)- Section 143A is discretionary. Rakesh Ranjan Shrivastava VS State Of Jharkhand - 2024 3 Supreme 130- Consult a lawyer for case-specific strategy.
This article provides general information based on judicial trends and is not legal advice. Laws evolve; seek professional counsel for your situation.
References: Gyan Prakash Agarwal VS Babu Khan - Allahabad (2019)Mithun Modak VS Deepak Kumar Sharma - Calcutta (2023)Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - Supreme Court (2019)Solar4max Com VS Oxide Power Product Pvt Ltd. - Rajasthan (2020)Nissar Puthalath VS Muhammed. C. K. - Kerala (2019)Harsh Sehgal VS State And Another - Delhi (2022)Lalit Kaushal VS Yadvinder Kaushal - Himachal Pradesh (2020)Rakesh Ranjan Shrivastava VS State Of Jharkhand - 2024 3 Supreme 130Surinder Singh VS Dharam Singh - 2023 Supreme(HP) 473K.K.RAMACHANDRAN vs C.NANDAKUMAR - 2025 Supreme(Online)(Ker) 56906Dinkar Verma Alias Jay Singh VS Rajan Kumar Gupta - 2024 Supreme(All) 2073Kamlesh Kumar VS Sardar Manjeet Singh - 2024 Supreme(All) 1513
#NIAct #ChequeBounceAppeal #Section148
Deswal vs Virender Gandhi, 2019 (11) SCC 341 was governing the field on interpretation of Section 148 of the N.I. Act. The said decision held the condition for deposit in terms of Section 148, N.I. Act as mandatory. 8. ... What is held by this Court is that a purposive interpretation should be made of Section 148 of the NI Act. Hence, normally, Appellate Court will be justified in imposing the condition o....
Mathur begins with the Hon’ble Supreme Court’s decision in Surender Singh Deswal, stating that it was in this case that a deposit under Section 148 was interpreted to have a mandatory connotation. ... Deswal laid down that the word “may” in Section 148 ought to be interpreted as “shall” and that the language of the provision evinces a mandatory nature of its content. ... Maintainability of the present b....
What is held by this Court is that a purposive interpretation should be made of Section 148 of the N.I. Act. Hence, normally, Appellate Court will be justified in imposing the condition of deposit as provided in Section 148. ... used is not “shall” and therefore the discretion is vested with the first appellate court has construed it as mandatory, which according to the learned Senior Advocate for the appellants would be c....
Section 148 of the N.I Act, 1881 is mandatory. Further, section 148 of the N.I. Act, 1881 envisages deposit of minimum 20% amount and section 148 of the N.I. Act, 1881 starts with a non obstante clause. ... to deposit such sum and the appellate court has construed it as mandatory, which according to the learned Senior Advocate for the appellants would be contrary to th....
Lastly, whilst praying for the quashing of the condition of deposit of 20% conviction amount, learned counsel for the petitioner submitted that under section 148 of the Negotiable Instruments Act, the said condition of pre-deposit is not mandatory in nature and the same can be exempted in extra-ordinary ... In essence, the Court opined that normally, the Appellate Court shall be justified in imposing the condition of #HL_S....
used is not "shall" and therefore the discretion is vested with the first appellate court to direct the appellant- accused to deposit such sum and the appellate court has construed it as mandatory, which according to the learned Senior Advocate for the appellants would be contrary to the provisions ... It is stated that learned Appellate Court had rightly understood and applied the provisions of Section 148 while ordering the petitioners to....
He submitted that unless it is held that sub-section (1) of Section 143A is mandatory, the very object of the legislature of enacting this provision will be frustrated. ... The learned counsel appearing for the respondent submitted that considering the very object of Section 138 of the N.I. Act, sub-section (1) of Section 143A will have to be held as mandatory. He submi....
to deposit such sum and the appellate court has construed it as mandatory, which according to the learned Senior Advocate for the appellants would be contrary to the provisions of section 148 of the N.I. ... Act, the word used is "may", it is generally to be construed as a "rule" or "shall" and not to direct to deposit by the appellate court is an exception for which special reasons are to be assigned. Therefore amended #H....
used is not “shall” and therefore the discretion is vested with the first appellate court to direct the appellant-accused to deposit such sum and the appellate court has construed it as mandatory, which according to the learned Senior Advocate for the appellants would be contrary to the provisions of ... Section 148 of the Negotiable Instruments Act provides that in an appeal by the drawer against conviction under Section ....
On making the deposit, the 1st respondent filed Crl.M.P.No.4568/2025 for a direction to release the deposited amount to him and the petitioner filed Crl.M.P.No.4606/2025 for a direction to deposit the amount in the Government Treasury in fixed deposit. ... Sub Section (3) of a href="./.. ... — (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal by the drawer against con....
16. This Court in the case of Hari Gopal v. Vijay Kumar and others, 2009(8) ADJ 134, has held that to take the benefit of Section 20(4) of UP Act No. 13 of 1972, the compliance of Rule 21 (5) of the Rules, 1972 is mandatory. Paragraph No. 14 of the said judgment is being reproduced herein below : ''14. The procedure for deposit under Section 30 is provided in rule 21 of the Rules framed under the Act. Sub Rule 5, though empowers continuance of deposit in consonance with Section 30 (1....
25. In the case of Hari Gopal v. Vijay Kumar and others, 2009 (3) ARC 193 this Court held that to take the benefit of Section 20(4) of Uttar Pradesh Act No. 13 of 1972, the compliance of Rule 21 (5) of the Rules, 1972 is mandatory. Paragraph No. 14 of the said judgment is being reproduced herein-below: “14. The procedure for deposit under section 30 is provided in rule 21 of the Rules framed under the Act. Sub Rule 5, though empowers continuance of deposit in consonance with section ....
In paragraph 9, Hon'ble Supreme Court held as under: At best, the Appellate Tribunal could have, after recording the reasons, reduced the amount of deposit of fifty per cent to an amount not less than twenty five per cent of the debt referred to in the second proviso. "9......Therefore, the condition of pre-deposit being mandatory, a complete waiver of deposit by the appellant with the Appellate Tribunal, was beyond the provisions of the Act, as is evident from the second and third p....
For the analysis and reasons mentioned hereinabove, the writ petition is allowed, setting aside the impugned order dated 27 April, 2015 passed by the first respondent in AIR No.640 of 2014 and remitting back the matter to the first respondent Appellate Tribunal to consider the issue afresh on its own merits in the light of the aforestated observations. It is for the Appellate Tribunal to examine the facts before coming to a conclusion as to whether the proposed appeal is filed by a person from....
The procedure for deposit under Section 30 is provided in Rule 21 of the Rules framed under the Act. Sub-rule (5), though empowers continuance of deposit in consonance with Section 30 (1) it imposes a mandatory condition that on every subsequent deposits, though fresh application is not necessary, but process and notice in the Form ‘F’ shall accompany every subsequent deposit. No doubt, so far as the initial deposit is concerned, it would be presumed that the service was suff....
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