S.148 NI Act | Appellate Court Has 'Sole Discretion' To Direct Deposit Of Minimum 20% Compensation Amount: Gujarat High Court

The Gujarat High Court has said that appellate court under Section 148 of the Negotiable Instruments Act has the sole discretion to direct a person challenging conviction for cheque dishonour to deposit 20% of the compensation amount, while considering the attending circumstances.

Section 148 pertains to power of Appellate Court to order payment pending appeal against conviction. The provision states that in the drawer's appeal challenging conviction for cheque dishonour under Section 138, the appellate court "may" order the appellant to deposit a "minimum of twenty per cent" of the fine or compensation awarded by the trial court.

Referring to Supreme Court's decisions Justice RT Vachhani in his order said:

"Thus, sum and substance as emerges from the law in question laid down by the Hon'ble Apex Court while interpretation of “may” being read as “shall” in sub-Section (1) of Section 148 of the N.I. Act. Hence, the sole discretion lies with the first appellate court while considering the surrounding circumstances of the case, so as to direct the appellant to deposit 20% amount on any of the valid grounds. Thus, the discretion of the court simply because insertion of “may”, the power not to demeanour the first appellate court are limited to discretion confirmed by the legislature, and therefore, the power to exercise by the first appellate court rendering deposit considering the factual matrix of the case on hand, do not require any interference, as the same has been done while affording all reasonable opportunities to the party concerned, simply because the order in question having been passed subsequent to the exercise of powers under Section 389(3) of the Cr.P.C. does not stay to discard the entire exercise and the discretionary powers exercise by the Court under the provision of Section 148 of N.I. Act".

The court observed that the "purpose" behind directing deposit of amount under Section 148, is to atleast "recover plausible compensation amount" and to provide some relief to the complainant.

Thus, the high court, held that during the pendency of appeal, the first appellate court is also competent to direct to deposit upon filing of an application by the complainant or on its own.

"In nutshell, the direction to deposit minimum 20% amount is admittedly not an absolute rule, but is a subject to discretion which is to be exercised by the first appellate court, keeping in mind the very provision of Section 148 of N.I. Act," the court added.

The petitioner who was convicted under Section 38 by the magistrate court had appealed before the appellate court seeking stay on the order had also moved an application under Section 383(3) CrPC seeking suspension of sentence pending appeal as well release on bail. This application was allowed by the appellate court however it directed petitioner to deposit 20% of compensation amount. Against this the petitioner moved the high court.

The petitioner challenged the direction to deposit 20% of the compensation amount and argued that the term "may" is used in Section 148 which cannot be construed as mandatory.

It thus dismissed the plea.

Case title: MAHADEV ENTERPRISE THRO PRUTHVI SANJAYBHAI SOLANKI & ANR. v/s STATE OF GUJARAT & ANR.

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