S.138 NI Act | Right To Bail Can't Be Denied By Appellate Court Solely Due To Non-Deposit Of Compensation: P&H High Court

The Punjab & Haryana High Court has clarified that the right to bail of a convict under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), cannot be denied by the appellate court merely due to non-payment of 20% of the compensation amount as stipulated under Section 148 of the Act.

Section 148 of the NI Act, allows an appellate court, in an appeal against a conviction for cheque dishonour under Section 138, to order the appellant (drawer of the cheque) to deposit a minimum of 20% of the fine or compensation awarded by the trial court. This deposit must be made within 60 days (or an additional 30 days with sufficient cause), and the amount can be released to the complainant during the appeal.

A division bench comprising Justice Sanjay Vashisth while hearing a reference held 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 of the NI Act and imposes conditions on the suspension of sentence, such conditions must be just conditions."

It explained that once the issue regarding deposit of 20% of the compensation or fine amount, payable under Section 148 of NI Act, is decided by the concerned Appellate Court by following the spirit of the observations made in the judgments of Jamboo Bhandari case and Muskan Enterprises, and condition, if any, is imposed while suspending the sentence, the same would be deemed to be just and fair, and undoubtedly such condition requires its fulfillment at the end of the appellant, who seeks suspension of sentence.

Act Does Not Permit Appellate Court To Impose Any Prerequisite For Appeal To Be Admitted

The bench elucidated that the language of Section 148 NI Act neither restricts a convict's right to challenge their conviction, sentence, or compensation by filing an appeal, nor does it permit the Appellate Court to impose any prerequisites for the appeal to be admitted or decided.

"Section 148 of the NI Act, due to its non-compliance, does not explicitly prohibit the suspension of sentence or the hearing of the appeal. If the legislature intended such restrictions, they would have included and placed them, but they did not, which shows that it is not the legislature's intention for the suspension of sentence and the hearing of the appeal to be subject to compliance with Section 148 NI Act," it added.

The Court said, neither Section 148 nor any other provision of the Negotiable Instruments Act prescribes any provisions for the suspension of sentence. Therefore, Section 430 BNSS shall apply.

"Additionally, neither Section 148 NI Act nor Section 430 BNSS places any specific restrictions on suspension of sentence. Instead, Section 430 BNSS has carved out a separate, most lenient category, and in cases where the sentence prescribed is up to three years of imprisonment, or when the offences in which an accused is convicted are bailable offences, the sentence is suspended by the trial Court/ convicting Court."

The Court opined that the very purpose of Section 430 BNSS, 2023 which corresponds to S. 389 CrPC, 1973 is to restore the liberty curtailed post- conviction until the decision of the appeal challenging such conviction and sentence.

"However, the legislative intention is clear from the language in which the provision is couched, “in an appeal by the drawer against conviction under section 138”. Thus, Section 148 of the NI Act is attracted only when the convict files an appeal against the judgment and continues to apply during the time the said appeal is pending before the Appellate Court," added the bench.

The Court clarified that that the Appellate Court assumes the jurisdiction to order a deposit under Section 148 NI Act only if the convict files an appeal before it, challenging the conviction and sentence, and the jurisdiction stays only during the pendency of such an appeal, and the Appellate Court's jurisdiction would eclipse on the decision of the appeal.

"The legislative intent, as shown by the language of Section 148 NI Act, is to recover at least 20% of the compensation amount to provide some relief to the finance and trade sectors, thereby resuscitating their businesses." the bench said.

It added that, In the absence of the specific provision in the language of Section 148 that in the absence of deposit of 20% of compensation, neither shall any appeal be entertained nor the sentence shall be suspended, it shall be re-writing Section 148 of NI Act and Section 430 of BNSS, 2023, to treat the deposit of 20% as a prerequisite for filing an appeal or for suspending the sentence.

The Court held that, "in the absence of the specific provision in the language of Section 148 that in the absence of deposit of 20% of compensation, neither shall any appeal be entertained nor the sentence shall be suspended, it shall be re-writing Section 148 of NI Act and Section 430 of BNSS, 2023, to treat the deposit of 20% as a prerequisite for filing an appeal or for suspending the sentence."

Also Read: S.138 NI Act | Court Must Decide Appeal In 90 Days If Convict Can't Get Bail Due To Non-Payment Of Compensation: P&H High Court

Title: M/s Coromandel International Limited v. Shri Ambica Sales Corporation

Mr. Ashok Singla, Advocate, and Mr. Ankush Singla, Advocate, for the petitioner.

Mr. Deepender Singh, Advocate, Amicus Curiae.

Citation: 2025 LiveLaw (PH) 392

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