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Appellate Court Has...
Appellate Court Has Discretion Not To Order The Deposit Of 20% Of The Amount U/S. 148 NI Act In Appropriate & Exceptional Cases: SC
By - Riya Rathore
Update: 2025-01-04 12:00 GMT
Appellate Court Has Discretion Not To Order The Deposit Of 20% Of The Amount U/S. 148 NI Act In Appropriate & Exceptional Cases: SC
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The Supreme Court observed that an appellate court has the discretion not to order the deposit of 20% of the amount under Section 148 Negotiable Instruments Act in appropriate and exceptional cases.

The Court quashed the Order of the Punjab and Haryana High Court which dismissed a Petition under Section 482 of the CrPC filed by Muskan Enterprises (Appellant). The Court remitted the matter to the Sessions Court for reconsideration of the deposit condition under Section 148 of the Negotiable Instruments Act (N.I. Act), 1881.

The Bench of Justice Dipankar Datta and Justice Prashant Kumar Mishra observed, “It would amount to a travesty of justice if exercise of discretion, which is permitted by the legislature and could indeed be called for in situations such as these pointed out above, or in any other appropriate situation, is not permitted to be exercised by the Appellate Court by a judicial interpretation of ‘may’ being read as ‘shall’ in sub-section (1) of Section 148 and the aggrieved appellant is compelled to make a deposit of minimum 20% of the fine or compensation awarded by the trial court, notwithstanding any opinion that the Appellate Court might have formed at the stage of ordering deposit as regards invalidity of the conviction and sentence under challenge on any valid ground.”

Advocate Shumaila Altaf represented the Appellants, while AAG Mohd Irshad appeared for the Respondents.

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The Supreme Court held that the exercise of power to grant interim compensation in cheque bounce cases under sub-section (1) of Section 143A of the Negotiable Instruments Act, 1881 (N.I. Act) is discretionary and not mandatory.
The complainant filed a complaint under Section 138 of the N.I. Act against the appellant, alleging dishonour of a cheque made towards payment of agreed amounts in various business ventures. Subsequently, the complainant sought interim compensation under Section 143A of the NI Act, which was granted by the trial court and upheld by the Jharkhand High Court.

The Supreme Court had to decide on the factors to be considered while exercising powers under sub-section (1) of Section 143A of the N.I. Act.

Justice Abhay S. Oka and Justice Ujjal Bhuyan observed, “Section 143A can be invoked before the conviction of the accused, and therefore, the word “may” used therein can never be construed as “shall”. The tests applicable for the exercise of jurisdiction under sub-section (1) of Section 148 can never apply to the exercise of jurisdiction under subsection (1) of Section 143A of the N.I. Act.”

AOR Shubham Bhalla represented the petitioner, while Advocate Prateek Yadav appeared for the respondent.

The appellant had challenged the said order before the Supreme Court arguing that Section 143A of the N.I. Act uses the word ‘may,’ which made the provision discretionary.

“While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors,” the Court remarked

The Court provided the following parameters for exercising the discretion under Section 143A of the N.I. Act:

The Court must evaluate the merits of a case made out by the complainant and the defence pleaded by the accused in the reply to the application. “The financial distress of the accused can also be a consideration.”
If a complainant made out a prima facie case, only then a direction to pay interim compensation could be issued by the Court.
The Court may exercise discretion in refusing to grant interim compensation if the defence of the accused was found to be prima facie plausible.
If the Court concludes that a case warrants interim compensation, it will also "have to apply its mind to the quantum of interim compensation to be granted." While doing so, the Court should also consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc.
The Court stated the parameters given by the Court were not exhaustive and that “there could be several other relevant factors in the peculiar facts of a given case.”

Accordingly, the Supreme Court partly allowed the appeal.