Chandigarh, September 25 — The Punjab and Haryana High Court has ruled that an accused convicted in a cheque dishonour case cannot be compelled to deposit 20 per cent of the compensation as a prerequisite for filing or pursuing an appeal. The Bench, however, clarified that such a deposit may be directed if the appellate court decides to suspend the sentence during the pendency of the appeal.
The judgment, delivered by a Division Bench of Justice Anoop Chitkara and Justice Sanjay Vashisth, came while answering a reference placed before a “larger bench” to settle four legal questions regarding Section 148 of the Negotiable Instruments Act, which deals with interim compensation in cheque dishonour appeals.
“The legislative intent of Section 148, though aimed at safeguarding commercial dealings, cannot be stretched to rewrite the law by making deposit a mandatory precondition for hearing an appeal,” the Bench noted in its order.
According to the ruling, the appellate court may direct the appellant to deposit 20 per cent of the compensation when considering suspension of the sentence. Non-compliance with such a condition could lead to the suspension being vacated, but not to denial of the statutory right of appeal.
“After analysing the statutory provision vis-à-vis judicial precedents, the answer to the first proposition is that the imposition of a condition to deposit 20 per cent of the compensation amount awarded by the Trial Court is sustainable while deciding the application for suspension of sentence in an appeal when the judgment of conviction and order of sentence is still awaiting confirmation,” the Bench observed.
The Judges cited Supreme Court rulings to reinforce this position. “The Appellate Court that has suspended the sentence on a condition, after observing non-compliance, could reasonably hold that the suspension stood vacated due to the non-compliance… non-compliance with the suspension condition is enough to declare that the suspension has been vacated,” the court said.
At the same time, the ruling made a clear distinction between the suspension of sentence and the fundamental right to appeal. “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 per cent of the compensation amount under Section 148 of the NI Act,” the Bench categorically held.
The judges further explained that any conditions imposed under Section 148 must remain fair. “It is clear that non-deposit of 20 per cent of the compensation or fine amount would not disentitle the accused from availing any of his substantive rights, including the right of appeal,” the order read. “Thus, to get the appeal decided, there cannot be any precondition for depositing the amount ordered under Section 148 of the NI Act by the Appellate Court.”
The ruling also addressed the application of the provision to companies and institutions. The Bench observed that Section 148 was ineffective against juristic persons, as they cannot be imprisoned. “Suspending the sentence based on the deposit does not affect juristic persons because they cannot be imprisoned and thus cannot seek a suspension of sentence or appeal, as these are statutory rights that cannot be subjected to the deposit,” the court stated.
The Bench directed that if an appeal remains pending beyond 60 days, the appellant would be required to comply with directions to deposit compensation, with the possibility of an extension for another 30 days.
By distinguishing between substantive rights and conditional relief, the High Court made it clear that while appellate courts may attach a deposit to suspension of sentence, the right to file or pursue an appeal cannot be fettered by such financial requirements.
