LI Network
Published on: 28 January, 2024 at 18:10 IST
In a recent directive, the Madras High Court has instructed District Courts across Tamil Nadu not to mechanically apply the condition of depositing 20% of the compensation amount or cheque amount under Section 148 of the Negotiable Instruments Act (NI Act).
The order comes in response to an appeal against the conviction for dishonoring a cheque under Section 138 NI Act, where the appellate court has the authority, as per Section 148 NI Act, to suspend the sentence pending appeal with the imposition of a minimum 20% compensation or fine amount ordered by the trial court.
In a case disposed of by a single judge bench led by Justice N. Anand Venkatesh, the Court emphasized that when dealing with applications for suspension of sentence or bail in appeals against Section 138 convictions, courts should not automatically impose the 20% deposit condition.
The bench highlighted that if the appellant raises grounds for reducing or exempting the deposit, the appellate court must address these concerns and provide a reasoned order if it decides to direct the appellant to deposit the specified amount.
The specific case leading to this directive involved a plea filed under Section 482 CrPC challenging a condition imposed on the petitioner to deposit 20% of the cheque amount while suspending the sentence under Section 138 of the NI Act.
The petitioner argued that they had already filed an insolvency petition, and the respondent/complainant, aware of it, misused the cheque by depositing it in the bank without due consideration by the lower court.
Considering the circumstances, the court referred to a Supreme Court ruling in the case of Jamboo Bhandari vs. MP State Industrial Development Corporation Ltd, stating that the 20% deposit condition is not an absolute rule.
Additionally, the court cited a recent Kerala High Court judgment emphasizing the need for the appellate court to pass a speaking order by applying its mind when ordering the deposit of a minimum 20% compensation or fine amount under Section 148 of the NI Act.
In light of these precedents, the Madras High Court observed that the lower court should have applied its mind to the petitioner’s grounds for reduction or exemption and issued a reasoned order. As this was not done in the present case, the court remanded the matter back to the Principal District and Sessions Judge, Erode, for consideration of the petitioner’s request for exemption from depositing 20% of the compensation amount.
The case, titled CR Balasubramanian vs. P Eswaramoorthi [Crl.O.P.No.947 of 2024], was subsequently disposed of in accordance with the court’s directives.