The Karnataka High Court has intervened in a dispute under Section 138 of the Negotiable Instruments Act, modifying a trial court's direction requiring the accused to deposit 20% of the cheque amount. The Court, while not adjudicating the merits, allowed the trial to proceed without insisting on the balance 10%, provided the already deposited 10% remains secure for one year with auto-renewal. This order underscores the Court's discretion in balancing interim relief with the expeditious disposal of cheque bounce cases.
Background & Facts
The Dispute
The petitioner, Shree Bonny, was accused in a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) for dishonour of a cheque amounting to ₹5,45,000. The cheque was allegedly issued by the petitioner to the respondent, Vishwanath, in discharge of a liability. Upon dishonour, the respondent filed a criminal complaint before the II Additional Senior Civil Judge and Judicial Magistrate First Class (JMFC), Dharwad, registered as CC No. 2415/2023.
Key Facts
- The cheque in question was for ₹5,45,000, issued by the petitioner to the respondent.
- The respondent filed an application under Section 143A of the NI Act on 29.11.2022, seeking a direction for the petitioner to deposit 20% of the cheque amount as interim compensation.
- The JMFC, Dharwad, passed an order on 15.07.2024, directing the petitioner to deposit 20% of the cheque amount.
- The petitioner deposited 10% of the cheque amount pursuant to an order dated 01.08.2025 passed by the High Court in a previous criminal petition.
- The respondent alleged that the petitioner had taken unnecessary adjournments and avoided cross-examining the complainant, compelling the respondent to seek the deposit.
Procedural History
- 29.11.2022: Application under Section 143A NI Act filed before the JMFC, Dharwad, seeking deposit of 20% of the cheque amount.
- 15.07.2024: JMFC passed an order in CC No. 2415/2023, directing the petitioner to deposit 20% of the cheque amount.
- 17.06.2025: The III Additional District and Sessions and Special Judge, Dharwad, modified the trial court's order in Criminal Revision Petition No. 93/2024, upholding the direction for deposit.
- 01.08.2025: The High Court, in a previous order, directed the petitioner to deposit 10% of the cheque amount.
- Present Petition: The petitioner filed Criminal Petition No. 102873 of 2025 under Section 482 of the Code of Criminal Procedure (CrPC) (corresponding to Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS)), seeking to quash the impugned orders.
Relief Sought
The petitioner sought the quashing of the orders dated 15.07.2024 and 17.06.2025, which directed the deposit of 20% of the cheque amount. The petitioner contended that the deposit of 10% already made pursuant to the High Court's order dated 01.08.2025 should suffice for the trial to proceed.
The Legal Issue
The primary legal question before the Court was whether the trial court and the revisional court were justified in directing the petitioner to deposit 20% of the cheque amount under Section 143A of the NI Act, particularly when the petitioner had already deposited 10% pursuant to a High Court order, and whether such a direction could be modified or set aside under Section 482 CrPC without prejudicing the trial.
Arguments Presented
For the Petitioner
- The petitioner's counsel argued that the application for deposit under Section 143A NI Act was filed at a belated stage and was not maintainable.
- It was contended that the petitioner had already complied with the High Court's order dated 01.08.2025 by depositing 10% of the cheque amount, and no further deposit should be insisted upon.
- The petitioner highlighted that the trial should proceed without unnecessary financial burdens, especially when the merits of the case had not yet been adjudicated.
For the Respondent
- The respondent's counsel opposed the petition, arguing that the petitioner had taken unnecessary adjournments and avoided cross-examining the complainant.
- It was contended that the petitioner's conduct compelled the respondent to seek the deposit of 20% of the cheque amount to ensure the seriousness of the proceedings.
- The respondent relied on the trial court and revisional court orders, which had directed the deposit of 20% of the cheque amount.
The Court's Analysis
The High Court observed that the cheque amount was ₹5,45,000, and 20% of this amount would be approximately ₹1,09,000. The petitioner had already deposited 10% (₹54,500) pursuant to the High Court's earlier order. The Court noted that the parties' contentions regarding the maintainability of the application and the conduct of the petitioner required adjudication on merits, which was not the focus of the present petition.
The Court refrained from entering into the merits of the respective contentions but emphasized the need to ensure that the trial proceeds expeditiously. The Court held that insisting on the balance 10% deposit would serve no immediate purpose, particularly when the already deposited amount could be secured for the benefit of the successful party.
"Under these circumstances, without entering into the merits of the respective contentions raised by the parties, the Court is of the view that, the Trial Court should proceed with the trial without insisting for balance 10% of the cheque amount."
The Court further directed that the amount already deposited (10%) be kept in a nationalized bank for a period of one year with an auto-renewal mandate, ensuring that the successful party would be entitled to the said amount.
The Verdict
The High Court disposed of the petition with the following directions:
- The trial court shall proceed with the trial in CC No. 2415/2023 without insisting on the deposit of the balance 10% of the cheque amount.
- The ₹54,500 (10% of the cheque amount) already deposited by the petitioner shall be kept in a nationalized bank for a period of one year with an auto-renewal mandate.
- The successful party in the trial shall be entitled to the deposited amount.
- The impugned orders dated 15.07.2024 and 17.06.2025 were effectively modified to the extent that no further deposit was required.
What This Means For Similar Cases
Discretion in Interim Deposits Under Section 143A NI Act
- Courts have the discretion to modify or set aside directions for interim deposits under Section 143A NI Act if the circumstances warrant such intervention. The High Court's order demonstrates that while interim deposits may be directed to secure the complainant's interests, the quantum and necessity of such deposits can be revisited, especially when partial compliance has already been made.
- Practitioners should note that Section 482 CrPC (or Section 528 BNSS) provides a robust mechanism to challenge orders that may impose undue financial burdens on the accused, particularly when the trial is yet to conclude on merits.
Trial Proceedings Must Proceed Without Unnecessary Burdens
- The Court's emphasis on proceeding with the trial without insisting on the balance deposit underscores the principle that interim directions should not impede the expeditious disposal of cases. Courts are likely to favor orders that balance the interests of both parties while ensuring that the trial is not delayed or derailed by procedural disputes.
- Accused persons can argue that partial compliance with deposit directions should be considered sufficient to proceed with the trial, especially when the deposited amount is secured for the benefit of the successful party.
Security of Deposited Amounts
- The direction to keep the deposited amount in a nationalized bank with an auto-renewal mandate ensures that the interests of the successful party are protected. This mechanism can be cited in similar cases where courts seek to balance interim relief with the rights of the accused.
- Practitioners should highlight the auto-renewal mandate as a safeguard against erosion of the deposited amount's value, ensuring that the complainant's interests are not prejudiced during prolonged trials.
