The Telangana High Court has clarified the permissible limit for compensation deposits under Section 148 of the Negotiable Instruments Act, reducing a mandatory 20% deposit to 10% in an appeal against conviction. This ruling reinforces the Supreme Court’s directive to avoid disproportionate financial burdens on appellants while preserving the appellate process.
Background & Facts
The Dispute
The petitioner, Sri Janardhan Reddy, was convicted by the Trial Court under Section 138 of the Negotiable Instruments Act, 1881, for issuing a cheque that was dishonoured. The trial court sentenced him to six months’ simple imprisonment and imposed a fine of Rs. 15,00,000, with an additional three months’ imprisonment in default of payment. The petitioner filed an appeal before the II Additional District and Sessions Judge, Medchal-Malkajgiri District.
Key Facts
- The dishonoured cheque was issued on or about 15.01.2023 for Rs. 15,00,000 as part of a business transaction
- Legal notice under Section 138 was issued on 20.02.2023 and received by the accused on 25.02.2023
- The complaint was filed on 10.04.2023 (C.C. No. 3003 of 2025)
- Trial Court delivered judgment on 12.12.2025, convicting the petitioner
- The petitioner filed appeal before the Sessions Judge on 20.12.2025 (Crl.A. No. 103 of 2025)
- On 10.04.2026, the Sessions Judge suspended the sentence but imposed a condition to deposit 20% of the compensation amount (Rs. 3,00,000) within 15 days
- The petitioner challenged this condition as excessive and contrary to settled Supreme Court principles
Procedural History
- 15.01.2023: Cheque issued and subsequently dishonoured
- 20.02.2023: Legal notice sent under Section 138 NI Act
- 25.02.2023: Notice received by accused
- 10.04.2023: Criminal complaint filed before Magistrate
- 12.12.2025: Trial Court conviction and sentencing
- 20.12.2025: Appeal filed before Sessions Judge (Crl.A. No. 103 of 2025)
- 10.04.2026: Sessions Judge orders suspension of sentence subject to deposit of 20% compensation (Rs. 3,00,000)
- 01.05.2026: Criminal Petition filed before Telangana High Court under Section 528 BNSS
Relief Sought
The petitioner sought quashing and/or suspension of the condition requiring deposit of 20% of the compensation amount (Rs. 3,00,000), arguing it was arbitrary and contrary to the Supreme Court’s ruling in Sanjabij Tari v. Kishore S. Borcar.
The Legal Issue
The central question was whether the Sessions Judge could impose a condition under Section 148 of the NI Act requiring an appellant to deposit 20% of the compensation amount, or whether such a requirement must be reduced to 10% in line with the Supreme Court’s binding precedent.
Arguments Presented
For the Petitioner
Mr. E. Sreenivas Reddy, learned counsel for the petitioner, submitted that the imposition of a 20% deposit was excessive and contrary to the Supreme Court’s judgment in Sanjabij Tari v. Kishore S. Borcar (2025 SCC Online SC 2069), which held that 10% is the appropriate benchmark for compensation deposits in appeals under Section 148. He argued that the Sessions Judge failed to consider the financial hardship imposed on the accused and that the 20% condition was not justified by any exceptional circumstances.
For the Respondent
The Additional Public Prosecutor contended that the Sessions Judge had exercised discretion under Section 148 and that the 20% deposit was within the permissible range. He relied on earlier High Court orders that had permitted 20% deposits in similar cases, but conceded that the Supreme Court’s recent ruling in Sanjabij Tari had clarified the standard.
The Court's Analysis
The Court examined the statutory framework under Section 148 of the NI Act, which empowers appellate courts to direct deposit of a portion of the compensation amount as a condition for suspending the sentence. The Court noted that while the provision grants discretion, it must be exercised reasonably and in conformity with binding precedents.
"The Hon'ble Supreme Court in Sanjabij Tari v. Kishore S. Borcar has laid down that 10% of the compensation amount is the normative benchmark under Section 148, and higher deposits require exceptional justification."
The Court observed that the Sessions Judge had not provided any reasoning to justify deviating from the 10% standard established by the Supreme Court. The imposition of 20% without distinguishing facts or exceptional circumstances rendered the condition arbitrary and contrary to the spirit of the law.
The Court further emphasized that Section 148 is not meant to penalize appellants but to ensure that the appellate process is not abused. A 20% deposit, particularly in cases involving business transactions, may effectively deny access to justice for those unable to meet such a burden.
The Court held that the Supreme Court’s ruling in Sanjabij Tari is binding on all subordinate courts and must be followed unless there are compelling reasons to depart from it - none of which were present here.
The Verdict
The criminal petition is allowed. The order dated 10.04.2026 of the II Additional District and Sessions Judge, Medchal-Malkajgiri, is modified to reduce the deposit requirement from 20% to 10% of the compensation amount, i.e., Rs. 1,50,000. The petitioner shall deposit the said amount within four weeks from today. In default, the Sessions Judge may proceed with the appeal in accordance with law. All other conditions of the impugned order remain unaffected.
What This Means For Similar Cases
10% Is the Presumptive Norm Under Section 148
- Practitioners must now argue that any deposit exceeding 10% requires specific, documented justification tied to risk of flight, prior defaults, or financial capacity
- Courts cannot impose 20% as a routine condition; the burden shifts to the prosecution to show why a higher deposit is necessary
- Failure to cite Sanjabij Tari in arguments may render the order liable to be set aside
Deposit Conditions Must Be Proportionate and Reasoned
- Orders imposing deposits must include a brief rationale explaining why the standard 10% is inadequate
- Blanket orders referencing "practice" or "precedent" without distinguishing facts are legally unsustainable
- Appellants may now file immediate petitions under Section 528 BNSS if a higher deposit is imposed without reasoning
Practical Tip for Defence Counsel
- File a petition under Section 528 BNSS immediately upon receipt of an order requiring more than 10% deposit
- Cite Sanjabij Tari v. Kishore S. Borcar (2025 SCC Online SC 2069) as binding authority
- Request suspension of the deposit condition pending hearing, citing hardship and proportionality
