The Punjab and Haryana High Court has clarified that appellate courts cannot mechanically impose the 20% deposit condition under Section 148 of the Negotiable Instruments Act without recording specific reasons for rejecting an exception. This ruling reinforces the principle that the right to appeal must not be rendered illusory by arbitrary financial conditions.
Background & Facts
The Dispute
The petitioner, Rajinder Singh, was convicted by the Judicial Magistrate First Class, Muktsar Sahib, on 27.10.2025 for offences under Section 138 of the Negotiable Instruments Act and Section 395(3) of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. He was sentenced to two years of rigorous imprisonment and ordered to pay compensation of Rs. 6,75,000 with interest at 6% per annum from the date of cheque issuance until payment.
Key Facts
- The complaint (NACT-575-2022) was filed by Sukhmander Singh alleging dishonour of a cheque issued as payment for a debt or liability
- The trial court convicted the petitioner on 27.10.2025 and imposed the compensation order
- The petitioner filed an appeal before the Sessions Judge, Muktsar Sahib, under Section 374 CrPC
- The petitioner claims financial hardship and inability to deposit 20% of the compensation amount
Procedural History
- 27.10.2025: Conviction and sentencing by Judicial Magistrate First Class, Muktsar Sahib
- 18.11.2025: Sessions Judge passed order suspending sentence subject to:
- Furnishing bail bond of Rs. 50,000 with one surety
- Deposit of 20% of compensation (Rs. 1,35,000) within 60 days
- 06.04.2026: Writ petition filed before the Punjab and Haryana High Court challenging the deposit condition
Relief Sought
The petitioner sought quashing of the Sessions Judge’s order dated 18.11.2025, particularly the condition requiring deposit of 20% of the compensation amount, on grounds of financial hardship and violation of the Supreme Court’s ruling in Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd.
The Legal Issue
The central question was whether an appellate court under Section 148 of the Negotiable Instruments Act may impose the condition of depositing 20% of compensation as a mandatory prerequisite for suspension of sentence, without recording specific reasons for rejecting the existence of exceptional circumstances warranting waiver.
Arguments Presented
For the Petitioner
Counsel for the petitioner relied on the Supreme Court’s judgment in Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd. (2023) 10 SCC 446, which held that Section 148 permits but does not mandate the deposit condition. The Court emphasized that appellate courts must record reasons if they find the case exceptional and warranting waiver. The petitioner argued that the Sessions Judge failed to consider his financial hardship and passed the order mechanically, violating the spirit of the Supreme Court’s directive.
For the Respondent
The respondent did not file a written reply. The Court noted no counter-submissions were made by the State or the complainant, leaving the petitioner’s contentions unchallenged.
The Court's Analysis
The High Court examined the Supreme Court’s holding in Jamboo Bhandari, particularly paragraphs 6 and 7, which establish that while Section 148 allows appellate courts to impose a deposit condition, it does not make it mandatory. The Court held that the imposition of such a condition must be preceded by a judicial determination of whether the case qualifies as "exceptional" - a determination that requires reasoned justification.
"Therefore, when Appellate Court considers the prayer under Section 389 of the Cr.P.C. of a petitioner who has been convicted for offence under Section 138 of the N.I. Act, it is always open for the Appellate Court to consider whether it is an exceptional case which warrants grant of suspension of sentence without imposing the condition of deposit of 20% of the fine/compensation amount. As stated earlier, if the Appellate Court comes to the conclusion that it is an exceptional case, the reasons for coming to the said conclusion must be recorded."
The Court found that the Sessions Judge’s order dated 18.11.2025 contained no analysis of the petitioner’s financial condition, no reference to the principles in Jamboo Bhandari, and no expression of satisfaction regarding the absence of exceptional circumstances. The order was thus deemed non-speaking, arbitrary, and contrary to the settled law.
The High Court emphasized that the right to appeal is a statutory right and cannot be rendered ineffective by imposing financial conditions without reasoned justification. The failure to record reasons undermines the very purpose of appellate review and violates the principles of natural justice.
The Verdict
The petition succeeded. The High Court set aside the condition imposed in the order dated 18.11.2025 requiring the petitioner to deposit 20% of the compensation amount (Rs. 1,35,000). The matter was remanded to the Sessions Judge, Muktsar Sahib, with directions to re-examine the petitioner’s request for waiver of the deposit condition after granting him an opportunity to submit evidence of financial hardship. The appellate court is directed to pass a speaking order, recording specific reasons for either granting or denying waiver, strictly in accordance with the judgment in Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd.
What This Means For Similar Cases
Deposit Condition Is Not Automatic
- Practitioners must now argue that Section 148 NI Act permits, but does not compel, deposit conditions
- Courts cannot impose the 20% deposit as a routine condition without evaluating exceptional circumstances
- Financial hardship, age, health, or lack of means must be formally considered and recorded
Speaking Orders Are Mandatory
- Any order imposing or waiving the deposit condition must contain a judicial analysis
- Vague or boilerplate language such as "after considering the facts" is insufficient
- Failure to record reasons renders the order liable to be set aside on writ petition
Appeal Rights Are Protected
- The Supreme Court’s intent in Jamboo Bhandari was to prevent the right to appeal from being defeated by financial barriers
- Appellate courts must balance public interest in deterrence with individual rights to due process
- Petitioners in similar cases may now file writ petitions to challenge non-speaking orders under Article 226
