The Delhi High Court has set aside an order under Section 148 of the Negotiable Instruments Act, 1881 that required the petitioner to deposit twenty percent of the compensation amount, citing his dire financial condition and the need for an expeditious disposal of the pending appeal.
Background & Facts
The Dispute
- Petitioner Chander Mohan was convicted under Section 138 of the Negotiable Instruments Act, 1881 for issuing a dishonoured cheque.
- He was sentenced to 16 months of simple imprisonment and a fine of Rs.70,50,000.
- The conviction was challenged by filing an appeal registered as CRL.A. 209/2025.
Key Facts
- On 03.12.2025, the trial court issued an order under Section 148 directing the petitioner to deposit 20% of the compensation amount pending the appeal.
- The petitioner failed to make the deposit, leading to the issuance of non-bailable warrants.
- The petitioner alleges severe financial hardship, having also been placed in civil imprisonment for an execution petition.
- The next date for the appeal was fixed for 20.08.2026.
- Counsel for the petitioner relied on observations of the Supreme Court in Jambo Bhandari v. M.P. State Industrial Development Corporation Ltd. & Ors. (2023) 10 SCC 446 and Muskan Enterprises & Anr. v. State of Punjab & Anr. (2024) SCC OnLine SC 4107.
Procedural History
- 19.08.2026: Petition (CRL.M.C. 1728/2026) filed seeking waiver of the deposit requirement.
- 03.11.2026: A further date was scheduled but subsequently cancelled.
- 03.12.2025: Order under Section 148 directing 20% deposit issued.
- 20.08.2026: Next date for hearing of the appeal (CRL.A. 209/2025).
- 19.08.2026: Current judgment disposing the petition.
Parties' Positions
- Petitioner: Requests setting aside of the Section 148 order, arguing that the deposit would cause undue hardship and is unnecessary before the appellate court decides the matter.
- Respondent: Initially sought enforcement of the deposit but, during arguments, agreed that a direction could be given to the First Appellate Court to decide the appeal without insisting on any deposit.
Relief Sought
- Waiver of the requirement to deposit 20% of the compensation amount.
- Recall of the coercive process (non-bailable warrants).
- Direction to the First Appellate Court to dispose of the appeal within six weeks.
The Legal Issue
What is the appropriate scope of a Section 148 order directing a deposit of a percentage of compensation when the appellant is in financial distress and the appeal is pending, and may such an order be set aside by the High Court?
Arguments Presented
For the Petitioner
- The petitioner contended that imposing a deposit under Section 148 would be oppressive given his financial condition and the pending nature of the appeal.
- Reliance was placed on Supreme Court pronouncements in Jambo Bhandari and Muskan Enterprises that emphasize the need to balance coercive measures with the rights of the accused during the pendency of an appeal.
- The petitioner argued that the deposit requirement is not a mandatory statutory condition but a discretionary direction that can be waived.
For the Respondent
- The respondent initially sought enforcement of the deposit to secure the compensation amount.
- However, during the hearing, the respondent agreed that the appellate court could be directed to decide the appeal without insisting on any deposit, thereby removing the immediate need for the petitioner to comply.
The Court's Analysis
The Court examined the purpose of Section 148, which empowers a court to secure the execution of a decree by directing a deposit of a portion of the compensation. It noted that the provision is discretionary and must be exercised with regard to the appellant's financial capacity and the stage of the proceedings. The Court observed that the petitioner had already been sentenced to imprisonment and a substantial fine, and that the pending appeal could potentially alter the liability.
"the abovesaid direction regarding deposit of 20% of the amount is waived and coercive process is recalled."
The Court further held that the coercive process of issuing non-bailable warrants was unnecessary in view of the petitioner's inability to pay and the pending appellate review. It emphasized the need for expeditious disposal of the appeal and directed the First Appellate Court to conclude the matter within six weeks, without insisting on any deposit.
The Verdict
The petition was allowed in part. The High Court set aside the order dated 03.12.2025 directing the petitioner to deposit 20% of the compensation amount, waived the coercive process, and directed the First Appellate Court to dispose of the appeal within six weeks. No monetary deposit is required from the petitioner pending the appellate decision.
What This Means For Similar Cases
Deposit Directions Are Not Automatic
- Courts may exercise discretion under Section 148 and waive deposit requirements when the appellant demonstrates genuine financial hardship.
- Practitioners should be prepared to substantiate the appellant's inability to pay and cite relevant Supreme Court precedents.
Expedite Appeal Disposal
- The judgment underscores the importance of directing lower courts to dispose of appeals promptly, especially when coercive measures have been imposed.
- Lawyers should request time-bound directions to avoid prolonged incarceration or financial strain on the appellant.
Use of Supreme Court Authority
- Citing recent Supreme Court observations, as done in Jambo Bhandari and Muskan Enterprises, can strengthen arguments against imposing deposit conditions.
- Counsel should align their submissions with the principle that coercive orders must be proportionate and not defeat the right to a fair appeal.
