The Kerala High Court has clarified that appellate courts possess discretionary power under Section 148 of the Negotiable Instruments Act to waive the mandatory 20% deposit for suspension of sentence when exceptional circumstances - such as severe illness and complete financial incapacity - are established. This ruling reinforces that the provision’s language of 'may' permits judicial flexibility, not rigid compliance.
Background & Facts
The Dispute
The petitioner, Jacob Ruskil, aged 58, was convicted by the Judicial First Class Magistrate-II, Pala, in ST No.38/2023 under Section 138 of the Negotiable Instruments Act for issuing a dishonoured cheque. The Trial Court imposed a fine of Rs.25 lakh and sentenced him to six months’ imprisonment, with a default sentence of three months. The petitioner appealed to the Additional Sessions Judge, Pala, in Crl.A No.78/2026.
Key Facts
- The petitioner is a retired individual with no current employment or source of income
- He suffers from chronic illness and requires ongoing medical care
- He resides with his wife and two daughters in a rented accommodation
- He owns no immovable property or assets of value
- The 20% deposit required under Section 148 NI Act amounts to Rs.5 lakh, which he cannot raise
- He filed Annexure-C application seeking waiver of the deposit, citing indigence and health condition
- The Appellate Court dismissed the application without addressing the factual averments
Procedural History
- 26.02.2026: Trial Court convicted petitioner and imposed fine of Rs.25 lakh and six months’ imprisonment
- 05.03.2026: Petitioner filed Crl.A No.78/2026 before the Additional Sessions Judge, Pala
- 10.03.2026: Petitioner filed Annexure-C application under Section 148 NI Act seeking waiver of deposit
- 20.04.2026: Appellate Court passed Annexure-D order suspending sentence but conditioning it on deposit of Rs.5 lakh (20% of fine)
- 25.04.2026: Petitioner filed Crl.M.C. No.4851/2026 before the High Court challenging the condition
- 15.06.2026: High Court heard the matter and delivered judgment
Relief Sought
The petitioner sought unconditional suspension of sentence without any deposit condition, arguing that the Appellate Court failed to consider his exceptional circumstances of illness and destitution.
The Legal Issue
The central question was whether Section 148 of the Negotiable Instruments Act mandates a compulsory deposit of 20% of the fine as a precondition for suspension of sentence, or whether the Appellate Court retains discretion to waive it in cases of exceptional hardship.
Arguments Presented
For the Petitioner
The petitioner’s counsel relied on Surinder Singh Deswal v. Virendar Gandhi (2019 (11) SCC 341) and Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd (2023 (6) KHC 80), arguing that the word 'may' in Section 148 confers judicial discretion. He emphasized that the petitioner’s indigence, chronic illness, and lack of assets constitute exceptional circumstances warranting waiver. He contended that the Appellate Court’s mechanical application of the provision violated the spirit of the amendment and the principles of natural justice.
For the Respondent
The Public Prosecutor did not oppose the waiver but acknowledged the Appellate Court’s procedural compliance. However, no substantive counter-argument was advanced to contest the existence of exceptional circumstances or the applicability of the cited precedents.
The Court's Analysis
The Court examined the statutory language of Section 148 of the Negotiable Instruments Act, which states: "The Appellate Court may, if it thinks fit, suspend the execution of the sentence... subject to such conditions as it may impose, including the condition that the appellant shall deposit... 20 per cent of the fine or compensation amount."
"The language of Section 148 is 'may' and not 'shall'. Therefore, the discretion is vested with the Appellate Court to decide whether 20% of the fine/compensation amount is to be deposited or waived."
The Court cited Surinder Singh Deswal to affirm that the amendment was introduced to prevent undue hardship to accused persons who are genuinely unable to pay. It further relied on Jamboo Bhandari and Sreenivasan P. v. Babu Raj (2024 (2) KHC 621) to hold that the Appellate Court must consider exceptional circumstances and record reasons for its decision.
The Court observed that the Appellate Court had mechanically imposed the deposit condition without evaluating the petitioner’s sworn affidavit detailing his illness, lack of income, rental residence, and absence of assets. This omission rendered the order legally unsustainable.
The Court held that the petitioner’s circumstances - chronic illness, no employment, no property, and dependence on family - constitute exceptional hardship under the settled jurisprudence. The Appellate Court’s failure to engage with these facts was a clear error of law.
The Verdict
The petitioner succeeded. The High Court set aside the condition in the Appellate Court’s order dated 20.04.2026 requiring deposit of Rs.5 lakh. The sentence imposed by the Trial Court is suspended unconditionally, subject to the petitioner executing a bond of Rs.25 lakh with two solvent sureties of the like sum, to be approved by the Trial Court within two weeks from the date of judgment. The Appellate Court is directed to dispose of Crl.A No.78/2026 expeditiously and in accordance with law.
What This Means For Similar Cases
Judicial Discretion Is Not Optional
- Practitioners must now explicitly plead and substantiate exceptional circumstances in Section 148 waiver applications
- Blanket rejections without reasoning are appealable on grounds of arbitrariness
- Courts must record specific findings on financial incapacity, health, and family dependency
Documentation Is Critical
- Affidavits detailing income, assets, medical reports, and rental agreements are essential
- Absence of property registration or bank statements strengthens the case for waiver
- Failure to submit supporting documents may weaken the claim of exceptional hardship
Procedural Fairness Required
- Appellate courts cannot treat Section 148 as a mechanical checklist
- The burden is on the court to assess, not on the accused to prove impossibility
- Delay in disposing of appeals after suspension must be challenged if unreasonable
