Introduction:

The Gujarat High Court in the case of Mahadev Enterprise Thro Pruthvi Sanjaybhai Solanki & Anr. v. State of Gujarat & Anr. examined the scope of powers vested in appellate courts under Section 148 of the Negotiable Instruments Act, 1881. The matter revolved around a petition challenging the direction of the appellate court requiring the petitioner to deposit 20% of the compensation amount while granting suspension of sentence and bail in an appeal filed against conviction under Section 138 of the Act for dishonour of cheque. The petitioner argued that the use of the word “may” in Section 148 meant that the deposit of such compensation could not be made a mandatory precondition for suspension of sentence. However, the Court, relying upon binding precedents of the Supreme Court and interpreting the legislative intent, clarified that the discretion lies exclusively with the appellate court to direct deposit of a minimum of 20% of the compensation amount during pendency of an appeal against conviction, taking into account the surrounding circumstances of each case.

Arguments of the Petitioner:

The petitioner, convicted under Section 138 of the Negotiable Instruments Act by the trial magistrate, filed an appeal before the appellate court against the conviction order. Alongside, the petitioner moved an application under Section 389(3) of the Code of Criminal Procedure seeking suspension of the sentence and release on bail during the pendency of the appeal. The appellate court allowed the application for suspension of sentence but imposed a condition directing the petitioner to deposit 20% of the compensation awarded by the trial court. Aggrieved, the petitioner approached the High Court challenging this condition. The principal contention advanced was that Section 148 of the Negotiable Instruments Act employs the expression “may” and not “shall.” According to the petitioner, the language of the statute clearly indicates that the appellate court is not bound to direct such deposit and therefore imposing such a condition amounts to treating the provision as mandatory, contrary to legislative intent. The petitioner further argued that making the deposit of 20% a precondition amounts to curtailing the fundamental right to appeal and violates principles of fairness, as the right of appeal cannot be made contingent upon financial capacity or pre-deposit. It was contended that such a condition, if treated as mandatory, would prejudice the accused even before the appeal is adjudicated, since the presumption of innocence continues until final conviction. The petitioner also highlighted that the appellate court had already granted bail under Section 389(3) CrPC, and therefore, imposition of deposit in addition was excessive and unnecessary.

Arguments of the Respondents:

The State and the complainant opposed the petition and supported the order of the appellate court. They submitted that Section 148 of the Negotiable Instruments Act was introduced by the legislature through an amendment with a specific purpose of curbing the menace of cheque dishonour and to ensure expeditious recovery of compensation to the complainant. The respondents relied on judgments of the Supreme Court which have consistently interpreted the word “may” under Section 148 to mean that appellate courts are empowered to order a deposit of a minimum of 20% of the fine or compensation. They emphasized that such discretion is not illusory but must be exercised judicially in light of the facts of each case. The respondents further argued that the purpose of Section 148 is to prevent abuse of the appellate process by delaying tactics. Without such a deposit, accused persons often prolong appeals without any relief being granted to the complainant, who is the rightful beneficiary of the compensation. It was urged that the High Court should not interfere with the discretion exercised by the appellate court, which had duly considered the circumstances and directed a fair deposit of 20%. They submitted that the provision was enacted to strike a balance between the rights of the accused and the complainant, ensuring some relief to the complainant during the pendency of appeals while still preserving the right of the accused to challenge conviction.

Court’s Judgment:

Justice R.T. Vachhani, speaking for the Gujarat High Court, dismissed the petition and upheld the order of the appellate court. The Court began by analyzing the object and scope of Section 148 of the Negotiable Instruments Act. It noted that the provision was introduced by way of amendment in 2018 with the clear legislative intent of strengthening the credibility of negotiable instruments and discouraging frivolous or dilatory appeals in cheque dishonour cases. The Court observed that while the provision uses the expression “may,” the Supreme Court, in various precedents, has clarified that this cannot be read in isolation. The interpretation of “may” as “shall,” in the context of Section 148, means that appellate courts are empowered to direct such deposits as a general rule, subject to judicial discretion in exceptional cases. Referring to the purpose of the amendment, the Court emphasized that directing deposit of 20% of the compensation is intended to provide “plausible relief” to the complainant and to ensure at least partial recovery of the awarded amount during pendency of appeals, which often take years to decide. The Court clarified that the power under Section 148 is discretionary but not arbitrary. The discretion is vested solely in the appellate court and must be exercised keeping in mind the facts and surrounding circumstances. Thus, while it is not an absolute rule that deposit will be directed in every case, ordinarily the appellate court is justified in imposing such a condition unless strong reasons exist to depart from it. The High Court rejected the petitioner’s contention that imposing such a deposit makes the provision mandatory and curtails the right to appeal. It held that the provision merely regulates the conditions of suspension of sentence and is in furtherance of legislative intent to balance the rights of both parties. Importantly, the Court observed that the discretion of the appellate court under Section 148 does not get diluted merely because bail has been granted under Section 389(3) CrPC. Both powers operate in distinct spheres, and the deposit condition under Section 148 is not inconsistent with bail under Section 389. The Court concluded that the appellate court had exercised its discretion fairly and reasonably by directing a deposit of 20% of the compensation. There was no illegality or perversity in such an order warranting interference by the High Court. Accordingly, the petition was dismissed, affirming the appellate court’s power to impose deposit conditions while granting suspension of sentence and bail in appeals under the Negotiable Instruments Act.