Introduction:
In a significant ruling, the Punjab & Haryana High Court addressed a crucial issue regarding the interplay between Section 138 and Section 148 of the Negotiable Instruments Act, 1881 (NI Act), clarifying that the right to bail of a convict cannot be denied by the appellate court merely due to non-payment of 20% of the compensation amount under Section 148 of the Act. The case, M/s Coromandel International Limited v. Shri Ambica Sales Corporation [2025 LiveLaw (PH) 392], was heard by a division bench led by Justice Sanjay Vashisth, where Advocate Ashok Singla and Advocate Ankush Singla represented the petitioner, and Advocate Deepender Singh appeared as Amicus Curiae. The judgment explained that while Section 148 NI Act empowers appellate courts to direct deposit of a minimum of 20% of compensation or fine awarded by the trial court, non-compliance with such an order cannot automatically bar suspension of sentence or admission of appeal. The Court emphasized that neither Section 148 NI Act nor Section 430 BNSS, 2023 (corresponding to Section 389 CrPC, 1973), creates such a mandatory prerequisite, and treating it as such would amount to judicial rewriting of statutory provisions.
Arguments of the Petitioner:
On behalf of the petitioner, learned counsel Ashok Singla and Ankush Singla submitted that the conviction under Section 138 NI Act warranted suspension of sentence pending appeal and that bail could not be denied solely on account of failure to deposit 20% compensation under Section 148 NI Act. The petitioners argued that the language of Section 148 was directory in nature and not mandatory, since it only granted appellate courts the power to order deposit but did not make such deposit a condition precedent to hearing the appeal or granting bail. They contended that the legislature, while drafting Section 148, was conscious of the balance between safeguarding the rights of the complainant and protecting the liberty of the convict, and therefore deliberately refrained from linking the right of appeal or suspension of sentence to mandatory compliance with deposit requirements.
The petitioners further highlighted that Section 430 BNSS, 2023, which corresponds to Section 389 CrPC, 1973, governs suspension of sentence during pendency of appeal, and under this framework, the trial court or the appellate court has discretion to suspend sentences, particularly in cases where the prescribed punishment does not exceed three years or where the offence is bailable. Since Section 138 NI Act prescribes a maximum punishment of two years and is a bailable offence, they argued that suspension of sentence was the rule, and denial of bail merely for non-deposit under Section 148 would be contrary to both legislative intent and established principles of criminal law.
Arguments of the Amicus Curiae:
Amicus Curiae Deepender Singh submitted that while Section 148 NI Act introduced in 2018 was aimed at providing relief to the complainant and reducing delays in cheque dishonour cases, it was never intended to deprive a convict of their fundamental right to appeal and liberty. He pointed out that the Supreme Court, in Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd. and in Muskan Enterprises v. State of Maharashtra, had clarified that deposit of 20% under Section 148 was not an absolute precondition for appeal or suspension of sentence but was subject to judicial discretion. He stressed that imposing denial of bail for non-compliance would effectively amend the statute by judicial interpretation, which courts are not empowered to do.
The amicus also highlighted the constitutional underpinnings of the right to bail, rooted in Article 21 of the Constitution of India, which protects personal liberty. He submitted that in absence of express legislative prohibition, courts must lean in favour of preserving liberty during pendency of appeals. Furthermore, he argued that the legislative object of Section 148—to secure some financial relief to complainants—could still be achieved by directing deposit in appropriate cases, but that should not translate into absolute denial of suspension of sentence where deposit was not made.
Court’s Judgment:
After hearing both sides, Justice Sanjay Vashisth delivered a detailed ruling clarifying the scope of Section 148 NI Act. The Court held that the right of bail cannot be taken away by the appellate court, where final adjudication of the appeal is pending, merely because of non-compliance with the direction of paying 20% of the compensation amount. It emphasized that conditions imposed while suspending sentence must always be “just” and fair, and the judiciary must be guided by legislative intent rather than expanding statutory language.
The Court carefully examined the statutory scheme. Section 148 NI Act, it noted, was confined to appeals against convictions under Section 138 NI Act and empowered the appellate court to direct deposit of 20% compensation within a prescribed timeline. However, the section did not expressly state that failure to comply would result in automatic denial of bail or suspension of sentence. The Court observed that had the legislature intended to make such compliance mandatory, it would have expressly provided so in the statute. Thus, reading such a restriction into the provision would amount to rewriting the law, which courts are not authorized to do.
The bench further clarified that since neither Section 148 NI Act nor any provision of the NI Act deals with suspension of sentence, the issue must be governed by Section 430 BNSS, 2023. This section, corresponding to Section 389 CrPC, 1973, provides for suspension of sentence during the pendency of an appeal and specifically carves out a lenient category for offences punishable with up to three years’ imprisonment or where the offences are bailable. In such cases, suspension of sentence is the norm, designed to protect the liberty of the convict pending final adjudication. Section 138 NI Act squarely falls within this framework, and therefore, bail cannot be withheld as a punitive measure for non-deposit.
The Court underscored that the purpose of Section 430 BNSS is to restore the liberty curtailed post-conviction until the appellate court finally decides the case. Any interpretation that deprives a convict of suspension of sentence merely due to failure to deposit 20% compensation under Section 148 would undermine this objective. At the same time, the Court recognized the legislative intention behind Section 148: to provide financial relief to the complainant and strengthen the credibility of commercial transactions by ensuring some compensation during prolonged appeals. The Court concluded that while appellate courts can exercise discretion to order deposit under Section 148, such an order cannot be treated as an absolute bar to bail if not complied with.
The bench also clarified the jurisdictional scope of Section 148. It stated that the appellate court assumes jurisdiction to order a deposit under this provision only if the convict files an appeal, and the jurisdiction continues only during the pendency of the appeal. Once the appeal is decided, the jurisdiction under Section 148 lapses. The legislative intent, it emphasized, was not to create an additional prerequisite for appeals but to ensure interim relief to complainants during the appellate process.
In its final analysis, the Court held that non-compliance with Section 148 NI Act cannot be a ground to deny bail or suspension of sentence. To hold otherwise would be to judicially re-write Section 148 NI Act and Section 430 BNSS, 2023, which was impermissible. Accordingly, the Court affirmed the right of convicts under Section 138 NI Act to secure bail during pendency of appeal, regardless of whether the 20% compensation deposit has been made, though subject to just and fair conditions imposed by the appellate court.
Significance of the Ruling:
This judgment is a landmark in cheque dishonour litigation, as it balances the rights of complainants with the constitutional right to liberty of convicts. It ensures that convicts are not unjustly deprived of bail merely due to financial incapacity to deposit 20% compensation while appealing. At the same time, it upholds the legislative objective of Section 148 by confirming that appellate courts retain discretion to direct such deposits, thereby protecting the interests of complainants.
The decision also clarifies a grey area where conflicting interpretations had arisen across different courts regarding the mandatory nature of Section 148. By affirming that deposit under Section 148 is not an absolute prerequisite for bail or suspension of sentence, the Punjab & Haryana High Court has reinforced the principle that liberty cannot be curtailed by implication or judicial expansion of statutory text. The ruling will have far-reaching consequences for thousands of pending cheque dishonour cases, offering clarity and uniformity in appellate procedures.