Case Note & Summary
The matter involved cross criminal writ petitions before the Bombay High Court arising from four cheque dishonour complaints under Section 138 of the Negotiable Instruments Act, 1881. The complainant had secured convictions against two accused in four separate trials, resulting in substantive imprisonment of one month and compensation equal to twice the cheque amounts. Aggrieved by the conviction, the accused filed criminal appeals and sought suspension of sentence. The Additional Sessions Judge, Pune, by four separate orders dated 29 November 2024, directed the accused to deposit 20% of the compensation amount within 60 days as a condition for suspending the sentence under Section 148 of the Negotiable Instruments Act, 1881. The complainant challenged the adequacy of the compensation and sought enhancement, while the accused challenged the mandatory deposit condition. On 7 July 2025, the High Court had directed both accused to deposit Rs.5 lakhs before the trial court, which was complied with. The core legal issues framed by the High Court were whether the appellate court rightly applied the ratio of Supreme Court precedents while directing the 20% deposit, whether the quantum was inadequate and required enhancement, and whether reasons are required only when exceptional circumstances are made out or also when they are not. The accused argued that the appellate court concluded no exceptional case was made out without giving reasons and without addressing submissions made for waiver, thereby failing to justify the deposit condition. The complainant relied on Muskan Enterprises and other High Court decisions to assert that the deposit condition is mandatory and can be waived only in exceptional circumstances listed in the judgment, none of which existed. The High Court examined the evolution of judicial interpretation of Section 148 NI Act, starting with Surinder Singh Deswal where the Supreme Court held that the word 'may' in sub-section (1) must be read as 'shall', making deposit of minimum 20% ordinarily mandatory, with non-deposit being an exception requiring special reasons. Subsequently, in Jamboo Bhandari, the Supreme Court clarified that in exceptional cases where the deposit would be unjust or would deprive the appellant of the right of appeal, the appellate court may waive the condition, but must record specific reasons for doing so. The later decision in Muskan Enterprises further analysed the use of 'may' and 'shall' in sub-sections (1) and (3) of Section 148, emphasising legislative intent and judicial discretion, and observed that reading 'may' as 'shall' without permitting exercise of discretion in appropriate situations would amount to a travesty of justice. The High Court considered these precedents and the arguments advanced by both sides, but the available excerpt of the judgment does not contain the final operative direction or conclusion on the issues. The matter was listed for oral judgment on 4 August 2025, and the court had examined the correct ratio in the referred judgments and the interpretation of Section 148 NI Act.
Headnote
A) Criminal Law - Cheque Dishonour Appeal - Suspension of Sentence and Deposit Condition - Negotiable Instruments Act, 1881, Section 148; Code of Criminal Procedure, 1973, Section 389 - The appellate court directed accused to deposit 20% of compensation as a condition for suspending sentence in cheque dishonour appeals - Court considered whether the word 'may' in Section 148(1) NI Act should be read as mandatory, and whether exceptional circumstances require recorded reasons for waiver - Held that ordinarily deposit of minimum 20% is mandatory, but appellate court may waive in exceptional cases with reasons specifically recorded (Paras 10-11). B) Statutory Interpretation - Mandatory vs Directory - 'May' and 'Shall' in Section 148 NI Act - Negotiable Instruments Act, 1881, Section 148(1) and 148(3) - The Supreme Court in Surinder Singh Deswal read 'may' as 'shall' making deposit mandatory ordinarily, while Jamboo Bhandari allowed exception for unjust or right-depriving conditions with recorded reasons - The High Court examined the subsequent Muskan Enterprises judgment which analysed the use of 'may' and 'shall' in sub-sections (1) and (3) and stressed legislative intent and judicial discretion - Held that reading 'may' as 'shall' without permitting exercise of discretion in appropriate situations would amount to travesty of justice (Paras 10-15). C) Judicial Review - Appellate Court's Discretion - Requirement of Reasons for Waiver of Deposit - Negotiable Instruments Act, 1881, Section 148; Code of Criminal Procedure, 1973, Section 389 - The issue framed was whether reasons are required only when exceptional circumstances are made out or also when not made out - Accused contended appellate court gave no reasons while rejecting exceptional circumstances; complainant relied on Muskan Enterprises listing contingencies for waiver - Court considered whether appellate court must record reasons for its conclusion on exceptional circumstances (Paras 6-15). D) Compensation Enhancement - Appeal Against Quantum - Section 138 NI Act - Complainant filed writ petitions seeking enhancement of compensation amount after conviction, arguing the fixed amount was inadequate - Court framed issue whether quantum fixed is inadequate and requires enhancement; no final determination in available excerpt (Para 6).
Issue of Consideration
Whether appellate court rightly applied ratio of Supreme Court judgments while directing 20% deposit; whether quantum fixed inadequate and requires enhancement; whether reasons required only when exceptional circumstances made out or always.
Law Points
- Section 148 NI Act imposes mandatory deposit of minimum 20% of compensation ordinarily
- word 'may' read as 'shall'
- exception requires special reasons
- appellate court may waive in exceptional circumstances if deposit unjust or deprives right of appeal
- reasons must be recorded
- interpretation of 'may' and 'shall' in Section 148(1) and (3) guided by legislative intent
- reading 'may' as 'shall' without discretion amounts to travesty of justice
