N.I Act appeal compensation: Deposit of 20% is not an absolute rule may be reduced or even exempted

Prayer

Criminal Original Petition filed under Section 482 of the Code of Criminal Procedure praying to set aside and modify the condition passed in Crl.M.P.No.3983 of 2023 in C.A.No.372 of 2023, dated 09.11.2023 on the file of Principal District and Sessions Judge, Erode.

This petition has been filed as against one of the condition that was imposed by the Court below directing the petitioner to deposit 20% of the cheque amount while suspending the sentence imposed against the petitioner u/s.138 of the Negotiable Instruments Act.

Present challenge

The petitioner faced trial for offence u/s.138 of the Negotiable Instruments Act before the Judicial Magistrate, Fast Track Court II, Erode, in STC No.523 of 2019. The trial Court, by judgment dated 22.09.2023, convicted the petitioner and sentenced him to undergo three months simple imprisonment and to pay the cheque amount as compensation, in default, to undergo one month simple imprisonment. Aggrieved by the same, the petitioner filed C.A.No.372 of 2023 before the Principal District and Sessions Judge, Erode. Along with this appeal, the petitioner also filed an application for suspension of sentence in Crl.M.P.No.3983 of 2023. The Court below, while suspending the sentence, imposed certain conditions. One such condition that was imposed by the Court below to the effect that the petitioner must deposit 20% of the cheque amount has been put to challenge in the present petition.

Main ground

The main ground that was urged by learned counsel for petitioner is that the petitioner had already filed an insolvency petition before the concerned Court and the respondent/complainant after being aware of the same misused the cheque and deposited in the bank. The insolvency petition that was filed was also marked as Ex.D1. Therefore, this was one of the main ground that was taken in the grounds of appeal. It was contended that even without considering the same, the Court below had mechanically imposed the condition of deposit of 20% of the cheque amount

Deposit of 20% is not an absolute rule

The Apex Court in Jamboo Bhandari v. M.P.State Industrial Development Corporation Ltd. and others [2023 (3) MWN (Cr.) DCC 104 (SC)] has held that deposit of 20% of the compensation amount is not an absolute rule and it can be reduced or even exempted in exceptional cases by assigning reasons. The Kerala High Court also taken into consideration the scope of Section 148 of the Negotiable Instruments Act and it was held that reasons must be assigned while directing deposit of 20% of the fine amount/compensation amount imposed by the trial Court. Useful reference can be made to the judgment in Baiju v. State of Kerala [2023 (3) MWN (Cr.) DCC 140 (Ker.)]

In the light of the above judgments, it is clear that there is an element of application of mind that is involved while directing deposit of 20% of the amount as contemplated u/s.148 of the Negotiable Instruments Act. If the accused person is able to make out a ground for reduction of this percentage or for exemption of deposit, the same has to be considered by the appellate Court before directing deposit of compensation amount as a condition while suspending the sentence/ granting bail.

Conclusion

Hon’ble High Court left open to the District court to decide by proper application of mind based on the above said judgments.

Hon’ble High Court’s direction to the District Judiciary

Before drawing the curtains in this case, this Court thought it fit to bring to the notice of the District Judiciary the above two judgments, particularly, the judgment of the Apex Court. While dealing with an application for suspension of sentence or for grant of bail when an appeal is filed against the conviction for offence u/s.138 of the Negotiable Instruments Act, the Courts must not mechanically impose a condition of deposit of 20% of the compensation amount/cheque amount u/s.148 of the Negotiable Instruments Act. When any ground has been raised by the appellant for reducing the percentage or for exempting the deposit of such amount, it has to be dealt with by the appellate Court and a reasoned order must be passed if the Court wants to direct the appellant to deposit 20% of the compensation amount/cheque amount. A copy of this order shall be circulated to all the Principal District Courts across the State of Tamil Nadu.

Parties

C.R.Balasubramanian S/o.C.R.Raju P.Eswaramoorthi S/o.N.Palaniyappan Vs. … Petitioner … Respondent – Crl.O.P.No.947 of 2024 – DATED : 22.01.2024 CORAM THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH – 2024:MHC:5897

https://mhc.tn.gov.in/judis/index.php/casestatus/viewpdf/1097516

C.R.Balasubramanian Vs. P.Eswaramoorthi – N.I Act appeal

Further study

Deposit of minimum 20% is not absolute rule for suspension of sentence or to admit appeal

“6. What is held by this Court is that a purposive interpretation should be made of Section 148 of the N.I. Act. Hence, normally, Appellate Court will be justified in imposing the condition of deposit as provided in Section 148. However, in a case where the Appellate Court is satisfied that the condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of the right of appeal of the appellant, exception can be made for the reasons specifically recorded.

Therefore, when Appellate Court considers the prayer under Section 389 of the Cr.P.C. of an accused who has been convicted for offence under Section 138 of the N.I. Act, it is always open for the Appellate Court to consider whether it is an exceptional case which warrants grant of suspension of sentence without imposing the condition of deposit of 20% of the fine/compensation amount. As stated earlier, if the Appellate Court comes to the conclusion that it is an exceptional case, the reasons for coming to the said conclusion must be recorded.

We disagree with the above submission. When an accused applies under Section 389 of the Cr.P.C. for suspension of sentence, he normally applies for grant of relief of suspension of sentence without any condition. Therefore, when a blanket order is sought by the appellants, the Court has to consider whether the case falls in exception or not.

In these cases, both the Sessions Courts and the High Court have proceeded on the erroneous premise that deposit of minimum 20% amount is an absolute rule which does not accommodate any exception”.

[JAMBOO BHANDARI vs. M.P. STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. & ORS – CRIMINAL APPEAL NO(S). 2741 OF 2023 (@ SLP(CRL.) NO(S). 4927 OF 2023) – SEPTEMBER 04, 2023 – 2023INSC822].