M/s. A3V Cinemaz (represented by proprietor N. Vemal) and respondent M/s. Arasu Films (represented by proprietor Mr. B. Gopi), bearing case number Crl.O.P.No.24083 of 2026 (arising out of Crl.A.No.1086 of 2026 / S.T.C.No.108 of 2022), with neutral citation noted as Crl.O.P.No.24083 of 2026, adjudicated on September 11, 2026, by the Hon’ble Mr. Justice G.K. Ilanthiraiyan of the High Court of Judicature at Madras
Impugned Order and Parties Filing the Petition
The petition is filed by petitioners M/s. A3V Cinemaz (represented by its proprietor N. Vemal) and Vemal challenging the conditional suspension of sentence order dated 04.08.2026 passed in Crl.M.P.No.1 of 2026 in Crl.A.No.1086 of 2026 by the XV Additional City Civil Court, Chennai. In the impugned order, the Appellate Court granted suspension of sentence following conviction under Section 138 of the Negotiable Instruments Act, 1881, but imposed a condition requiring the petitioners to deposit a sum of Rs. 10,00,000/- towards the compensation amount to the credit of S.T.C.No.108 of 2022 within sixty days. The petitioners invoked the jurisdiction of the High Court under Section 528 seeking to modify or set aside this conditional deposit requirement.
Factual Matrix
The criminal prosecution originated from a complaint filed by respondent M/s. Arasu Films (represented by proprietor Mr. B. Gopi) under Section 138 of the Negotiable Instruments Act, 1881 in S.T.C.No.108 of 2022, alleging the dishonour of a cheque issued in connection with an alleged loan transaction of Rs. 3 Crores. Following trial, the Trial Court convicted the accused petitioners for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and directed compensation. The petitioners subsequently preferred a criminal appeal in Crl.A.No.1086 of 2026 along with Crl.M.P.No.1 of 2026 before the XV Additional City Civil Court, Chennai for suspension of sentence, wherein the Appellate Court passed the conditional order directing a deposit of Rs. 10,00,000/- within sixty days.
Core Legal Arguments in nutshell
The learned counsel appearing for the petitioners argued that a strong prima facie case had been established to demonstrate that the complainant failed to prove the offence under Section 138 of the Negotiable Instruments Act, 1881 beyond reasonable doubt, as the statutory presumption under Section 139 was categorically rebutted. Specifically, cross-examination of the complainant (PW.1), along with the company’s bank statements, established that the complainant possessed no proper source of income or requisite bank balance to lend a sum of Rs. 3 Crores. Furthermore, the income tax return produced before the Trial Court revealed a net income of only Rs. 19,29,056/- for the relevant year, establishing the complainant’s lack of financial capacity. Consequently, the petitioners asserted that enforcing a deposit of Rs. 10,00,000/- under Section 148 without evaluating these exceptional circumstances was unjustified and contrary to law.
The court established that while Section 148 of the Negotiable Instruments Act, 1881 empowers the Appellate Court to direct a minimum deposit of 20% of the fine or compensation pending an appeal against conviction, this power must be exercised judiciously rather than mechanically. Following the Supreme Court precedent in Jamboo Bhandari v. Madhya Pradesh State Industrial Development Corporation Limited [(2023) 10 SCC 446], when an accused establishes a prima facie exceptional case such as demonstrating the complainant’s total lack of financial capacity to advance the alleged loan amount imposing the deposit condition of 20% or a substantial compensation sum under Section 148 can be unjust or amount to a deprivation of the right of appeal. In such exceptional cases, the Appellate Court is justified in suspending sentence under Section 389 of the Cr.P.C. without insisting on the deposit condition, provided specific reasons are recorded.
Conclusion
The High Court held that the Supreme Court precedent in Jamboo Bhandari was squarely applicable to the case on hand, as the petitioners successfully established a prima facie exceptional case to not impose any deposit condition under Section 148 of the Negotiable Instruments Act, 1881[1][2]. Consequently, the High Court allowed the Criminal Original Petition, deleting the condition imposed by the XV Additional City Civil Court, Chennai in M.P.No.1 of 2026 in C.A.No.1086 of 2026 requiring a deposit of Rs. 10,00,000/- as compensation, while extending the time for execution of sureties until September 18, 2026
Judgments Cited
Jamboo Bhandari vs. Madhya Pradesh State Industrial Development Corporation Limited and others, (2023) 10 SCC 446: The Hon’ble Supreme Court held that while an Appellate Court considering a prayer under Section 389 Cr.P.C. is normally justified under Section 148 of the Negotiable Instruments Act, 1881 in imposing a minimum 20% deposit condition of the fine or compensation, an exception can be made without requiring such deposit if the Appellate Court is satisfied that imposing it would be unjust or deprive the appellant of the right to appeal, provided specific reasons for finding an exceptional case are recorded.
Acts and Sections
Negotiable Instruments Act, 1881:
Section 138: Offence relating to dishonour of cheque for insufficiency of funds.
Section 139: Statutory presumption in favour of the holder of the cheque.
Section 143A: Power to direct interim compensation.
Section 148: Power of the Appellate Court to order payment/deposit pending appeal against conviction.
Code of Criminal Procedure, 1973 (Cr.P.C.)
Section 389: Provision governing suspension of sentence pending appeal.
Bhartiya Nagarik Suraksha Sanhita, 2023 / Criminal Code Procedure:
Section 528: High Court’s inherent power / Criminal Original Petition filing provision.
