2025 (3) TMI 825 - HC - Indian Laws

Delhi HC quashes ASJ orders mandating 20% deposit under Section 148 NI Act for cheque dishonour appeals

Delhi HC allowed petition challenging ASJ orders requiring 20% deposit of compensation under Section 148 NI Act for dishonour of cheque appeals. Court ... Dishonour of cheque - interpretation of Section 148 of the NI Act - whether the petitioner has been able to make out any exception for not to deposit 20% of the fine or compensation awarded by the learned MM before the learned ASJ as also whether the learned ASJ has exercised the discretion after taking into consideration the various factors? HELD THAT:- Since the petitioner has sought to challenge the reasonings in the two impugned orders passed by the learned ASJ, the issue of non-challenge to any of the two earlier orders dated 07.08.2024 and 23.09.2024 and/ or their non-compliance by the petitioner as also the other contentions raised by the learned counsel for the respondent(s) need not be gone into by this Court. Likewise, the contention of the learned counsel for respondent(s) herein that the petitioner had acquiesced with either of those two earlier orders dated 07.08.2024 and 23.09.2024 passed in the very same two appeals by the very same learned ASJ is of no significance. Therefore, in such a scenario wherein the reasonings given by the learned ASJ in the impugned orders are in question, the present petitions challenging them are per se maintainable. In the considered opinion of this Court, neither of the aforesaid factors spelt out as ought to be for the learned ASJ to direct the petitioner to deposit 20% of compensation amount as awarded by the learned MM vide order(s) dated 08.07.2024. It is said so, since neither the presumptions of/ in the NI Act nor the appellant being pronounced as “guilty”, per se, can be held sufficient for calling upon any such “guilty” like the appellant thereto/ petitioner herein to deposit the 20% of compensation amount as awarded by the learned MM at the very threshold of the appeal itself. Similarly, since vide a detailed judgment passed by the learned MM, has convicted the appellant (like the petitioner herein) and is pronounced as “guilty” cannot qualify to be a reason, necessarily not a sufficient one, since the appeal thereagainst is already pending adjudication/ disposal before the very same learned ASJ and doing so will tantamount to pre-judging the case of the appellant. Conclusion - This Court finds that there is no clear finding as it is not spelt out in any of the impugned orders as to whether the petitioner has been able to make out any exception for waiver of depositing 20% of the fine or compensation awarded by the learned MM before it as also the aforesaid factors considered by the learned ASJ and the reasons spelt out therein, and instead calling upon the petitioner to deposit 20% of the compensation amount as awarded by the learned MM in the two impugned orders, are insufficient. Petition allowed. 1. ISSUES PRESENTED and CONSIDEREDThe primary legal issue considered by the Court was whether the appellate court, in this case, the Additional Sessions Judge (ASJ), correctly exercised its discretion under Section 148 of the Negotiable Instruments Act, 1881 (NI Act) when it required the petitioner to deposit 20% of the compensation amount as a condition for suspending the sentence pending appeal. The Court examined if the ASJ's interpretation of Section 148 was appropriate and whether the ASJ had considered all relevant factors in determining the petitioner's financial capacity and the necessity of the deposit.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:Section 148 of the NI Act, as amended by the Negotiable Instruments (Amendment) Act, 2018, allows the appellate court to order the appellant to deposit a minimum of 20% of the fine or compensation awarded by the trial court. The provision aims to ensure the speedy disposal of cases and prevent dilatory tactics by convicted individuals. The Court referenced the Supreme Court decisions in Surinder Singh Deswal and Jamboo Bhandari, which interpreted Section 148 as generally requiring the deposit but allowing exceptions where imposing such a condition would be unjust or impede the right of appeal.Court's Interpretation and Reasoning:The Court emphasized that the language of Section 148 uses 'may,' indicating discretion rather than a mandatory requirement. The appellate court must exercise this discretion judiciously, considering the specific circumstances of each case. The Court noted that the ASJ's decision to require a deposit was not supported by adequate reasoning or consideration of the petitioner's financial capacity, as evidenced by the erroneous assumption about the petitioner's business ownership.Key Evidence and Findings:The ASJ's orders were based on the presumption of the petitioner's financial capacity, which was incorrectly attributed to the petitioner owning a saree business. This assumption was later admitted as a typographical error. The Court found that the ASJ failed to adequately consider the petitioner's financial situation and the potential impact of the deposit requirement on the petitioner's right to appeal.Application of Law to Facts:The Court applied the principles established in Surinder Singh Deswal and Jamboo Bhandari, emphasizing the need for a purposive interpretation of Section 148. The Court concluded that the ASJ did not properly exercise discretion, as the decision to require a deposit seemed mechanical and lacked consideration of the petitioner's specific circumstances.Treatment of Competing Arguments:The petitioner's counsel argued that the ASJ erred in treating the deposit requirement as mandatory and failed to consider the petitioner's financial incapacity. The respondents' counsel contended that the deposit was a safeguard for complainants and that the petitioner had not demonstrated genuine financial hardship. The Court found merit in the petitioner's arguments, noting the ASJ's failure to provide sufficient reasoning for the deposit requirement.Conclusions:The Court concluded that the ASJ's orders lacked adequate reasoning and did not reflect a proper exercise of discretion under Section 148 of the NI Act. The Court set aside the ASJ's orders and remanded the applications for fresh consideration, instructing the ASJ to take into account the established legal principles and the petitioner's financial circumstances.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:The Court emphasized the need for a 'purposive interpretation' of Section 148 of the NI Act, as highlighted in Jamboo Bhandari, stating that exceptions to the deposit requirement should be made where it would be unjust or impede the right to appeal.Core principles established:The appellate court must exercise discretion under Section 148 judiciously, considering the appellant's financial capacity and the potential impact on the right to appeal. Mechanical application of the deposit requirement without adequate reasoning is improper.Final determinations on each issue:The Court determined that the ASJ's orders were insufficiently reasoned and did not adequately consider the petitioner's financial situation. The orders were set aside, and the applications were remanded for fresh consideration, with instructions to apply the established legal principles and consider the petitioner's circumstances.