20% Deposit Under Section 148 NI Act Not Mandatory in Exceptional Cases: SC

Jamboo Bhandari Vs State Industrial Development Corporation Ltd. & Ors. (Supreme Court of India)

The Supreme Court considered appeals filed by the accused who had been convicted by the Judicial Magistrate on a complaint under Section 138 of the Negotiable Instruments Act, 1881. The Magistrate convicted the appellants and directed them to pay the cheque amount of ₹2,52,36,985 along with interest at 9% per annum. The appellants challenged the conviction before the Sessions Court, which, while considering their applications under Section 389 of the Code of Criminal Procedure, 1973 for suspension of sentence, granted relief subject to the condition that they deposit 20% of the compensation amount in terms of Section 148 of the Negotiable Instruments Act.

The appellants challenged the condition before the High Court. The High Court relied upon the Supreme Court’s decision in Surinder Singh Deswal Alias Colonel S.S. Deswal and Others v. Virender Gandhi and proceeded on the basis that the word “may” used in Section 148 of the Negotiable Instruments Act had been interpreted as “shall”. Accordingly, the High Court held that suspension of sentence under Section 389 of the Cr.P.C. could be granted only upon directing the accused to deposit a minimum of 20% of the compensation or fine amount.