Supreme Court has issued a landmark decision, asserting that the mandatory deposit requirement of a minimum 20% under Section 148 of the Negotiable Instruments Act (NI Act) is not an unalterable stipulation. This significant ruling now empowers Appellate Courts to carefully consider extraordinary circumstances and potentially exempt defendants from this condition.

A bench, presided over by Justices Abhay S. Oka and Pankaj Mithal, has explicitly clarified that when an Appellate Court assesses an appeal under Section 389 of the Criminal Procedure Code (Cr.P.C.) from an individual convicted under Section 138 of the Negotiable Instruments Act, it retains the prerogative to evaluate whether the case qualifies as an exceptional situation justifying the suspension of the sentence without the obligatory deposit of 20% of the financial penalty or compensation amount.

Notably, the Court has underscored that if the Appellate Court deems the case to be an exception, it must provide articulate and recorded rationales justifying this decision.

This precedent-setting judgment emanated from a case where individuals faced convictions under Section 138 of the NI Act. During the appeals process, the Sessions Court granted relief under Section 389 of the Cr.P.C. but imposed the proviso of depositing 20% of the compensation amount. Subsequently, the Madhya Pradesh High Court upheld this ruling.

The High Court's rationale rested on the assertion that the suspension of a sentence under Section 389 of the Cr.P.C. could only materialize if the accused deposited at minimum 20% of the compensation or fine.

In its pronouncement, the Supreme Court referred to its earlier observations in the case Surinder Singh Deswal Alias Colonel S.S. Deswal and Others v. Virender Gandhi (2019) 11 SCC 341. The Court emphasized the necessity of interpreting Section 148 of the NI Act with a purpose-driven approach. While acknowledging the general authority of the Appellate Court to enforce the deposit condition stipulated in Section 148, the Court elucidated that exceptions can be granted in cases where the imposition of the 20% deposit requirement would prove inequitable or impede the appellant's right to appeal.

Crucially, the Supreme Court found faults with the decisions of both the Sessions Court and the High Court in the present case. It asserted that both lower courts had erred in presuming that the deposit of a minimum 20% amount was an immutable rule, devoid of any scope for exceptions. As a consequence, the Supreme Court mandated the High Court to conduct a fresh evaluation of the case, urging it to consider the unique and extenuating circumstances that might warrant a waiver of the 20% deposit requirement.

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