Not mandatory to deposit 20 percent amount for filing appeal in cheque bounce cases: Delhi High Court

The Delhi High Court recently held that in cheque bounce cases, it is not mandatory to deposit 20 percent of the disputed amount under Section 148 of the Negotiable Instruments Act as a precondition to file appeals [Anuj Ahuja Vs Sumitra Mittal & Anr.]..Justice Saurabh Banerjee observed that the requirement to deposit 20 percent under Section 148 Negotiable Instruments Act is not mandatory and is left open to the discretion of courts.“Any order of deposit by the appellate Court (like the learned ASJ herein) is not compulsory and/ or mandatory and is thus, open to exercise of discretion and relaxation in exceptional cases, as and when the need arises,” the Court stated. .Under Section 148 of the Negotiable Instruments Act, the appellate court 'may' order the appellant to deposit such sum which shall be a minimum of 20 percent of the fine or compensation awarded by the trial court.The High Court said that any order by the trial court requiring deposit of the amount must be passed after application of mind and not mechanically.“Such an order asking an appellant (like the petitioner herein) to deposit 20% of the fine or compensation awarded by the learned MM in a complaint under Section 138 of the NI Act, passed by the appellate Court (like the learned ASJ herein) while dealing with an appeal under Section 148 of the NI Act, has to reflect due application of mind as it ought not to be passed mechanically,” the Court stated. .The Court further laid down the factors to be considered by the appellate court for passing such orders, such as nature of transaction, relationship between the parties, quantum of amount, financial capacity of the parties and whether the requirement of depositing amount would hamper the right of appeal..The Court was hearing a petition filed by one Anuj Ahuja, seeking quashing of Sessions Court orders dismissing his plea to waive the requirement of depositing 20 percent as a condition for instituting an appeal in cheque bounce case.Ahuja had taken a loan which was repaid by way of two cheques that were dishonoured due to ‘insufficient funds’ in bank account. The lenders filed two complaint before the Magistrate for each cheque. The Magistrate found Ahuja guilty and convicted him.In appeal, the sessions court suspended Magistrate’s sentencing orders, subject to Ahuja depositing 20 percent of the compensation amount in each case. Ahuja then filed an application seeking waiver of the condition but the same was dismissed by the sessions court. Ahuja then moved the High Court against the same.Dr. Amit George appearing for Ahuja submitted that such a requirement for filing appeal deprived Ahuja of his right to appeal, causing him irreparable loss, harm and injury..The Court stated that the factors that Ahuja is presumed guilty under the Negotiable Instruments Act and was adjudged guilty by the Magistrate, would not be sufficient to direct him to deposit 20 percent of compensation amount for filing appeal. “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. I say 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,” the High Court stated. .It also observed that the mandatory deposit of compensation amount for instituting an appeal would tantamount to pre-judging the matter.“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,” the Court stated..Dr. Amit George appearing for Ahuja submitted that such a requirement for filing appeal deprived Ahuja of his right to appeal, causing him irreparable loss, harm and injury.Advocate FK Jha appearing for the lenders submitted that the requirement of deposit under Section 148 of the NI Act is a safeguard meant to protect the rights of complainants in cases under Section 138 of the Act. It was further contended that the petitioner had failed to establish any genuine financial incapacity and mere claims of hardship do not entitle an accused to exemption from statutory obligations..The Court after hearing the parties set aside the orders of the sessions court mandating deposit of 20 percent of the disputed amount.It remanded the matter back to the sessions court for fresh consideration.It also stayed the operation of the Magistrate’s order sentencing Ahuja till the disposal of his applications seeking waiver of deposit requirement. .Dr. Amit George with Advocates Ananya Sikri, Medhavi Bhatia, Ibansara Syiemlieh, Dushyant K Kaul and Rupam Jha appeared for Ahuja. Advocates FK Jha and Gaurav Jha appeared for the respondents.[Read Judgment]