Holding

The High Court held that the discretion conferred by Section 148 of the Negotiable Instruments Act is not mandatory and, in the present cases, the condition should be limited to a deposit of 20 % of the cheque amount, not the compensation or fine.

Summary

The High Court of Gujarat considered several criminal revision applications (R/CR.RA/1163‑1170 of 2026) arising from convictions under Section 138 of the Negotiable Instruments Act, where the appellate court had imposed a condition that the accused pay 80 % of the compensation to the complainant and deposit the remaining 20 % with the government, with a default imprisonment provision. The petitioners argued that such a condition was excessive and violated the discretion granted by Section 148 of the NI Act, relying on Supreme Court judgments in Jamboo Bhandari, Surinder Singh Deswal and Rakesh Ranjan Shrivastava. The Court examined the purposive interpretation of the word “may” in Section 148 and the scope of discretion to waive the 20 % deposit in exceptional cases. It held that the appellate court is not bound to impose the 20 % of fine/compensation in every case and must consider the financial position of the accused. Accordingly, the condition was modified to require deposit of only 20 % of the cheque amount by 8 June 2026, and all the revision applications were disposed of.

Issues considered

Whether the appellate court must mandatorily impose a deposit of 20 % of the fine or compensation under Section 148 of the Negotiable Instruments Act in all cheque‑bounce cases.
Whether the condition of paying 80 % of compensation to the complainant and 20 % to the government amounts to deprivation of the accused’s right to appeal.
What is the extent of discretion available to the appellate court under Section 148 (NI Act) and when can it be exercised to waive the deposit condition?

Legislation cited

Code of Criminal Procedure, 1973s. 389
Negotiable Instruments Act, 1881s. 138, s. 148

Subjects

Section 148 NI ActSection 138 NI Actcheque bouncesuspension of sentencedeposit conditionappellate discretioncriminal revisioncompensationfine

Judgment

R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/CRIMINAL REVISION APPLICATION (MODIFICATION OF
CONDITION/ORDER) NO. 1163 of 2026
With
R/CRIMINAL REVISION APPLICATION NO. 1164 of 2026
With
R/CRIMINAL REVISION APPLICATION NO. 1165 of 2026
With
R/CRIMINAL REVISION APPLICATION NO. 1166 of 2026
With
R/CRIMINAL REVISION APPLICATION NO. 1167 of 2026
With
R/CRIMINAL REVISION APPLICATION NO. 1168 of 2026
With
R/CRIMINAL REVISION APPLICATION NO. 1170 of 2026
==========================================================
SHARAD KISHANCHAND BIHANI PROP. OF SHARAD FABRICS
Versus
HARISHBHAI RAMKISHAN NARANG PROP. OF DURGA FINANCE & ANR.
==========================================================
Appearance:
MR MANAN SHAH for MR CR BUDDHADEV(6707) and MR HARMEET M
DESAI(18820) for the Applicant(s) No. 1
MR PRANAV DHAGAT, APP for the Respondent(s) No. 2
==========================================================
CORAM:HONOURABLE MS. JUSTICE GITA GOPI
Date : 23/04/2026
COMMON ORDER

1. Common grievance has been raised in all the matters by

learned advocate Mr. Manan Shah that the learned Appellate

Court, Surat had passed an order laying down condition on

the very same day i.e. 18.3.2026 in all the appeals preferred,

on suspending the sentence passed by the learned Magistrate,

Surat, while releasing the applicant – accused on bail of

paying 80% of compensation money to the complainant and

20% to be deposited to the Government in four matters, while

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

had also ordered to pay total compensation amount to the

complainant in other three cases.

2. The crux of the sentence with the conditions, in terms of the

case, with the details of cheque and the cheque amount was

summarised in the tabular form referred by Mr. Shah.

Cheque Details Appeal Details

Sr CRRA C.C. Deposit
Sentence / Punishment Criminal
No No. No. Cheque Cheque Amount
Date Appeal
No. Amount (20% of
No.
Fine)

Simple imprisonment for 1 year.
Fine of Rs. 30,00,000/- (twice cheque
amount). 287 /
1163/ 8905 / 80% to be paid to complainant as 2026
1 444805 Rs.15,00,000 04.01.2013 Rs.6,00,000
2026 2013 compensation within 30 days. (20% of
20% to be deposited with government. fine)
Default: simple imprisonment for 3
months.

Simple imprisonment for 1 year.
Fine of Rs. 30,00,000/- (twice cheque
amount). 289 /
1164/ 35591 / 80% to be paid to complainant as 2026 Rs.
2 446941 Rs.15,00,000 17.01.2013
2026 2013 compensation within 30 days. (20% of 6,00,000
20% to be deposited with government. fine)
Default: simple imprisonment for 3
months.

Simple imprisonment for 1 year.
Fine of Rs. 30,00,000/- (twice cheque
amount). 291 /
1165/ 35588 / 80% to be paid to complainant as 2026 Rs.
3 449504 Rs.15,00,000 18.01.2013
2026 2013 compensation within 30 days. (20% of 6,00,000
20% to be deposited with government. fine)
Default: simple imprisonment for 3
months.

Simple imprisonment for 1 year.
Fine of Rs. 9,90,000/- to be paid to 286 /
1166/ 8908 / 764061 Rs.3,00,000 02.01.2013 complainant as compensation within 30 2026 Rs.
4
2026 2013 764059 Rs.3,00,000 02.01.2013 days. (20% of 1,98,000
Default: simple imprisonment for 3 fine)
months.

Simple imprisonment for 1 year.
Fine of Rs. 30,00,000/- (twice cheque
amount). 285 /
1167/ 35587 / 80% to be paid to complainant as 2026 Rs.
5 451471 Rs.15,00,000 16.01.2013
2026 2013 compensation within 30 days. (20% of 6,00,000
20% to be deposited with government. fine)
Default: simple imprisonment for 3
months.

Simple imprisonment for 1 year.
Fine of Rs. 9,90,000/- to be paid to 288 /
1168/ 8909 / 764067 Rs 3,00,000 01.01.2013 complainant as compensation within 30 2026 Rs.
6
2026 2013 764066 Rs.3,00,000 01.01.2013 days. (20% of 1,98,000
Default: simple imprisonment for 3 fine)
months.

Simple imprisonment for 1 year.
Fine of Rs. 9,90,000/- to be paid to 290 /
1170/ 8907 / 764062 Rs.3,00,000 03.01.2013 complainant as compensation within 30 2026 Rs.
7
2026 2013 764060 Rs.3,00,000 03.01.2013 days. (20% of 1,98,000
Default: simple imprisonment for 3 fine)
months.

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

2. Advocate Mr. Shah, relying upon the judgment in the case of

Jamboo Bhandari v. Madhya Pradesh State Industrial

Development Corporation Limited & Ors. reported in (2023)

10 SCC 446, has submitted that the learned Appellate Court

while considering the provision under Section 148 of the

Negotiable Instruments Act, 1881 (hereinafter referred to as

“the NI Act”) was required to consider the observations in the

case of Surinder Singh Deswal @ Colonel S.S. Deswal & Ors.

v. Virender Gandhi, (2019) 11 SC 341, where the Hon'ble

Apex Court has explained the meaning of expression “may”

under sub-section (1) of Section 148 of the NI Act and thus,

submitted that the Appellate Court was required to examine

the facts of the case for the satisfaction of the Court to

consider whether imposing such condition of the

compensation/fine amount would be unjust or imposition of

that condition would have deprived the right of the appeal of

the appellant, as the order ultimately would become very

onerous and the appellant – accused’s right to proceed with

the appeal would get frustrated as his financial capacity would

not permit him to deposit such a huge amount in one go, as

ordered by the learned Appellate Court.

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

3. Having heard the learned advocate Mr. Shah, the law laid

down in regard to the provision of Section 148 NI Act would

be required to be appreciated by referring to the case laws.

4. In the case of Surinder Singh Deswal (supra), the amended

provision of Section 148 of NI Act was dealt with in following

terms:-

“8. Now so far as the submission on behalf of
the appellants that even considering the
language used in Section 148 of the NI Act as
amended, the appellate court “may” order the
appellant to deposit such sum which shall be a
minimum of 20% of the fine or compensation
awarded by the trial court and the word used is
not “shall” and therefore the discretion is
vested with the first appellate court has
construed it as mandatory, which according to
the learned Senior Advocate for the appellants
would be contrary to the provisions of Section
148 of the NI Act as amended is concerned,
considering the amended Section 148 of the NI
Act as a whole to be read with the Statement
of Objects and Reasons of the amending
Section 148 of the NI Act, the word used is
“may”, it is generally to be construed as a
“rule” or “shall” and not to direct to deposit by
the appellate court is an exception for which
special reasons are to be assigned.

Therefore amended Section 148 of the NI Act
confers power upon the appellate court to pass
an order pending appeal to direct the
appellant-accused to deposit the sum which
shall not be less than 20% of the fine or
compensation either on an application filed by
the original complainant or even on the
application file by the appellant-accused under
Section 389 CrPC to suspend the sentence. The

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

aforesaid is required to be construed
considering the fact that as per the amended
Section 148 of the NI Act, a minimum of 20%
of the fine or compensation awarded by the
trial court is directed to be deposited and that
such amount is to be deposited within a period
of 60 days from the date of the order, or within
such further period not exceeding 30 days as
may be directed by the appellate court for
sufficient cause shown by the appellant.

Therefore, if amended Section 148 of the NI
Act is purposively interpreted in Section 148 of
the NI Act, but also Section 138 of the NI Act.
The Negotiable Instruments Act has been
amended from time to time so as to provide,
inter alia, speedy disposal of cases relating to
the offence of the dishonour of cheques. So as
to see that due to delay tactics by the
unscrupulous drawers of the dishonoured
cheques due to easy filing of the appeals and
obtaining stay in the proceedings, an injustice
was caused to the payee of a dishonoured
cheque, who has to spend considerable time
and resources in the court proceedings to
realise the value of the cheque and having
observed that such delay has compromised the
sanctity of the cheque transactions. Parliament
has thought it fit to amend Section 148 of the
NI Act. Therefore, such a purposive
interpretation would be in furtherance of the
Objects and Reasons of the amendment in
Section 148 of the NI Act and also Section 138
of the NI Act.”

5. In the case of Jamboo Bhandari (supra), after noting the

observations in Surinder Singh Deswal (supra), it was

observed by the Hon’ble Apex Court in Paragraph 7 as under:-

“7. Therefore, when Appellate Court
considers the prayer under Section 389 of the

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

Cr.P.C. of an accused who has been convicted
for offence under Section 138 of the N.I. Act, it
is always open for the Appellate Court to
consider whether it is an exceptional case
which warrants grant of suspension of sentence
without imposing the condition of deposit of
20% of the fine/compensation amount. As
stated earlier, if the Appellate Court comes to
the conclusion that it is an exceptional case,
the reasons for coming to the said conclusion
must be recorded.”

6. The Hon’ble Apex Court has noted that when a prayer is made

under Section 389 of Cr.P.C. before the learned Appellate

Court, it would be open for the Court to consider whether it is

an exceptional case which warrants grant of suspension of

sentence without imposing condition of deposit of 20% of the

fine/compensation amount by expressing the reasons for non-

imposition of such condition. Thus, it has been specified that it

is not mandatory for the learned Appellate Court to pass an

order for the compulsory deposit of 20% of the cheque

amount in all the cases. The Appellate Court does possess a

limited discretion to be exercised in exceptional circumstances

to exempt an appellant from making the deposit contemplated

under Section 148 of the NI Act.

7. In the decision of Rakesh Ranjan Shrivastava v. State of

Jharkhand & Anr. (2024) 4 SCC 419, the Hon’ble Apex Court

had dealt with the provision of Section 148 of the N.I. Act and

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

the power which has been entrusted to the learned Appellate

Court. The Hon’ble Apex Court thus observed in Paragraph 20,

which is as under:-

“20. Even sub-section (1) of Section 148 uses
the word “may”. In the case of Surinder Singh
Deswal v. Virender Gandhi 1, this Court, after
considering the provisions of Section 148, held
that the word “may” used therein will have to
be generally construed as “rule” or “shall”. It
was further observed that when the Appellate
Court decides not to direct the deposit by the
accused, it must record the reasons. After
considering the said decision in the case of
Surinder Singh Deswal1, this Court, in the case
of Jamboo Bhandari v. Madhya Pradesh State
Industrial Development Corporation Limited &
Ors., in paragraph 6, held thus:

“6. What is held by this Court is that a
purposive interpretation should be made of
Section 148 NI Act. Hence, normally, the
appellate court will be justified in imposing the
condition of deposit as provided in Section 148.
However, in a case where the appellate court is
satisfied that the condition of deposit of 20%
will be unjust or imposing such a condition will
amount to deprivation of the right of appeal of
the appellant, exception can be made for the
reasons specifically recorded.”
(Emphasis added)

8. In the present, the matter before the learned Magistrate by

the finance Company was of providing financial loan to the

applicant – accused. The observation made by the learned

Trial Court Judge while referring to the affidavit of the

complainant was that the accused often used to take facility

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

of cheque discount for the fund and that it was business

relations with the accused. The accused had further stated in

the affidavit that the accused whenever was in need of money

approached the complainant firm and by depositing the

cheque of the account, received the amount from the

complainant’s firm and against that paid legal commission to

the complainant and in that respect for providing the finance,

the accused had signed the legal documents.

9. The learned Appellate Court Judge was required to observe

the facts of the case and the details as per the income-tax

details and other accounts of the complainant if at all

produced during the trial reflected in the judgment to consider

the fact of business transactions and the deals between the

parties. When the learned Appellate Judge had deemed it fit

to admit the appeal, then, as laid down in the case of Jamboo

Bhndari (supra) and Surinder Singh Deswal (supra), the facts

recorded and the admission of the complainant along with the

defence pleaded was to be taken into consideration.

10. In the case of Jamboo Bhandari (supra), by considering the

interpretation as was laid down in the case of Surinder Singh

Deswal (supra), the Hon'ble Supreme Court has directed to

give a purposive interpretation for Section 148 of the NI Act.

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

It was held that when the learned Appellate Court is satisfied

that condition of deposit of 20% would be unjust and

imposition of such condition would amount to deprivation of

right of appeal of the appellant, exception can be made with

the reasons specifically recorded, when the learned Appellate

Court considers prayer under Section 389 of the Cr.P.C. of the

accused, who has been convicted for the offence under

Section 138 of the NI Act. It would be always open to the

learned Appellate Court to consider suspension of sentence

without imposing condition of deposit of 20% of the

fine/compensation amount.

11. Having considered all the cases in totality, and when the order

was passed by the learned Appellate Judge on the very same

day, learned Appellate Court was having the clear picture of

the case of the appellant before it. The imposition of the

condition ordering 80% to be paid to the complainant and to

deposit 20% amount with the Government and in default to

undergo simple imprisonment for three months would serve

no purpose, would ultimately give no scope to the accused

who was before the learned Appellate Court agitating the

reasons of the Trial Court while convicting him. The learned

Appellate Court was required to deal with the provision of

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R/CR.RA/1163/2026 ORDER DATED: 23/04/2026

Section 148 of the NI Act in a purposive manner considering

financial status of the accused and that of the complainant

who is already in the business of financial transactions, while

the complainant is in a defence challenging the said

transactions.

12. In view of the observations in the cases of Jamboo Bhandari

(supra), Surinder Singh Deswal @ Colonel S.S. Deswal

(supra) and Rakesh Ranjan Shrivastava (supra), this Court

deems it appropriate to modify the condition by giving a

purposeful interpretation of Section 148 of the NI Act, without

overburdening the appellant - accused and without getting his

right of appeal to be scuttled restricting the ultimate limit of

20% to the cheque amount and not the compensation / fine

ordered.

13. Thus, the condition laid down in all the matters before the

Appellate Court is modified directing the applicant – accused

to deposit 20% of the cheque amount before the learned

Appellate Court on or before 8.6.2026.

14. Accordingly, all the applications are disposed of. Direct service

is permitted.

(GITA GOPI,J)
Maulik
Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: MAULIK RAJESH PANDYA(HC00205), PRINCIPAL PRIVATE SECRETARY, at High Court of Gujarat on 24/04/2026 17:38:27

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