Appellate Court U/S 148 NI Act Has Discretion To Either Order To Deposit A Portion Of Fine/Compensation Or To Waive Such Deposit: Kerala HC

The Kerala High Court has interpreted the nature and manner of exercise of discretion by the Appellate Court under Section 148 of the Negotiable Instruments Act, 1881 (NI Act).

The Court was dealing with criminal miscellaneous cases which were placed before it by an order of the Chief Justice to a reference order of the Single Judge.

A Division Bench comprising Justice A.K. Jayasankaran Nambiar and Justice Kauser Edappagath held as follows:

(a) Under Section 148 of the N.I. Act, the Appellate Court has a discretion to either order the appellant to deposit a portion of the fine or compensation awarded by the trial court or to waive such deposit. In either event, since it would be exercising a statutory discretion, the Appellate Court would be legally obliged to furnish reasons for its decision so as to unambiguously indicate that its discretion was exercised keeping in mind the object of the statutory provision.

(b) If the Appellate Court, pursuant to the exercise of its discretion, finds that the appellant is required to deposit a portion of the fine or compensation awarded by the trial court pending disposal of the appeal, then the amount directed to be deposited cannot be less than an amount equivalent to 20% of the fine or compensation awarded by the trial court.

(c) If the Appellate Court chooses to direct the appellant to deposit any sum which is more than 20% of the fine or compensation awarded by the trial court, then it would be obliged to give further reasons for directing the deposit of such amounts as are in excess of the minimum of 20% of the fine or compensation awarded by the trial court.

Advocate P. Samsudin Panolan appeared on behalf of the petitioner while Public Prosecutor Alex M. Thombra appeared on behalf of the respondents.

Factual Background -

The issued concerned the interpretation of the provisions of Section 148 of NI Act that deals with the power of an Appellate Court to order payment pending an appeal against conviction. In particular, the court was called upon to clarify the nature and extent of the statutory discretion conferred on the Appellate Court, in the matter of ordering payments pending appeal against conviction under Section 138 of NI Act as also on the requirement of furnishing reasons in support of the order passed by the Appellate Court in exercise of that discretion. In both the cases, orders passed by the Sessions Court [Appellate Court] directing deposit of a percentage of the compensation amount ordered by the Trial Court under Section 148 of the N.I. Act were challenged on the ground that the orders passed by the Appellate Court were not supported by any reasons.

The referring Judge noticed that different perspectives were embraced by Single Judges of the Court while comprehending the law laid down by the Supreme Court in Surinder Singh Deswal @ Col. S.S. Deswal and Others v. Virender Gandhi [(2019) 11 SCC 341] and Jamboo Bhandari v. M.P.State Industrial Development Corporation Ltd. [(2023) 10 SCC 446]. The different perspectives of the Single Judges of the Court were found in Ambili R. v. Sree Gokulam Chit and Finance Company (P) Ltd. and Another [2020 (1) KHC 476] and Baiju v. State of Kerala [2023 (7) KHC 669], and the referring Judge, while favouring the view taken in Ambili R. (supra), believed that a conflicting view was taken in Baiju case and referred the issues to be considered by the Division Bench.

The High Court in view of the above facts observed, “In our view, a reading of Section 148 of the N.I. Act as an exception to the general principles of suspension of sentence by an Appellate Court as contained in Section 389 of the Cr.P.C., and in the backdrop of the decisions of the Supreme Court in Surinder Singh Deswal and Jamboo Bhandari (supra) would result in the following interpretation as regards the nature and manner of exercise of discretion by the Appellate Court under Section 148 of the N.I. Act"

The Court added that the above interpretation would, in its view, result from a harmonious reading of the judgments in Surinder Singh Deswal and Jamboo Bhandari and would also be in accordance with the express provisions of Section 148 of the N.I. Act, as amended, and its stated object as discernible from the Statement of Objects and Reasons of the Amendment Act No.20 of 2018.

Accordingly, the High Court disposed of the criminal miscellaneous cases, set aside the impugned orders, and directed the appellate court to pass fresh orders.

Cause Title- P. Sreenivasan v. Babu Raj & Anr. (Neutral Citation: 2024:KER:23307)

Appearance:

Appellant: Advocates P. Samsudin Panolan, Milan Rachel Mathew, Lira A.B., and Nasrin Wahab.

Respondents: Public Prosecutor Alex M. Thombra

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