Requirement To Deposit 20% Of Compensation Is Not An Absolute Rule: Punjab & Haryana High Court While Remanding NI Act Cases

​The Bench of Justice Sanjay Vashisth while relying on the High Court judgment in M/s Coromandel International Limited v. Shri Ambica Sales Corporation, and clarified, “When the convict challenges the conviction, sentence, or compensation by filing an appeal, the requirement to deposit 20% or more of the fine amount or compensation is not an absolute rule and is subject to exceptions mentioned in Jamboo Bhandari (supra) and Muskan Enterprises (supra), it can be reduced to below the statutory minimum of 20% or even waived in exceptional cases by assigning reasons…When a convict challenges the judgment of conviction by filing an appeal, then during the pendency of appeal, i.e. if the appeal is not decided within 60 days, extendable by 30 days, then the convict might be compelled to deposit the amount as was directed, by taking recourse to Section 395 BNSS, 2023…Deposit of a minimum 20% amount is not an absolute rule.”

Advocate Amardeep Singh Mann appeared on behalf of the Petitioners, whereas Advocate Sourav Goyal appeared for the Respondents.

Few petitions were filed under Section 528 of the BNSS, 2023, were filed by the petitioners assailing the orders passed by the Appellate Court while deciding the application for suspension of sentence, filed by the petitioners along with the appeals preferred by them against the judgement of conviction and order of sentence passed by the Trial Court, while deciding complaints under Section 138 of the Negotiable Instruments Act, 1881 (‘the NI Act’).

In all the cases, the respective Appellate Courts, while allowing the applications and suspending the sentence during pendency of the appeals, subjected the appellants/petitioners herein to deposit 20% of the amount of compensation imposed by the Trial Court, within the stipulated time.

The Court said, “In view of above, matters in hand are required to be sent back to the respective Appellate Courts, for decision afresh in consonance with the order dated 24.09.2025, passed by the Larger Bench/Division Bench of this Court in the case of M/s Coromandel International Limited (supra)…Further, it is directed that till the time a fresh order is passed by the respective Appellate Court, the condition of deposit of 20% of the compensation amount, as already directed vide order(s) impugned in these petitions by the Appellate Court(s), shall remain inoperative, and the bail shall not be cancelled in consequence thereof. In case the Appellate Court(s), after re-appreciation of the matter, comes to the conclusion that the deposits are expensive than the liberty, and the convict is not in a position to deposit and likely to forego his liberty even when the first appeal is yet to be decided, the Appellate Court(s) must make efforts to prioritize hearing appeal filed against the conviction under Section of the 148 NI Act and decide the same preferably within next sixty days of passing of fresh order, and not later than ninety days, which clearly aligns with the legislators’ intentions. However, the time of sixty days should be extended to the extent to which the decision of the appeal is delayed because of the complainant.”

“Whenever the deposits are expensive than the liberty, and the Appellate Courts are convinced that the convicts are not in a position to deposit and likely to forego their liberty even when the first appeal is yet to be decided, the Appellate Courts must make efforts to prioritize hearing appeals filed against the convictions under Section 148 NI Act and decide those preferably within sixty days of filing, and not later than ninety days, which clearly aligns with the legislators’ intentions. However, the time of sixty days should be extended to the extent to which the decision of the appeal is delayed because of the complainant.”, the Court said.

With regard to Section 148 of the Act, the Court held that Section 148 of the NI Act neither restricts the right of the convict to challenge the conviction, sentence, or compensation by filing an appeal, nor does it permit the Appellate Court to impose any prerequisites for the appeal to be admitted or decided. Section 148 of the NI Act, due to its non-compliance, does not explicitly prohibit the suspension of sentence or the hearing of the appeal. Neither Section 148 nor any other provision of the NI Act prescribes any provisions for the suspension of sentence. Therefore, Section 430 of the BNSS, 2023 shall apply, the Court further noted.

Accordingly, the Court remanded the matters to be decided afresh by the respective Appellate Courts.

Cause Title: VK Construction and Anr. v. Tej Veer and Anr. and others connected matters [Neutral Citation: 2025:PHHC:179359]

Appearances:

Petitioners: Advocates Amardeep Singh Mann, Bhumika Khatri, Vineet Dhanda and L.S. Sidhu.

Respondents: Advocates Sourav Goyal, Kanwaljeet Singh and Satvir Singh.

Click here to read/download the Judgment