Section 148 NI Act | Allahabad High Court Rules, Appellate Court has Discretion to Waive the Deposit Requirement Only in Exceptional Circumstances

The Allahabad High Court, Lucknow Bench, has dismissed the applications filed by Mohammad Javad Farooqui and Mohammad Yahya Farooqui, challenging the order of the appellate court that required them to deposit 20% of the fine imposed by the trial court as a precondition for staying the sentence and realization of the fine. The judgment, delivered by Justice Abdul Moin, reinforces the discretionary power of appellate courts under Section 148 of the Negotiable Instruments Act, 1881.

Background of the Case

The case originated from a complaint filed under Section 138 of the Negotiable Instruments Act, 1881, by Asif Ali Ahmed Siddiqui and another against Mohammad Javad Farooqui. The trial court convicted Javad Farooqui on March 14, 2024, sentencing him to one year of imprisonment and imposing a fine of ₹15,00,000, out of which ₹11,00,000 was to be paid as compensation to the complainant. In default of payment, an additional three months of simple imprisonment was ordered.

Legal Issues Involved

The primary legal issue revolved around the interpretation and application of Section 148 of the Negotiable Instruments Act, 1881, which allows appellate courts to order the appellant to deposit a minimum of 20% of the fine or compensation awarded by the trial court during the pendency of an appeal against a conviction under Section 138.

Court’s Observations and Decision

Justice Abdul Moin, in his judgment, emphasized the purposive interpretation of Section 148, aligning with the Supreme Court’s rulings in Surinder Singh Deswal v. Virender Gandhi and Jamboo Bhandari v. Madhya Pradesh State Industrial Development Corporation Limited. The court reiterated that while the word “may” in Section 148(1) indicates discretion, it is generally construed as “shall,” making the deposit a rule rather than an exception.

Key Observations:

– Discretionary Power: The court noted that the appellate court has the discretion to waive the deposit requirement only in exceptional circumstances, which must be explicitly recorded. In this case, the appellate court did not find any exceptional circumstances to waive the deposit.

– Right to Appeal: The court rejected the argument that the deposit requirement infringes on the appellant’s right to appeal, stating that the provision aims to balance the interests of both parties and ensure the complainant’s compensation is secured during the appeal process.

– Non-Application of Mind: The applicants contended that the appellate court’s order lacked consideration of the case’s merits and the absence of liability to pay the amount. However, the High Court found no merit in this argument, affirming that the appellate court’s decision was in line with legal precedents and statutory provisions.

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Counsel Representations

– For the Applicants: Advocate Ashok Kumar Singh represented Mohammad Javad Farooqui and Mohammad Yahya Farooqui.

– For the Opposite Party: Additional Government Advocate Anurag Verma and Advocate Vimal Kumar represented the State of Uttar Pradesh and the complainants.

Case Details:

– Case Number: Application U/S 482 No. 5955 of 2024 and Application U/S 482 No. 5927 of 2024

– Bench: Justice Abdul Moin

– Applicants: Mohammad Javad Farooqui, Mohammad Yahya Farooqui

– Opposite Party: State of Uttar Pradesh, Asif Ali Ahmed Siddiqui, and another

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