Stop! Read This Before Seeking a waiver of 20% Deposit in a Cheque Bounce Appeal

The waiver of 20% deposit in a cheque bounce appeal is a critical issue for anyone convicted under Section 138 of the NI Act. This article explores the legal standing of such a waiver, analyzing the discretion of the court under Section 148 of NI Act. We delve into a recent judgment to understand the rare exceptions under Section 148 of the NI Act and whether financial hardship alone is a valid reason. Furthermore, we examine a crucial procedural question: the maintainability of a revision petition against an order under Section 148 of NI ACT and on what grounds one can challenge the 20% deposit order in the High Court.

STAY UPDATED: The law surrounding the waiver of 20% deposit in a cheque bounce appeal is constantly evolving. We will update this article with the latest judgments from the Hon’ble Supreme Court and High Courts regarding the exceptions under Section 148 of the NI Act.

Delhi High Court Judgment IHOME AND INFRASTRUCTURE PVT LTD & ORS. versus THE STATE GOVT. OF NCT OF DELHI AND ANR. CRL.REV.P.(NI) 149/2025

YOUTUBE VIDEO: To better understand the complex legal arguments about the discretion of the court under Section 148 of NI Act and how you can challenge the 20% deposit order in the High Court, watch our detailed video on this topic.

Navigating the legalities of a waiver of 20% deposit in a cheque bounce appeal requires a careful understanding of the law. The discretion of the court under Section 148 of NI Act is limited, and understanding if your case falls into the exceptions under Section 148 of the NI Act is crucial.

If you wish to have a deeper understanding of your specific situation or the maintainability of a revision petition against an order under Section 148 of NI ACT, you can book a time to discuss. Schedule an Appointment.

To help you navigate this article, we have prepared a Table of Contents. This will guide you through the key issues, from the case facts to the Hon’ble High Court’s final decision on the waiver of 20% deposit in a cheque bounce appeal.

1. Case Details: A High Court Judgment on the Waiver of 20% Deposit in a Cheque Bounce Appeal

The waiver of 20% deposit in a cheque bounce appeal is a critical point of contention in cheque dishonour litigation. When a person is convicted under Section 138 of the Negotiable Instruments Act, 1881, and they file an appeal, the Appellate Court often directs them to deposit a minimum of 20% of the fine or compensation amount. This article analyzes a judgment from the Hon’ble High Court of Delhi that provides crucial clarity on the discretion of the court under Section 148 of NI Act and the very rare exceptions under Section 148 of the NI Act. This case also settles an important procedural question: the maintainability of a revision petition against an order under Section 148 of NI ACT.

• Title of the Judgment: IHOME AND INFRASTRUCTURE PVT LTD & ORS. versus THE STATE GOVT. OF NCT OF DELHI AND ANR. (and connected matters)
• Name of the Judge: HON’BLE MR. JUSTICE AJAY DIGPAUL
• Citation Number: 2025:DHC:7837
• Date of the Judgment: 09.09.2025

2. Brief Facts: The Cheque Dishonour Dispute Leading to the Appeal

The case originated from a real estate transaction. The complainant (respondent no. 2) had invested in a project and later entered into a buy-back agreement with the accused (petitioners) for 22 flats. The total consideration was ₹3,78,76,866/-.

As part of this agreement, the accused issued nine post-dated cheques of ₹40,00,000/- each. The accused’s primary contention was that these cheques were only for “security” and were not meant to be presented. They argued that the agreement stipulated that upon actual payment for two flats, a corresponding cheque would be returned. They further pointed to clauses suggesting that in case of default, fresh PDCs with interest would be issued, not that the old cheques would be encashed. From the accused’s perspective, since the titles for the flats were never transferred to them, no “legally enforceable debt” ever arose.

The complainant, however, contended that these cheques represented a “legally enforceable liability” against the accused. When the cheques were dishonoured, the complainant initiated proceedings under Section 138 of the NI Act.

3. Case Timelines: From Trial Court Conviction to the 20% Deposit Order

• 16.12.2024: The learned Metropolitan Magistrate (Trial Court) passed the judgments of conviction against the accused.
• 28.01.2025: The Trial Court passed the orders on sentencing.
• May 2025: The accused filed appeals (C.A. nos. 75-80/2025) before the learned ASJ, Saket Courts (Appellate Court).
• 24.05.2025: The learned ASJ passed the “impugned order”. This order suspended the accused’s sentence subject to them depositing 20% of the fine amount.
• August 2025: The accused filed the present revision petitions in the Hon’ble High Court of Delhi, challenging the 20% deposit direction.
• 09.09.2025: The Hon’ble High Court of Delhi passed its final judgment on the revision petitions.

4. Rulings of the Lower Courts

4.1. The Trial Court’s Conviction

The Trial Court found the accused guilty of the offence under Section 138 of the NI Act. It passed judgments of conviction and sentencing, which led the accused to file an appeal.

4.2. The Appellate Court’s Order: The 20% Deposit Mandate

Before the learned ASJ (Appellate Court), the accused (appellants in that court) argued that they should be exempted from the 20% deposit. They raised arguments about the conviction being flawed (cheques were security, no debt existed). The learned ASJ, after hearing both sides, issued the order dated 24.05.2025, directing the 20% deposit.

The ASJ’s reasoning was based on the prevailing law. It noted that while Jamboo Bhandari allows for exceptions, the later Supreme Court judgment in Muskan Enterprises clarified the position. The ASJ held that a deposit should normally be directed. It stated that an exception could only be made if, “upon a plain reading of the Trial Court’s order… it becomes apparent that the same are wholly incorrect and erroneous”.

The learned ASJ concluded that, upon its own “prima facie reading,” the Trial Court’s judgment did not suffer from such obvious infirmities. It observed that checking the accused’s arguments in detail would require a “thoughtful examination of the entire record,” which is not the purpose of a hearing for suspension of sentence.

5. The Core Conflict: Can You challenge the 20% deposit order in the High Court?

Aggrieved by the Appellate Court’s direction to deposit 20% of the fine, the accused (petitioners) decided to challenge the 20% deposit order in the High Court. They filed criminal revision petitions before the Hon’ble High Court of Delhi, seeking a waiver of 20% deposit in a cheque bounce appeal. This set the stage for the Hon’ble High Court to decide two critical issues.

6. Key Issue 1: Maintainability of Revision Petition against order under Section 148 of NI ACT

6.1. Complainant’s Objection: Why the Revision Petition is Not Maintainable

The complainant (respondent) raised a preliminary objection, challenging the very maintainability of these revision petitions. They argued that an order directing a deposit under Section 148 is “interlocutory” in nature. Citing a Madras High Court decision, they contended that such interlocutory orders cannot be challenged via a revision petition, and the only possible remedy (if any) would be under Section 482 of the CrPC.

6.2. Accused’s Stand: Why They Can challenge the 20% deposit order in the High Court

The accused (petitioners) countered this by pointing out that their petitions were filed under Section 442 read with Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). They argued that this invocation gave the Hon’ble High Court the necessary jurisdiction to hear the challenge.

6.3. Hon’ble High Court’s Decision on the Maintainability of Revision Petition

The Hon’ble High Court rejected the complainant’s objection and held that the revision petitions were maintainable.

The Hon’ble Court chose a different route than the Bapuji Murugesan case. It held that an order under Section 148 cannot be classified as purely interlocutory. The Hon’ble Court’s reasoning was:

• The Hon’ble Supreme Court in Jamboo Bhandari noted that a deposit order could, in some cases, “amount to deprivation of the right of appeal”.
• The Hon’ble High Court applied the test for an “intermediate order” : an order which, if passed in one way, continues proceedings, but if passed in another, terminates them.
• It observed: “…when such an order calling for a deposit cannot be complied with by the appellant – the same may foreclose the appellant’s right to appeal, implying the termination of proceedings.”.
• Because such an order can prejudice and terminate an appellant’s rights, it is not a purely interlocutory order, and thus, a revision petition challenging it is not barred.
• The Hon’ble Court also noted that in the Jamboo Bhandari case itself, the Hon’ble Supreme Court had restored revision petitions, implying they were a proper remedy.

This decision firmly established the maintainability of a revision petition against an order under Section 148 of NI ACT before this Hon’ble Court.

7. Key Issue 2: Decoding the Discretion of Court under Section 148 of NI Act: Is It ‘May’ or ‘Shall’?

This was the central question: Is the 20% deposit a mandatory rule or a discretionary power?

7.1. Accused’s Argument: Seeking a Waiver of 20% Deposit in a Cheque Bounce Appeal

The accused argued that the discretion of the court under Section 148 of NI Act should be exercised in their favour. They heavily relied on the Hon’ble Supreme Court’s decision in Jamboo Bhandari , arguing that it “qualifying and diluting” the previously strict interpretation. They contended that a deposit can be waived if it is “unjust” or “curbing a party’s right to appeal”. They insisted that their conviction was so “wholly incorrect” (given the “security” cheque argument) that forcing a deposit would be unjust.

7.2. Complainant’s Argument: Why the Deposit is Mandatory

The complainant argued that the purpose of Section 148 is to protect the recipient of the cheque from being “entangle[d]… in endless litigation”. They relied on the Surender Singh Deswal judgment, which first interpreted “may” as “shall,” making the deposit mandatory. They argued that the exceptions discussed in Jamboo Bhandari and Muskan Enterprises are extremely rare and only apply where the conviction is flawed on a prima facie or “plain reading,” not when the accused simply wants to re-argue the entire case.

7.3. The Evolution of Law: From Deswal to Jamboo Bhandari

The Hon’ble High Court analyzed the evolution of the law on this point:

• Surender Singh Deswal: This judgment laid down that the word “may” in Section 148 should be interpreted as “shall,” making the deposit mandatory.
• Jamboo Bhandari: This judgment softened the mandatory rule. It held that while directing a deposit is the ordinary course , an exception can be made if the deposit is “unjust” or would lead to a “deprivation of the appellant’s right to appeal”.
• Muskan Enterprises: This judgment, which the Hon’ble High Court noted is the prevailing law, augmented the exceptions.

8. Key Issue 3: The Crucial Question: What are the Exceptions under Section 148 of the NI Act?

The Hon’ble High Court’s judgment provides a clear summary of the limited exceptions under Section 148 of the NI Act. A waiver is not the rule, but it is possible in rare cases.

8.1. Exception 1: The “Unjust or Deprivation of Right” Rule

Based on Jamboo Bhandari, an Appellate Court can waive the deposit if it is satisfied that ordering it would be:

• “Unjust”; or
• Imposing a condition that would amount to “deprivation of the appellant’s right to appeal”.

8.2. Exception 2: The “Wholly Incorrect Conviction” Rule

Based on Muskan Enterprises, the deposit can also be waived where an impugned order is so “wholly incorrect or erroneous that is only a matter of time for the same to be set aside”.

However, the Hon’ble High Court crucially clarified the degree of scrutiny for this exception. Agreeing with the complainant and the learned ASJ, it held that this opinion must be formed “on a plain reading of the order”. It does not permit a detailed re-evaluation of evidence. The accused’s arguments about the “security” nature of the cheques, the Trial Court’s application of Sampelly vs. Indus Airways, or the roping in of directors were all matters for the final appeal, not for a “plain reading”.

8.3. The Plea of Financial Hardship: Is it a Valid Exception?

The accused did raise a plea of financial hardship, linking to the “deprivation of the right to appeal” exception. They mentioned a “real estate market that is presently non-lucrative”.

The Hon’ble High Court flatly rejected this argument. It noted that Mr. Mathur, the learned Senior Counsel, was “unable to point out where such claim has been substantiated by adequate reasoning/ documentation”. The Hon’ble Court firmly held: “…claims of financial hardship, when made to convince the Court that a deposit under Section 148 would deprive the appellant’s right to appeal, ought to be supplemented by requisite proof.”.

Since the accused’s plea was merely a bald statement without any supporting evidence, it failed to meet the high bar for this exception.

Navigating the legalities of a waiver of 20% deposit in a cheque bounce appeal requires a careful understanding of the law. The discretion of the court under Section 148 of NI Act is limited, and understanding if your case falls into the exceptions under Section 148 of the NI Act is crucial. If you wish to have a deeper understanding of your specific situation or the maintainability of a revision petition against an order under Section 148 of NI ACT, you can book a time to discuss. Schedule an Appointment.

9. Hon’ble High Court’s Final Judgment on the Waiver Request

The Hon’ble High Court found “no merit in the present batch of revision petitions” and dismissed them.

The Hon’ble Court’s reasoning was:

• The learned ASJ had correctly understood and applied the law from Jamboo Bhandari and Muskan Enterprises.
• The learned ASJ correctly performed the “plain reading” exercise and rightly concluded that the accused’s arguments would require a “detailed reappreciation” of evidence, which is not permitted at this stage.
• The accused failed to provide any proof for their claim of financial hardship, so this exception was not met.

The Hon’ble High Court upheld the learned ASJ’s order and directed the accused (petitioners) to “comply with the directions… within a period of one week”.

10. Conclusion: Key Takeaways for Complainants and Accused

This judgment provides critical takeaways for both sides of a cheque dishonour appeal.

• For the Accused (Appellant): Seeking a waiver of 20% deposit in a cheque bounce appeal is an uphill battle. The deposit is the ordinary rule. To get an exception, you cannot simply re-argue your trial defence. You must demonstrate one of the rare exceptions under Section 148 of the NI Act, such as:
  • Proving with documented evidence that the deposit would be so “unjust” or “onerous” that it deprives you of your right to appeal (a simple claim of a “non-lucrative market” is not enough).
  • Showing the Trial Court’s conviction is “wholly incorrect” on a “plain reading” without a deep-dive into the evidence.While you can challenge the 20% deposit order in the High Court (as the petition was found maintainable), the grounds for success are extremely narrow.
• For the Complainant (Respondent): This judgment strengthens your position. It affirms that the discretion of the court under Section 148 of NI Act leans heavily in favour of ordering the deposit. This provision is meant to protect you from frivolous appeals and endless litigation. The burden is on the accused to prove they deserve a rare exception, and this judgment shows that is a very high bar to clear.

11. Frequently Asked Questions

Q: Is paying 20% deposit under Section 148 NI Act mandatory to appeal in a cheque bounce case?

It is not absolutely mandatory, but it is the “ordinary rule”. The judgment clarifies that while the court has discretion, it “leans heavily in favour of ordering the deposit”. A waiver is only granted in “rare and exceptional cases”.

Q: Can a court waive the 20% deposit in a cheque bounce appeal?

Yes, but it is an exception, not the rule. The article, based on a Hon’ble High Court judgment, explains that while a deposit is ordinarily directed, an Appellate Court has the discretion to waive it in “rare, fit and appropriate” cases.

Q: What are the exceptions to Section 148 of the NI Act?

The judgment identifies two main exceptions based on Hon’ble Supreme Court rulings:

• If ordering the deposit would be “unjust” or would “amount to deprivation of the appellant’s right to appeal”.
• If the conviction order is so “wholly incorrect or erroneous” on a “plain reading” that it’s just a matter of time before it’s set aside.

Q: My conviction is completely wrong, do I still have to deposit 20%?

Most likely, yes. The article explains that the exception for a “wholly incorrect conviction” only applies if the error is obvious “on a plain reading”. It does not apply if your argument requires a “detailed reappreciation” of the trial evidence (like the “security cheque” argument discussed in the case).

Q: What if I can’t pay the 20% deposit? Will I lose my right to appeal?

The article implies this is a risk. It states that an order for a deposit can “foreclose the appellant’s right to appeal”. This is why “deprivation of the right to appeal” is a valid exception, but you must prove it. A simple claim of “financial hardship” is not enough; the judgment requires “adequate reasoning/documentation” as proof.

Q: Is “financial hardship” a valid reason to get a waiver of the 20% deposit?

Not by itself. The judgment held that a simple, unsubstantiated claim of financial hardship (like a “non-lucrative market”) is not enough. To use this argument, the accused must provide “adequate reasoning/ documentation” to prove that the deposit would effectively deprive them of their right to appeal.

Q: Can I challenge the 20% deposit order in the High Court?

Yes. The judgment in this article specifically dealt with this issue. The accused (petitioners) filed criminal revision petitions in the Hon’ble High Court of Delhi to challenge the 20% deposit order, and the Hon’ble Court proceeded to hear the case.

Q: Is a revision petition against a 20% deposit order maintainable? Isn’t it an “interlocutory order”?

The Hon’ble High Court held that the revision petition was maintainable. It reasoned that an order under Section 148 is not purely interlocutory. Because non-compliance with the order could “foreclose the appellant’s right to appeal,” it is an “intermediate order” that can be challenged via a revision petition.

Q: Is the accused required to deposit 20% of the fine during the appeal?

Ordinarily, yes. The Hon’ble High Court’s judgment affirmed that this is the general rule. The purpose is to protect the complainant from being “entangle[d]… in endless litigation”, and the court’s discretion leans in favour of ordering the deposit.

Q: Can the accused get away with not paying the deposit under Section 148?

Only in “rare, fit and appropriate” cases. The article shows that the accused must prove one of the specific exceptions, such as a “wholly incorrect” conviction on a “plain reading” or proven financial hardship that deprives them of their right to appeal. In the case discussed, the accused failed to meet this high bar.

Q: What happens if the accused challenges the 20% deposit order?

The challenge will be heard by the Hon’ble High Court (it was found to be maintainable). However, the burden is on the accused to prove their case falls into a rare exception. In the case discussed, the Hon’ble High Court heard the challenge and dismissed it, forcing the accused to pay the 20% deposit.

Q: In the case discussed, did the accused get a waiver of the 20% deposit in their cheque bounce appeal?

No, they did not. The Hon’ble High Court dismissed their petitions. It found that the accused had failed to prove any of the rare exceptions, such as providing evidence of financial hardship or showing that the Trial Court’s conviction was “wholly incorrect” on a plain reading.

Q: What does this judgment mean for complainants in a cheque bounce appeal?

This judgment strengthens the complainant’s position. It affirms that the 20% deposit is the ordinary rule and the burden of proof is very high for the accused to get a waiver. It protects the complainant from frivolous appeals intended to cause delays.

Disclaimer: In compliance with the Bar Council of India guidelines, this article is intended for informational purposes only and does not constitute legal advice or a solicitation for legal services.