Mandatory deposit under Section 148 NI Act requires reasoned consideration of exceptional circumstances for waiver.

The petitioner was convicted by the Judicial Magistrate First Class, Raipur, under Section 138 of the Negotiable Instruments Act, 1881, on 07.11.2025.

He was sentenced to one year of Simple Imprisonment and ordered to pay compensation of ₹11,85,921/-.

The petitioner appealed the conviction before the First Additional Sessions Judge, Raipur, under Section 415 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

Along with the appeal, he filed an application for the suspension of sentence under Section 430 of the BNSS.

The Appellate Court stayed the execution of the judgment on 04.02.2026, subject to the condition that the petitioner deposit 20% of the compensation amount within 30 days.

The petitioner challenged this condition before the High Court, arguing it was imposed without assigning specific reasons.

Whether the Appellate Court is mandatorily required to record specific reasons or identify "exceptional circumstances" when imposing or waiving the condition to deposit a minimum of 20% of the fine/compensation under Section 148 of the N.I. Act.

The court applied Section 148 of the Negotiable Instruments Act, 1881 (as amended in 2018), which empowers the Appellate Court to order a deposit of a minimum of 20% of the fine or compensation pending appeal.

It further relied on the Supreme Court precedents of Jamboo Bhandari vs. M.P. State Industrial Development Corporation Ltd. & Ors. (2023) and Muskan Enterprises & Anr. vs. State of Punjab & Anr. (2024), which establish that while 20% is the norm, the Appellate Court must consider if a case qualifies as "exceptional" to warrant suspension without such a deposit and must record reasons for its conclusion.

The procedural framework was governed by Section 430 of the BNSS (corresponding to Section 389 of the Cr.P.C.).

The High Court observed that the literal use of the word "may" in Section 148 of the N.I. Act confers discretionary power upon the Appellate Court.

However, per the mandate in Jamboo Bhandari, this discretion must be exercised through a reasoned order.

The Court noted that the impugned order dated 04.02.2026 failed to disclose whether the Appellate Court had applied its mind to determine if the petitioner’s case was an "exceptional case" that might warrant a waiver of the 20% deposit condition.

Because the lower court passed the order mechanically without following the interpretative guidelines set by the Supreme Court regarding the recording of reasons, the order was found to be legally deficient.

The Court restored the petitioner’s application for suspension of sentence to the Appellate Court with a direction to reconsider it afresh and pass a reasoned order as per the guidelines in Jamboo Bhandari.

Pending this fresh consideration, the High Court directed that the execution of the trial court's judgment dated 07.11.2025 shall remain suspended.