Upon acquittal, the complainant must repay amounts released under Section 148 with statutory interest.

The petitioner, complainant in a complaint under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”), challenged the order dated 13 December 2023 directing him to return ₹5,44,000 deposited by respondent nos. 2 and 3 under Section 148 of the NI Act and subsequently released to him during the pendency of their appeal.

The trial court had convicted the respondents and directed them to pay a fine of ₹27,20,000 jointly and severally as compensation to the petitioner.

In appeal, the Sessions Court directed the respondents to deposit 20% of the fine, amounting to ₹5,44,000, in an FDR in the petitioner’s name under Section 148 of the NI Act.

The appellate court subsequently set aside the conviction and acquitted the respondents on 30 October 2023.

The trial court thereafter directed the petitioner to refund the deposited amount.

Whether, upon the respondents’ acquittal in the appeal, the petitioner was legally bound to repay the amount of ₹5,44,000 released to him under Section 148 of the NI Act?

Whether the trial court’s direction to refund the amount was liable to be set aside on the ground that the refund order ought to have been passed by the appellate court?

The Court applied Section 148(1) of the NI Act, which empowers the appellate court, in an appeal against a conviction under Section 138, to direct the appellant to deposit at least 20% of the fine or compensation awarded by the trial court.

Under Section 148(3), the appellate court may release the deposited amount to the complainant during the pendency of the appeal; however, its proviso mandates that, if the appellant is acquitted, the complainant shall repay the amount so released, together with interest at the bank rate, within the prescribed period.

The Court also applied the petitioner’s express undertaking before the appellate court to repay the amount/FDR upon disposal of the appeal.

The Supreme Court’s order requiring deposit and continued investment of ₹5,44,000 pending further orders did not bar the High Court from deciding the petition on merits.

The Court held that the respondents’ acquittal activated the proviso to Section 148(3) of the NI Act, which uses mandatory language and leaves no scope for the complainant to retain interim compensation after the conviction has been set aside.

The petitioner’s position was further weakened by his undertaking before the appellate court to repay the amount if the appeal ended in the respondents’ favour.

Although the Court accepted that the refund direction technically ought to have been issued by the appellate court rather than the trial court, it declined to interfere on that ground alone because the petitioner had himself approached the trial court after the appeal and had repeatedly failed to comply with subsequent directions to deposit the amount.

The Supreme Court’s direction concerning deposit and investment of the amount was treated as an interim arrangement and not as an impediment to final adjudication of the refund obligation.

The Court granted the respondents liberty to withdraw the amount deposited by the petitioner pursuant to the High Court’s order dated 7 April 2026.

Pending applications were closed.