Appellate court may not order deposit of 20% of compensation in appeal against conviction in checque dishonour case

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April 19, 2026

We may take the discussion a little forward to emphasize

our point of view. There could arise a case before the Appellate

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Court where such court is capable of forming an opinion, even in

course of considering as to what would be the appropriate

quantum of fine or compensation to be kept in deposit, that the

impugned conviction and the consequent sentence

recorded/imposed by the trial court is so wholly incorrect and

erroneous that it is only a matter of time for the same to be set

aside and that ordering a deposit would be unnecessarily

burdensome for the appellant. Such firm opinion could be formed

on a plain reading of the order, such as, the conviction might have

been recorded and sentence imposed without adherence to the

mandatory procedural requirements of the N.I. Act prior to/at the

time lodging of the complaint by the complainant rendering the

proceedings vitiated, or the trial court might have rejected

admissible evidence from being led and/or relied on inadmissible

evidence which was permitted to be led, or the trial court might

have recorded an order of conviction which is its ipse dixit, without

any assessment/analysis of the evidence and/or totally

misappreciating the evidence on record, or the trial court might

have passed an order failing to disclose application of mind and/or

sufficient reasons thereby establishing the link between the

appellant and the offence, alleged and found to be proved, or that

the compensation awarded is so excessive and outrageous that it

fails to meet the proportionality test : all that, which would evince

an order to be in defiance of the applicable law and, thus, liable to

be labelled as perverse. These instances, which are merely

illustrative and not exhaustive, may not arise too frequently but its

possibility cannot be completely ruled out. It would amount to a

travesty of justice if exercise of discretion, which is permitted by

the legislature and could indeed be called for in situations such as

these pointed out above, or in any other appropriate situation, is

not permitted to be exercised by the Appellate Court by a judicial interpretation of ‘may’ being read as ‘shall’ in sub-section (1) of Section 148 and the aggrieved appellant is compelled to make a deposit of minimum 20% of the fine or compensation awarded by the trial court, notwithstanding any opinion that the Appellate Court might have formed at the stage of ordering deposit as regards invalidity of the conviction and sentence under challenge on any valid ground. Reading ‘may’ as ‘may’ leads to the text matching the context and, therefore, it seems to be just and proper not to denude the Appellate Court of a limited discretion conferred by the legislature and that is, exercise of the power of not ordering deposit altogether albeit in a rare, fit and appropriate case which commends to the Appellate Court as exceptional. While there can be no gainsaying that normally the discretion of the Appellate Court should lean towards requiring a deposit to be made with the quantum of such deposit depending upon the factual situation in every individual case, more so because an

order under challenge does not bear the mark of invalidity on its

forehead, retention of the power of such court not to order any

deposit in a given case (which in its view and for the recorded

reasons is exceptional) and calling for exercise of the discretion to

not order deposit, has to be conceded. If indeed the legislative

intent were not to leave any discretion to the Appellate Court,

there is little reason as to why the legislature did not also use

‘shall’ instead of ‘may’ in sub-section (1). Since the self-same

section, read as a whole, reveals that ‘may’ has been used twice

and ‘shall’ thrice, it must be presumed that the legislature was

well and truly aware of the words used which form the skin of the

language. Reading and understanding the words used by the

legislature in the literal sense does not also result in manifest

absurdity and hence tinkering with the same ought to be avoided

at all costs. We would, therefore, read ‘may’ as ‘may’ and ‘shall’ as ‘shall’, wherever they are used in Section 148. This is because, the words mean what they say. {Para 27}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL No. 5491/2024

MUSKAN ENTERPRISES & ANR. Vs THE STATE OF PUNJAB & ANR.

DIPANKAR DATTA, J.

Citation: 2024 INSC 1046.

1. Leave granted.

2. The judgment and order dated 18th May, 2024, passed by a

learned Judge of the High Court of Punjab and Haryana at

Chandigarh1 dismissing a petition2 under Section 482 of the

Code of Criminal Procedure, 19733 preferred by the appellants

is under assail in this appeal.

3. The basic facts are not in dispute.

4. Conviction for offence punishable under Section 138 of the

Negotiable Instruments Act, 18814 had been recorded against

the appellants by the Judicial Magistrate, 1st Class, Amloh,

1 High Court

2 CRM-M-25041-2024

3 Cr. PC

4 N. I. Act

District Fatehgarh5 vide judgment and order dated 15th

September, 2022. Consequently, the second appellant (the

proprietor of the first appellant) was sentenced to 2 years’

rigorous imprisonment; also, under Section 357(3), Cr. PC.

they were directed to pay compensation of Rs.74,00,000/-

(double the cheque amount) to the complainant who was

given the liberty to recover the same from the appellants.

5. The conviction and sentence, as aforesaid, were carried in

appeal by the appellants before the Sessions Court, Fatehgarh

Sahib6. While admitting the appeal by order dated 17th

October, 2022, the Sessions Court suspended the sentence till

disposal of the appeal. The second appellant was granted bail.

Additionally, the Sessions Court directed the appellants to

deposit 20% of the compensation amount awarded by the trial

magistrate within a period of sixty days in the court below,

being of the view that such a deposit (of 20%) was

imperative. The complainant was given liberty to withdraw the

deposit subject to furnishing an undertaking that the same

would be returned, if the appellants succeeded in the appeal.

6. Imposition of such condition by the Sessions Court for deposit

of 20% of the compensation awarded by the trial magistrate

was questioned by the appellants before the High Court in a

5 trial magistrate

6 Sessions Court

petition7 filed under Section 482, Cr. PC.

7. The said petition was considered by the High Court on 01st

May, 2023, i.e., at a point of time when the decision of this

Court in Surinder Singh Deswal @ Col. S. S. Deswal vs

Virender Gandhi8 was governing the field on interpretation of

Section 148 of the N.I. Act. The said decision held the

condition for deposit in terms of Section 148, N.I. Act as

mandatory.

8. Learned counsel appearing for the appellants had argued for

some time. However, having found that his arguments would

yield no fruitful result since the High Court was bound by the

ratio of the decision in Surinder Singh Deswal (supra), he

made a statement that the appellants would withdraw the

petition. Accordingly, an order was passed to the effect that

the petition stands dismissed as withdrawn.

9. Close on the heels of dismissal of the said petition of the

appellants, as withdrawn, came the decision of another

coordinate bench of this Court in Jamboo Bhandari v.

Madhya Pradesh State Industrial Development

Corporation Ltd. and ors.9. Upon consideration of the law

laid down in Surinder Singh Deswal (supra), the bench in

7 CRM-M-21715-2023

8 2019 (11) SCC 341

9 (2023) 10 SCC 446

Jamboo Bhandari (supra) proceeded to hold as follows: –

“6. What is held by this Court is that a purposive

interpretation should be made of Section 148 of the

NI Act. Hence, normally, Appellate Court will be

justified in imposing the condition of deposit as

provided in Section 148. However, in a case where

the Appellate Court is satisfied that the condition of

deposit of 20% will be unjust or imposing such a

condition will amount to deprivation of the right of

appeal of the appellant, exception can be made for

the reasons specifically recorded.

7. Therefore, when Appellate Court considers the

prayer under Section 389 of the Cr. P.C. of an

accused who has been convicted for offence under

Section 138 of the N.I. Act, it is always open for the

Appellate Court to consider whether it is an

exceptional case which warrants grant of suspension

of sentence without imposing the condition of deposit

of 20% of the fine/compensation amount. As stated

earlier, if the Appellate Court comes to the conclusion

that it is an exceptional case, the reasons for coming

to the said conclusion must be recorded.”

10. Having regard to such decision, the appellants applied

afresh under Section 482, Cr. PC. It is this petition which has now

been dismissed by the High Court by the impugned order. The sole

ground assigned by the High Court is that since the earlier petition

had been withdrawn without liberty obtained to apply afresh, the

subsequent petition is not maintainable.

11. We have heard learned counsel appearing for the

appellants, the respondent no.2-complainant as well as the

respondent no.1- State of Punjab.

12. The short question emerging for our decision is whether the

High Court was justified in dismissing the subsequent petition

under section 482, Cr. PC for the reason that it assigned.

13. Having considered the materials on record as well as the

rival claims, we are of the considered view that the High Court was

unjustified in dismissing the subsequent petition on the ground

that the appellants had withdrawn the earlier petition without

obtaining leave to file afresh and, therefore, the petition under

consideration was not maintainable.

14. The procedural laws governing criminal proceedings and

civil proceedings in our country are quite dissimilar, though the

rule of audi alteram partem and a procedure that is both fair and

reasonable to both/all parties for rendering justice are at the heart

of both the Cr. PC and the Code of Civil Procedure, 190810. The

principle of res judicata, traceable in Section 11 of the CPC, does

neither apply to criminal proceedings nor is there any provision in

the Cr. PC akin to Order XXIII Rule 1(3), CPC. While Section 114

of the CPC read with Order XLVII thereof empowers the civil courts

to exercise the power of review, Section 362, Cr. PC bars a review.

A close reading of Sections 482, Cr. PC and 115, CPC would also

reflect that the purposes sought to be achieved by exercising the

high courts’ inherent powers, which the respective procedural laws

save, are also at variance. Prudence and propriety in the decision-

making process, thus, make it imperative for the high courts to

not confuse the procedural laws governing criminal and civil

proceedings.

15. The legal position as to whether a second petition under

Section 482, Cr. PC would be maintainable or not is no longer res

integra. We may notice a few decisions of this Court on the point.

16. In S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla11, a

decision arising out of the N.I. Act, the relevant high court had

given the party the liberty to avail any remedy in law, if available,

at the time of withdrawing her petition under section 482, Cr. PC.

This Court, observed that the high court would have the inherent

power to decide any successive petition under section 482 and

that it is not denuded of that power by the principle of res

judicata.

17. That the principle of res judicata has no application in a

criminal proceeding was reiterated by this Court in Devendra v.

State of U.P.12.

18. Recently, this Court in Bhisham Lal Verma v. State of

U.P13, has again held that there is no blanket rule against filing of

successive petition under section 482, Cr. PC before the high court.

It was also held that if such a petition is filed, it must be seen

11 (2007) 4 SCC 70

12 (2009) 7 SCC 495

13 2023 SCC OnLine SC 1399

whether there was any change in facts or circumstances,

necessitating the filing of such petition.

19. Section 482, Cr. PC, on its own terms, saves the inherent

powers of the high court to make such orders as may be necessary

(i) to give effect to any order under the Cr. PC, or (ii) to prevent

abuse of the process of any court, or (iii) to secure the ends of

justice. Change of law can legitimately be regarded as a vital

change in circumstance clothing the high court with the power,

competence and jurisdiction to entertain the subsequent petition

notwithstanding the fact that the earlier petition was withdrawn

without obtaining any leave, subject to the satisfaction recorded by

the high court that the order prayed for in the subsequent petition

ought to be made, inter alia, either to prevent abuse of the process

of any court or to secure the ends of justice.

20. Thus, in our considered opinion, the constricted view taken

by High Court to hold that the appellants were required to obtain

the leave of the Judge who had dismissed the earlier petition prior

to filing the subsequent petition is clearly untenable and not

warranted in law. It is noted that the appellants had applied a

second time before the High Court only when the law on

interpretation of Section 148, N.I. Act was laid down somewhat

differently in Jamboo Bhandari (supra) and not on any other

ground. It was not a review in disguise that the appellants

attempted but their endeavour was to impress the High Court to

have the law, currently governing the field, to be applied in their

case. In terms of the authorities referred to above, the subsequent

petition was well-nigh maintainable.

21. That the decisions in Surinder Singh Deswal (supra) and

Jamboo Bhandari (supra) have been rendered by benches of coequal

strength have not escaped our notice. However,

notwithstanding the legal position that a cleavage of opinion is

discernible owing to Jamboo Bhandari (supra) seeking to explain

the law by reading a limited discretion that an Appellate Court has

been conferred with by sub-section (1) of Section 148, which the

decision in Surinder Singh Deswal (supra) did not read, the

latter bench while deciding the matter before it having considered

the decision of the former bench, it is the decision of the latter

bench which is now the law.

22. Although a reference to a larger bench would have been

appropriate in view of the divergent views expressed in the said

decisions, we share the later view expressed in Jamboo Bhandari

(supra); and, we consider it proper to assign our own reason

therefor.

23. However, this must be preceded by reading Section 148 of

the N.I. Act. It reads:

“148. Power of Appellate Court to order payment pending appeal

against conviction.—(1) Notwithstanding anything contained in

the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal

by the drawer against conviction under Section 138, the

Appellate Court may order the appellant to deposit such sum

which shall be a minimum of twenty per cent of the fine or

compensation awarded by the trial Court:

Provided that the amount payable under this sub-section shall be

in addition to any interim compensation paid by the appellant

under Section 143-A.

(2) The amount referred to in sub-section (1) shall be deposited

within sixty days from the date of the order, or within such

further period not exceeding thirty days as may be directed by

the Court on sufficient cause being shown by the appellant.

(3) The Appellate Court may direct the release of the amount

deposited by the appellant to the complainant at any time during

the pendency of the appeal:

Provided that if the appellant is acquitted, the Court shall direct

the complainant to repay to the appellant the amount so

released, with interest at the bank rate as published by the

Reserve Bank of India, prevalent at the beginning of the relevant

financial year, within sixty days from the date of the order, or

within such further period not exceeding thirty days as may be

directed by the Court on sufficient cause being shown by the

complainant.”

(emphasis supplied)

24. Law is well-settled that user of the verbs ‘may’ and ‘shall’ in

a statute is not a sure index for determining whether such statute

is mandatory or directory in character. The legislative intent has to

be gathered looking into other provisions of the enactment, which

can throw light to guide one towards a proper determination.

Although the legislature is often found to use ‘may’, ‘shall’ or

‘must’ interchangeably, ordinarily ‘may’, having an element of

discretion, is directory whereas ‘shall’ and ‘must’ are used in the

sense of a mandatory provision. Also, while the general impression

is that ‘may’ and ‘shall’ are intended to have their natural

meaning, it is the duty of the court to gather the real intention of

the legislature by carefully analysing the entire statute, the section

and the phrase/expression under consideration. A provision

appearing to be directory in form could be mandatory in

substance. The substance, rather than the form, being relevant,

ultimately it is a matter of construction of the statute in question

that is decisive.

25. It is also a well-accepted rule that interpretation must

depend on the text and the context – the text representing the

texture and the context giving it colour – and, that interpretation

would be best, which makes the textual interpretation match the

contextual. While wearing the glasses of the statute-maker, the

enactment has to be looked at as a whole and it needs to be

discovered what each section, each clause, each phrase and each

word means and whether it is designed to fit into the scheme of

the entire enactment. While no part of a statute and no word of a

statute can be construed in isolation, statutes have to be

construed so that every word has a place and everything is in its

place. We draw inspiration for the above understanding of the

manner of interpreting a statute from the decision of this Court in

Reserve Bank of India v. Peerless General Finance &

Investment Co. Ltd.14.

14 AIR 1987 SC 1023

26. Wearing the glasses of the statute-maker, we need to read

the text as set in the context. What is most significant is that the

legislature has used both the verbs ‘may’ and shall’ in sub-section

(1) of Section 148, N.I. Act, but in different contexts. As we read

and understand the sub-section, what we find is that the verb

‘may’, implies discretion; and, if intended to have its natural

meaning, it would refer to the discretion left to the Appellate Court

to determine as to whether such court should order any deposit to

be made by the appellant or not pending hearing of the appeal

against the conviction and sentence recorded by the trial court.

What Jamboo Bhandari (supra) lays down is that deposit may

not be ordered if the Appellate Court finds a case to be exceptional

not calling for a deposit and the reasons for not ordering a deposit

are recorded in the order. On the contrary, the verb ‘shall’ used in

the same sentence and distanced from the verb ‘may’ by 8 (eight)

words, typically implies an obligation or duty that is referable to

the quantum of deposit, that is, the deposit, in any case, must not

be less than 20% of the fine or compensation awarded by the trial

court. What follows is that once the Appellate Court is satisfied

that a deposit is indeed called for, in an appropriate case, such

court’s power is in no way fettered to call upon the appellant to

deposit more than 20% of the awarded compensation, but in no

case can it be less than 20%. Interestingly, while the proviso to

sub-section (1) and sub-section (2) of Section 148 use ‘shall’ in

the relevant context, sub-section (3) again reverts to ‘may’ and its

proviso to ‘shall’. User of the verbs ‘may’ and ‘shall’ in different

contexts in the same section is clearly suggestive of the legislative

intent to mean what it said.

27. We may take the discussion a little forward to emphasize

our point of view. There could arise a case before the Appellate

Court where such court is capable of forming an opinion, even in

course of considering as to what would be the appropriate

quantum of fine or compensation to be kept in deposit, that the

impugned conviction and the consequent sentence

recorded/imposed by the trial court is so wholly incorrect and

erroneous that it is only a matter of time for the same to be set

aside and that ordering a deposit would be unnecessarily

burdensome for the appellant. Such firm opinion could be formed

on a plain reading of the order, such as, the conviction might have

been recorded and sentence imposed without adherence to the

mandatory procedural requirements of the N.I. Act prior to/at the

time lodging of the complaint by the complainant rendering the

proceedings vitiated, or the trial court might have rejected

admissible evidence from being led and/or relied on inadmissible

evidence which was permitted to be led, or the trial court might

have recorded an order of conviction which is its ipse dixit, without

any assessment/analysis of the evidence and/or totally

misappreciating the evidence on record, or the trial court might

have passed an order failing to disclose application of mind and/or

sufficient reasons thereby establishing the link between the

appellant and the offence, alleged and found to be proved, or that

the compensation awarded is so excessive and outrageous that it

fails to meet the proportionality test : all that, which would evince

an order to be in defiance of the applicable law and, thus, liable to

be labelled as perverse. These instances, which are merely

illustrative and not exhaustive, may not arise too frequently but its

possibility cannot be completely ruled out. It would amount to a

travesty of justice if exercise of discretion, which is permitted by

the legislature and could indeed be called for in situations such as

these pointed out above, or in any other appropriate situation, is

not permitted to be exercised by the Appellate Court by a judicial

interpretation of ‘may’ being read as ‘shall’ in sub-section (1) of

Section 148 and the aggrieved appellant is compelled to make a

deposit of minimum 20% of the fine or compensation awarded by

the trial court, notwithstanding any opinion that the Appellate

Court might have formed at the stage of ordering deposit as

regards invalidity of the conviction and sentence under challenge

on any valid ground. Reading ‘may’ as ‘may’ leads to the text

matching the context and, therefore, it seems to be just and

proper not to denude the Appellate Court of a limited discretion

conferred by the legislature and that is, exercise of the power of

not ordering deposit altogether albeit in a rare, fit and appropriate

case which commends to the Appellate Court as exceptional. While

there can be no gainsaying that normally the discretion of the

Appellate Court should lean towards requiring a deposit to be

made with the quantum of such deposit depending upon the

factual situation in every individual case, more so because an