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When a business proprietor or individual convicted of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) files a criminal appeal and seeks suspension of sentence, is the Appellate Court's direction to deposit 20% of the compensation amount automatic, or can it be waived? Furthermore, what happens when the appellant fails to establish an exceptional circumstance for waiver but requires additional time to arrange the deposit? In an important ruling clarifying appellate practice under Section 148 of the NI Act and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), the High Court of Judicature at Madras upheld the 20% deposit condition while granting a final time extension to prevent cancellation of bail.

Case Details at a Glance

• Case Title: Mohanlal Bora, Proprietor, Mohan Metals vs. M/s. Darshan Comtrade Pvt. Ltd., Rep. by its Director Samir Mehta
• Court Name: High Court of Judicature at Madras (Principal Seat)
• Coram / Judge Name: The Honourable Mr. Justice G.K. Ilanthiraiyan
• Case Number: Crl.O.P. No. 19171 of 2026 (CNR: HCMA011590912026)
• Appellate & Trial Proceedings: Crl.M.P. No. 1 of 2026 in Crl.A. No. 530 of 2026 (XVIII Additional City Civil Court, Chennai) arising from S.T.C. No. 9418 of 2023 (XXVI Metropolitan Magistrate, Egmore, Chennai)
• Order Pronounced Date: 03.11.2026 (Uploaded on: 04.11.2026)

1. Factual Background: Conviction in S.T.C. No. 9418 of 2023

The dispute arose out of a commercial cheque dishonour prosecution instituted by the respondent company, M/s. Darshan Comtrade Pvt. Ltd., against the petitioner, Mohanlal Bora, Proprietor of Mohan Metals, before the learned XXVI Metropolitan Magistrate, Egmore, Chennai, in S.T.C. No. 9418 of 2023.

Upon conclusion of the trial, by judgment dated 17.03.2026, the learned XXVI Metropolitan Magistrate convicted the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The Trial Court sentenced the petitioner to undergo one year of simple imprisonment and directed him to pay compensation equivalent to the cheque amount of Rs. 1,05,27,405/- (Rupees One Crore Five Lakhs Twenty-Seven Thousand Four Hundred and Five) to the complainant, with a default sentence of 30 days simple imprisonment.

2. The Appellate Court's Suspension of Sentence Order (15.04.2026)

Aggrieved by the conviction and the Rs. 1.05 crore compensation award, the petitioner preferred a statutory criminal appeal in Crl.A. No. 530 of 2026 before the learned Additional Judge, XVIII Additional City Civil Court, Chennai, accompanied by Crl.M.P. No. 1 of 2026 seeking suspension of sentence pending disposal of the appeal.

By order dated 15.04.2026, the Appellate Court suspended the sentence of imprisonment alone until the disposal of the criminal appeal, subject to the condition that the petitioner deposit 20% of the compensation amount before the Trial Court within a period of sixty days (two months). Challenging this 20% deposit condition, the petitioner invoked the inherent jurisdiction of the Madras High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) in Crl.O.P. No. 19171 of 2026.

3. Application of the Supreme Court Ratio in Jamboo Bhandari

Examining the legality of the Appellate Court's condition, Justice G.K. Ilanthiraiyan referred to the authoritative pronouncement of the Hon'ble Supreme Court of India governing Section 148 of the Negotiable Instruments Act:

"4. The Hon'ble Supreme Court of India in the case of Jamboo Bhandari Vs. M.P. State Industrial Development Corporation Ltd. & ors reported in 2023 (3) MWN Crl. 104 (SC) has held that the requirement to deposit of 20% of the compensation amount is not an absolute rule and it can be reduced or even exempted in exceptional cases by assigning reasons."

Under the legal framework established in Jamboo Bhandari, while Section 148 of the NI Act empowers the Appellate Court to order a minimum deposit of 20% of the fine or compensation awarded by the Trial Court, the provision is not a rigid, mechanical mandate in every single case. If an appellant demonstrates before the court that genuine exceptional circumstances exist—such as where imposing the deposit would unjustly deprive the appellant of their right to pursue the appeal or where prima facie illegality vitiates the conviction—the court may record special reasons to reduce or exempt the deposit.

4. High Court's Finding: No Exceptional Circumstance Demonstrated

Applying this standard to the facts on record, the Madras High Court evaluated whether the petitioner had established any valid ground or exceptional circumstance warranting a reduction or exemption from the 20% statutory threshold. Justice G.K. Ilanthiraiyan concluded:

• Absence of Exceptional Grounds: The petitioner failed to place any valid reason or exceptional circumstance before the Court to justify reducing the 20% deposit ordered on the Rs. 1,05,27,405/- compensation amount.
• Appellate Order Upheld: Consequently, the High Court found no infirmity or illegality in the order dated 15.04.2026 passed by the XVIII Additional City Civil Court, Chennai, in Crl.M.P. No. 1 of 2026 in Crl.A. No. 530 of 2026.

5. Operative Direction: Extension of Time With Self-Executing Default Clause

Although the High Court declined to reduce the quantum of deposit, considering that the two-month timeframe fixed by the Appellate Court in April 2026 had elapsed during the pendency of the challenge, the Court granted equitable relief by extending the time for compliance:

1. Extended Deadline to Deposit: The petitioner was directed to comply with the 20% deposit condition imposed in the order dated 15.04.2026 on or before 23.11.2026.
2. Automatic Cancellation on Default: The High Court explicitly ordered that if the petitioner fails to deposit the 20% amount on or before 23.11.2026, the time-extension order shall automatically stand cancelled, and the Appellate Court shall take appropriate action against the accused in accordance with law.

6. Strategic Lessons for Litigants in Section 138 NI Act Appeals

This decision offers three practical takeaways for commercial litigants and advocates handling high-value cheque bounce appeals across Tamil Nadu:

• Plead Specific Exceptional Circumstances Early: Relying on Jamboo Bhandari requires more than merely citing the judgment. The petition for suspension of sentence before the Sessions Court (and any subsequent petition under Section 528 BNSS) must be supported by concrete documentary material proving severe financial distress, insolvency, or a glaring legal flaw on the face of the Trial Court's conviction.
• Seek Extension Before Expiry of Deposit Window: Where an appellant intends to comply with the 20% deposit but faces liquidity constraints in high-value cheque cases exceeding Rs. 1 crore, approaching the High Court for a structured extension of time protects the suspension of sentence from lapsing.
• Strict Adherence to Peremptory Deadlines: When the High Court grants an extension of time coupled with a self-executing default clause, the deposit must be remitted before the Trial Court prior to the cut-off date to avoid immediate execution of the conviction warrant.

For comprehensive legal guidance on Negotiable Instruments Act trials, Section 138 criminal appeals, suspension of sentence petitions, and commercial litigation across Tamil Nadu, explore our services at SK Law House Criminal Defense Practice, review our civil and commercial support at SK Law House Practice Areas, or schedule a consultation via the SK Law House Contact Page.