Delhi High Court Rejects Poverty Plea of Cheque Bounce Convict

Introduction: A Strong Message from the Delhi High Court

In a decisive and strongly worded order, the Delhi High Court has reiterated that depositing compensation under Section 148 of the Negotiable Instruments Act, 1881 is the rule, not the exception. A convicted cheque bounce offender cannot escape this statutory obligation by merely pleading poverty, old age, or ill health.

The ruling arose in a case where a 68-year-old convict sought to avoid depositing any amount out of ₹1.90 crore compensation. Rejecting the plea, the Court observed that the petitioner had “not deposited a single penny” and failed to demonstrate any exceptional circumstance.

The judgment reinforces the legislative intent behind the 2018 amendment, aimed at preventing abuse of appellate remedies and ensuring victims are not deprived of compensation due to prolonged litigation.

Background of the Case

The case involved a serious financial transaction based on a forged Letter of Credit. On the strength of the forged document, the petitioner obtained substantial funds from a bank.

When repayment was demanded, the petitioner issued a cheque, which was dishonoured for insufficiency of funds, resulting in prosecution under Section 138 NI Act.

The Trial Court convicted the accused, sentencing him to one year’s imprisonment and directing payment of over ₹1.90 crore as compensation. The Appellate Court upheld the conviction.

Seeking suspension of sentence without depositing any amount under Section 148, the convict approached the Delhi High Court.

Arguments Raised by the Convict

• Claim of financial poverty and inability to deposit compensation
• Plea of old age and health issues
• Argument that deposit under Section 148 is discretionary
• Assertion that deposit would infringe the right to appeal

Understanding Section 148 NI Act

Why Section 148 Was Introduced

The 2018 amendment sought to curb delay tactics adopted by convicted cheque bounce offenders, who often prolonged litigation without paying compensation.

Purpose of the Provision

• Discourage frivolous appeals
• Ensure partial restitution to victims
• Maintain credibility of cheque transactions
• Balance rights of accused and complainants

Delhi High Court’s Findings

1. Deposit Is the Rule, Not the Exception

The Court held that deposit under Section 148 is the norm. Waiver can be granted only in rare and exceptional circumstances, supported by cogent material.

2. Financial Incapacity Is Not an Exceptional Circumstance

The petitioner failed to produce credible financial documents or insolvency records. Mere claims of poverty were held insufficient.

3. “Not Deposited a Single Penny” – Lack of Bona Fides

The Court noted that the petitioner enjoyed interim protection but showed no seriousness in complying with statutory obligations, demonstrating lack of bona fides.

4. Legislative Intent Cannot Be Defeated

Allowing convicts to bypass deposit would defeat the purpose of Section 148 and undermine confidence in banking and commercial transactions.

Relevant Judicial Precedents

• Surinder Singh Deswal v. Virender Gandhi (2019)
• Jamboo Bhandari v. State of Madhya Pradesh (2023)
• Consistent High Court rulings rejecting poverty as a ground for waiver

Why This Judgment Matters

• Strengthens financial accountability
• Protects victims of cheque dishonour
• Discourages delay tactics
• Enhances trust in judicial enforcement