Delhi High Court Orders Complainant to Refund Section 148 Deposit After Accused’s Acquittal; Holds Interim Amount Cannot Be Retained Once Conviction Is Set Aside
Delhi High Court Dismisses Complainant’s Challenge to Refund Order; Holds Section 148 NI Act Requires Repayment After Accused Is Acquitted
Facts
The petitioner, Arun Malhotra, was the complainant in a prosecution under Section 138 of the Negotiable Instruments Act, 1881. The trial court convicted respondent nos. 2 and 3 and directed them to pay a fine of ₹27.20 lakh, payable as compensation to the complainant.
The accused challenged the conviction in appeal. During the pendency of the appeal, the appellate court invoked Section 148 NI Act and directed them to deposit 20% of the fine amount, namely ₹5.44 lakh, in the form of an FDR.
That amount was later released to the complainant during the appeal. Ultimately, the appellate court set aside the conviction and acquitted the accused.
After acquittal, the trial court directed the complainant to refund the ₹5.44 lakh. The complainant challenged that direction before the Delhi High Court under Section 482 Cr.P.C.
Issues
The central issue was whether a complainant who receives an amount deposited under Section 148 NI Act during pendency of an appeal can retain that amount even after the accused is acquitted.
A subsidiary issue was whether the refund order was invalid merely because it had been passed by the trial court instead of the appellate court.
Petitioner’s Arguments
The complainant argued that there was no statutory mandate requiring automatic refund of the deposited amount after acquittal.
He also argued that no independent refund application had been filed by the accused, and that the order was passed hastily without adequate opportunity to object.
It was further contended that, if a refund was to be ordered at all, it ought to have been directed by the appellate court and not the trial court. The complainant also relied on the Supreme Court’s intervening order, contending that it had not expressly directed release of the ₹5.44 lakh to the accused.
Respondents’ Arguments
The accused opposed the petition and submitted that there was no infirmity in the refund order.
The State also pointed out that, when the amount had originally been released to the complainant, he had given an undertaking to repay/refund the amount depending upon the final outcome of the appeal.
Analysis of the Law
The High Court examined Section 148(3) of the Negotiable Instruments Act.
The provision empowers the appellate court to release the deposited amount to the complainant during pendency of the appeal. However, the proviso expressly states that if the appellant is acquitted, the court shall direct the complainant to repay the amount so released, along with interest at the applicable RBI bank rate.
The Court held that this language is unequivocal.
Once the conviction is set aside and the accused is acquitted, the complainant has no statutory right to continue retaining the amount released under Section 148.
Precedent Analysis
The judgment primarily turned on the express language of Section 148(3) NI Act rather than an extensive survey of precedent.
The Court also took note of the Supreme Court’s order dated 22 August 2025, by which the complainant’s SLP was dismissed and he was directed to deposit the ₹5.44 lakh before the appellate court to be kept in an interest-bearing fixed deposit pending further orders.
The High Court held that the Supreme Court’s order did not prevent it from finally deciding the Section 482 petition on merits.
Court’s Reasoning
The Court found that the statutory scheme itself answered the dispute.
Section 148 permits release of the appellate deposit during pendency of the appeal only on a conditional basis. If the accused is ultimately acquitted, repayment follows as a statutory consequence.
The High Court also relied on the complainant’s express undertaking before the appellate court that he would repay the amount subject to disposal of the appeal.
The Court was critical of the complainant’s repeated failure to comply with various directions requiring him to redeposit the money. It recorded that he deposited the amount only after repeated orders and when left with no practical alternative.
As to the technical objection that the refund order had been passed by the trial court rather than the appellate court, the High Court accepted that the appellate court would have been the proper court to pass such an order. However, in light of the subsequent developments and the complainant’s conduct, it declined to set aside the refund direction on that technical ground alone.
Conclusion
The Delhi High Court held that the complainant was bound to refund the ₹5.44 lakh because the appeal had ended in acquittal.
The Court dismissed the petition and granted liberty to respondent nos. 2 and 3 to withdraw the amount deposited by the complainant pursuant to the High Court’s earlier directions.
Case Details
Case: Arun Malhotra v. State Govt. of NCT of Delhi & Anr.
Court: Delhi High Court
Case Number: CRL.M.C. 9373/2023 with connected applications
CNR: DLHC010551462023
Judge: Justice Chandrasekharan Sudha
Reserved: 1 September 2026
Pronounced: 9 September 2026
Result: Petition dismissed; complainant held bound to refund the Section 148 amount after acquittal; accused permitted to withdraw the deposited ₹5.44 lakh.
