REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.917944 OF 2019
(Arising out of SLP(Criminal) Nos. 49484975/2019
Surinder Singh Deswal @ Col. S.S.Deswal
and others …Appellants
versus
Virender Gandhi …Respondent
J U D G M E N T
M.R. SHAH, J.
Leave granted.
2. As common question of law and facts arise in this group of
appeals and, as such, all these appeals, arise out of the
impugned common judgment and order passed by the High
Court, are being decided and disposed of together by this
common judgment and order.
3. Feeling aggrieved and dissatisfied with the impugned
common order passed by the High Court of Punjab and Haryana
at Chandigarh, by which the High Court has dismissed the
respective revision applications and has confirmed the order
passed by the first appellate court – learned Additional Sessions
Judge, Panchkula, directing the appellants herein – original
1
appellants – original accused to deposit 25% of the amount of
compensation, in view of the provisions of amended Act No. 20 of
2018 in Section 148 of the Negotiable Instruments Act, 1881
(hereinafter referred to as the ‘N.I. Act’), the original appellants –
original accused have preferred the present appeals.
4. The facts leading to the present appeals in nutshell are as
under:
That criminal complaints were filed against the appellants
herein – original accused for the offence under Section 138 of the
N.I. Act. That the said criminal complaints were filed prior to
2.8.2018. That the learned trial Court vide judgment and order
dated 30.10.2018 convicted the appellants for the offence under
Section 138 of the N.I. Act and sentenced them to undergo
imprisonment of two years and to pay cheque amount + 1% as
interest and litigation expenses as fine.
4.1 Feeling aggrieved and dissatisfied with the order of
conviction passed by the learned trial Court, convicting the
appellants – original accused for the offence under Section 138 of
the N.I. Act and the sentence imposed by the learned trial Court,
the appellants – original accused have preferred criminal appeals
before the first appellate Court – learned Additional Sessions
2
Judge, Panchkula. In the said appeals, the appellants – original
accused submitted application/s under Section 389 of the Cr.
P.C. for suspension of sentence and releasing them on bail,
pending appeal/s.
4.2 That considering the provisions of amended Section 148 of
the N.I. Act, which has been amended by Amendment Act No.
20/2018, which came into force w.e.f. 1.9.2018, the first
appellate Court, while suspending the sentence and allowing the
application/s under Section 389 of the Cr.P.C, directed the
appellants to deposit 25% of the amount of compensation/fine
awarded by the learned trial Court.
4.3 Feeling aggrieved by the order passed by the learned first
appellate Court – learned Additional Sessions Judge, Panchkula
directing the appellants – original accused – original appellants to
deposit 25% of the amount of compensation/fine awarded by the
learned trial Court, pending appeal challenging the order of
conviction and sentence imposed by the learned trial Court, the
appellants approached the High Court of Punjab and Haryana at
Chandigarh by way of revision application/s.
4.4 It was the case on behalf of the appellants that Section 148
of the N.I. Act, as amended by Act No. 20/2018, shall not be
3
applicable with respect to criminal proceedings already initiated
prior to the amendment in Section 148 of the N.I. Act.
4.5 The High Court by a detailed judgment and order has not
accepted the aforesaid contention and has dismissed the revision
application/s and has confirmed the order passed by the learned
first appellate Court – learned Additional Sessions Judge,
Panchkula directing the appellants original appellantsoriginal
accused to deposit 25% of the amount of compensation awarded
by the learned trial Court considering Section 148 of the N.I. Act,
as amended.
4.6 Feeling aggrieved and dissatisfied with the impugned
common judgment and order passed by the High Court in
dismissing the revision application/s and confirming the order/s
passed by the learned first appellate Court directing the
appellants – original appellants – original accused to deposit 25%
of the amount of compensation awarded by the learned trial
Court under Section 148 of the N.I. Act, as amended, the original
appellants – original accused have preferred the present appeals.
5. Shri Vijay Hansaria, learned Senior Advocate has appeared
on behalf of the appellants – original appellants – original
4
accused and Shri Alok Sangwan, learned Advocate has appeared
on behalf of the original complainant.
5.1 Shri Vijay Hansaria, learned Senior Advocate appearing on
behalf of the appellants has vehemently submitted that in the
present case, both, the High Court as well as the learned first
appellate Court have materially erred in directing the appellants
to deposit 25% of the amount of compensation as per Section 148
of the N.I. Act, as amended.
5.2 It is vehemently submitted by the learned Senior Advocate
appearing on behalf of the appellants that in the present case as
the criminal proceedings were initiated and the complaints were
filed against the accused for the offence under Section 138 of the
N.I. Act, prior to the amendment Act came into force, Section 148
of the N.I.Act, as amended shall not be applicable.
5.3 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that the legal proceedings,
whether civil or criminal, are to be decided on the basis of the law
applicable on the date of the filing of the suit or alleged
commission of offence by the trial Court or the appellate Court,
unless the law is amended expressly with retrospective effect,
subject to the provisions of Article 20(1) of the Constitution of
5
India. In support of his above submission, learned Senior
Counsel appearing on behalf of the appellants has heavily relied
upon the decisions of this Court in the case of Garikapatti
Veeraya v. N. Subbiah Choudhury, reported in AIR 1957 SC 540;
and Videocon International Limited v. Securities and Exchange
Board of India, reported in (2015) 4 SCC 33.
5.4 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that even otherwise in the
present case, the first appellate Court has interpreted the word
“may” as “shall” in Section 148 of the N.I. Act and proceeded on
the basis that it is mandatory for the appellate Court to direct
deposit of minimum of 25% of the fine or compensation awarded
by the trial Court for suspension of sentence.
5.5 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that the first appellate
Court heavily relied upon the decision of the Punjab and Haryana
High Court in the case of M/s Ginni Garments and another v. M/s
Sethi Garments (CRR No. 9872 of 2018, decided on 04.04.2019),
in which it was held that the appellate Court continues to have
discretion as to the condition to be imposed or not to be imposed
6
for suspension of sentence and it was further held that however
in case discretion is exercised to suspend the sentence subject to
payment of compensation/fine, such order must commensurate
with Section 148 of the N.I. Act. It is submitted, however, in the
present case, the appellate Court did not exercise discretion and
proceeded on the assumption that it is mandatory to deposit 25%
of the fine or compensation as a condition for suspension of
sentence. It is submitted that therefore the High Court ought to
have remanded the matter back to the appellate Court to decide
on the question of suspension of sentence as per the decision in
the case of M/s Ginni Garments (supra).
5.6 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that a similar view is taken
by the Bombay High Court in the case of Ajay Vinodchandra
Shah v. The State of Maharashtra (Criminal Writ Petition No. 258
of 2019). It is submitted that in the said decision, the Bombay
High Court has also observed and held that as per Section 148 of
the N.I. Act as amended, the appellate Court has the discretion to
direct deposit the sum pending appeal, but if at all such direction
is given, that sum shall not be less than 20% of the amount of
fine or compensation awarded by the trial Court. It is submitted
7
that in the present case, the appellate Court wrongly presumed
that the requirement under Section 148 of the N.I. Act is the
deposit of 25% of the fine or compensation.
5.7 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that in the present case the
learned trial Court imposed the fine under Section 138 of the N.I.
Act, equal to the amount of cheque plus 1%. It is submitted that
as per Section 357(2) of the Cr.P.C., no such fine is payable till
the decision of the appeal. It is submitted that therefore also the
first appellate Court ought not to have passed any order directing
the appellants to deposit 25% of the amount of
fine/compensation, pending appeal/s. In support of his above
submission, learned Senior Counsel has heavily relied upon the
decision of this Court in the case of Dilip S. Dhanukar v. Kotak
Mahindra Bank, reported in (2007) 6 SCC 528.
5.8 Making the above submissions and relying upon the
aforesaid decisions, it is prayed to allow the present appeals and
quash and set aside the impugned order passed by the first
appellate court, confirmed by the High Court, by which the
appellants are directed to deposit 25% of the amount of
8
compensation considering Section 148 of the N.I. Act as
amended.
6. While opposing the present appeals, Shri Alok Sangwan,
learned Advocate appearing on behalf of the original complainant
has vehemently submitted that the order passed by the first
appellate Court directing the appellants to deposit 25% of the
amount of compensation/fine pending appeal and while
suspending the sentence imposed by the learned trial Court is
absolutely in consonance with the Statement of Objects and
Reasons of the amendment in Section 148 of the N.I. Act. It is
submitted that having found that because of delay tactics of
unscrupulous drawers of dishonoured cheques due to easy filing
of appeals and obtaining stay on proceedings, the object and
purpose of N.I. Act was being frustrated and having found that
due to such delay tactics, injustice is caused to the payee of a
dishonoured cheque who has to spend considerable time and
resources in court proceedings to realize the value of the cheque,
the Parliament thought it fit to amend Section 148 of the N.I. Act,
which confers powers on the first appellate court to direct the
appellant (the convict for the offence under Section 138 of the
N.I. Act) to deposit such sum which shall be minimum of 20% of
9
the fine or compensation awarded by the trial court. It is
submitted that therefore the High Court has rightly refused to
interfere with the order passed by the first appellate court, which
was just in consonance with the provisions of Section 148 of the
N.I. Act as amended.
6.1 It is further submitted by the learned Advocate appearing on
behalf of the original complainant that the submission on behalf
of the appellants – original accused that Section 148 of the N.I.
Act would not be made applicable retrospectively and shall not be
applicable to the appeals arising out of the criminal proceedings
which were initiated much prior to the amendment in Section
148 of the N.I. Act is concerned, it is vehemently submitted that
the aforesaid submission has no substance. It is submitted that
first of all amendment in Section 148 of the N.I. Act is procedural
in nature and therefore there is no question of applying the same
retrospectively. It is submitted that as such no vested right of
the appeal of the appellants has been taken away or affected by
amendment in Section 148 of the N.I. Act. It is submitted that in
the present case, admittedly, the appeals were preferred after the
amendment in Section 148 of the N.I. Act came into force and
therefore Section 148 of the N.I. Act, as amended, is rightly
10
invoked/applied by the learned first appellate Court. It is
submitted that therefore the amendment so brought in the Act by
insertion of Section 148 of the N.I. Act is purely procedural in
nature and not substantive and does not affect the vested rights
of the appellants, as such, the same can have a retrospective
effect and can be applied in the present case also.
6.2 Now so far as the reliance placed on Section 357(2) of the
Cr.P.C. and the submission of the learned Senior Advocate
appearing on behalf of the appellants that in view of Section
357(2) of the Cr.P.C., fine during the pendency of the appeal is
not recoverable is concerned, it is vehemently submitted that in
the present case in Section 148 of the N.I. Act as amended, it is
specifically stated that “Notwithstanding anything contained in
the Code of Criminal Procedure, 1973…..”. It is submitted that
therefore Section 148 of the N.I. Act as amended shall be
applicable and it is always open for the appellate court to direct
deposit of such sum, but not less than 20% of the amount of
compensation/fine imposed by the learned trial court.
6.3 Making the above submissions, it is prayed to dismiss the
present appeals.
11
7. We have heard the learned counsel for the respective parties
at length.
7.1 The short question which is posed for consideration before
this Court is, whether the first appellate court is justified in
directing the appellants – original accused who have been
convicted for the offence under Section 138 of the N.I. Act to
deposit 25% of the amount of compensation/fine imposed by the
learned trial Court, pending appeals challenging the order of
conviction and sentence and while suspending the sentence
under Section 389 of the Cr.P.C., considering Section 148 of the
N.I. Act as amended?
7.2 While considering the aforesaid issue/question, the
Statement of Objects and Reasons of the amendment in Section
148 of the N.I. Act, as amended by way of Amendment Act No.
20/2018 and Section 148 of the N.I. Act as amended, are
required to be referred to and considered, which read as under:
“The Negotiable Instruments Act, 1881 (the Act)
was enacted to define and amend the law relating
to Promissory Notes, Bills of Exchange and
Cheques. The said Act has been amended from
time to time so as to provide, inter alia, speedy
disposal of cases relating to the offence of
dishonour of cheques. However, the Central
Government has been receiving several
representations from the public including trading
12
community relating to pendency of cheque
dishonour cases. This is because of delay tactics of
unscrupulous drawers of dishonoured cheques due
to easy filing of appeals and obtaining stay on
proceedings. As a result of this, injustice is caused
to the payee of a dishonoured cheque who has to
spend considerable time and resources in court
proceedings to realize the value of the cheque.
Such delays compromise the sanctity of cheque
transactions.
2. It is proposed to amend the said Act with a view
to address the issue of undue delay in final
resolution of cheque dishonour cases so as to
provide relief to payees of dishonoured cheques
and to discourage frivolous and unnecessary
litigation which would save time and money. The
proposed amendments will strengthen the
credibility of cheques and help trade and commerce
in general by allowing lending institutions,
including banks, to continue to extend financing to
the productive sectors of the economy.
3. It is, therefore, proposed to introduce the
Negotiable Instruments (Amendment) Bill, 2017 to
provide, inter alia, for the following, namely:—
(i) to insert a new section 143A in the said Act
to provide that the Court trying an offence under
section 138, may order the drawer of the cheque to
pay interim compensation to the complainant, in a
summary trial or a summons case, where he
pleads not guilty to the accusation made in the
complaint; and in any other case, upon framing of
charge. The interim compensation so payable shall
be such sum not exceeding twenty per cent of the
amount of the cheque; and
(ii) to insert a new section 148 in the said Act
so as to provide that in an appeal by the drawer
against conviction under Section 138, the Appellate
13
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.
4. The Bill seeks to achieve the above objectives.”
‘‘148. Power to 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
subsection shall be in addition to any interim
compensation paid by the appellant under section
143A.
(2) The amount referred to in subsection (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
14
exceeding thirty days as may be directed by the
Court on sufficient cause being shown by the
complainant.’’
8. It is the case on behalf of the appellants that as the criminal
complaints against the appellants under Section 138 of the N.I.
Act were lodged/filed before the amendment Act No. 20/2018 by
which Section 148 of the N.I. Act came to be amended and
therefore amended Section 148 of the N.I. Act shall not be made
applicable. However, it is required to be noted that at the time
when the appeals against the conviction of the appellants for the
offence under Section 138 of the N.I. Act were preferred,
Amendment Act No. 20/2018 amending Section 148 of the N.I.
Act came into force w.e.f. 1.9.2018. Even, at the time when the
appellants submitted application/s under Section 389 of the
Cr.P.C. to suspend the sentence pending appeals challenging the
conviction and sentence, amended Section 148 of the N.I. Act
came into force and was brought on statute w.e.f. 1.9.2018.
Therefore, considering the object and purpose of amendment in
Section 148 of the N.I. Act and while suspending the sentence in
exercise of powers under Section 389 of the Cr.P.C., when the
first appellate court directed the appellants to deposit 25% of the
15
amount of fine/compensation as imposed by the learned trial
Court, the same can be said to be absolutely in consonance with
the Statement of Objects and Reasons of amendment in Section
148 of the N.I. Act.
8.1 Having observed and found that because of the delay tactics
of unscrupulous drawers of dishonoured cheques due to easy
filing of appeals and obtaining stay on proceedings, the object
and purpose of the enactment of Section 138 of the N.I. Act was
being frustrated, the Parliament has thought it fit to amend
Section 148 of the N.I. Act, by which the first appellate Court, in
an appeal challenging the order of conviction under Section 138
of the N.I. Act, is conferred with the power to direct the convicted
accused – appellant to deposit such sum which shall be a
minimum of 20% of the fine or compensation awarded by the trial
Court. By the amendment in Section 148 of the N.I. Act, it
cannot be said that any vested right of appeal of the accused –
appellant has been taken away and/or affected. Therefore,
submission on behalf of the appellants that amendment in
Section 148 of the N.I. Act shall not be made applicable
retrospectively and more particularly with respect to
cases/complaints filed prior to 1.9.2018 shall not be applicable
16
has no substance and cannot be accepted, as by amendment in
Section 148 of the N.I. Act, no substantive right of appeal has
been taken away and/or affected. Therefore the decisions of this
Court in the cases of Garikapatti Veeraya (supra) and Videocon
International Limited (supra), relied upon by the learned senior
counsel appearing on behalf of the appellants shall not be
applicable to the facts of the case on hand. Therefore,
considering the Statement of Objects and Reasons of the
amendment in Section 148 of the N.I. Act stated hereinabove, on
purposive interpretation of Section 148 of the N.I. Act as
amended, we are of the opinion that Section 148 of the N.I. Act as
amended, shall be applicable in respect of the appeals against the
order of conviction and sentence for the offence under Section
138 of the N.I. Act, even in a case where the criminal complaints
for the offence under Section 138 of the N.I. Act were filed prior to
amendment Act No. 20/2018 i.e., prior to 01.09.2018. If such a
purposive interpretation is not adopted, in that case, the object
and purpose of amendment in Section 148 of the N.I. Act would
be frustrated. Therefore, as such, no error has been committed
by the learned first appellate court directing the appellants to
deposit 25% of the amount of fine/compensation as imposed by
17
the learned trial Court considering Section 148 of the N.I. Act, as
amended.
9. Now so far as the submission on behalf of the appellants
that even considering the language used in Section 148 of the
N.I. Act as amended, the appellate Court “may” order the
appellant to deposit such sum which shall be a minimum of 20%
of the fine or compensation awarded by the trial Court and the
word used is not “shall” and therefore the discretion is vested
with the first appellate court to direct the appellant – accused to
deposit such sum and the appellate court has construed it as
mandatory, which according to the learned Senior Advocate for
the appellants would be contrary to the provisions of Section 148
of the N.I. Act as amended is concerned, considering the
amended Section 148 of the N.I. Act as a whole to be read with
the Statement of Objects and Reasons of the amending Section
148 of the N.I. Act, though it is true that in amended Section 148
of the N.I. Act, the word used is “may”, it is generally to be
construed as a “rule” or “shall” and not to direct to deposit by the
appellate court is an exception for which special reasons are to
be assigned. Therefore amended Section 148 of the N.I. Act
confers power upon the Appellate Court to pass an order
18
pending appeal to direct the AppellantAccused to deposit the
sum which shall not be less than 20% of the fine or
compensation either on an application filed by the original
complainant or even on the application filed by the AppellantAccused under Section 389 of the Cr.P.C. to suspend the
sentence. The aforesaid is required to be construed considering
the fact that as per the amended Section 148 of the N.I. Act, a
minimum of 20% of the fine or compensation awarded by the trial
court is directed to be deposited and that such amount is to be
deposited within a period of 60 days from the date of the order, or
within such further period not exceeding 30 days as may be
directed by the appellate court for sufficient cause shown by the
appellant. Therefore, if amended Section 148 of the N.I. Act is
purposively interpreted in such a manner it would serve the
Objects and Reasons of not only amendment in Section 148 of
the N.I. Act, but also Section 138 of the N.I. Act. Negotiable
Instruments Act has been amended from time to time so as to
provide, inter alia, speedy disposal of cases relating to the offence
of the dishonoured of cheques. So as to see that due to delay
tactics by the unscrupulous drawers of the dishonoured cheques
due to easy filing of the appeals and obtaining stay in the
19
proceedings, an injustice was caused to the payee of a
dishonoured cheque who has to spend considerable time and
resources in the court proceedings to realise the value of the
cheque and having observed that such delay has compromised
the sanctity of the cheque transactions, the Parliament has
thought it fit to amend Section 148 of the N.I. Act. Therefore,
such a purposive interpretation would be in furtherance of the
Objects and Reasons of the amendment in Section 148 of the N.I.
Act and also Sec 138 of the N.I. Act.
10. Now so far as the submission on behalf of the appellants,
relying upon Section 357(2) of the Cr.P.C. that once the appeal
against the order of conviction is preferred, fine is not recoverable
pending appeal and therefore such an order of deposit of 25% of
the fine ought not to have been passed and in support of the
above reliance placed upon the decision of this Court in the case
of Dilip S. Dhanukar (supra) is concerned, the aforesaid has no
substance. The opening word of amended Section 148 of the N.I.
Act is that “notwithstanding anything contained in the Code of
Criminal Procedure…..”. Therefore irrespective of the provisions
of Section 357(2) of the Cr.P.C., pending appeal before the first
appellate court, challenging the order of conviction and sentence
20
under Section 138 of the N.I. Act, the appellate court is conferred
with the power to direct the appellant to deposit such sum
pending appeal which shall be a minimum of 20% of the fine or
compensation awarded by the trial Court.
In view of the above and for the reasons stated herein above,
impugned Judgment and Order passed by the High Court does
not call for any interference.
11. At this stage, learned Senior Advocate appearing on behalf
of the appellants has requested to grant the appellants some
more time (three months’ time) to deposit the amount as per the
order passed by the first appellate court, confirmed by the High
Court. The said prayer is opposed by the learned Advocate
appearing on behalf of the original complainant. It is submitted
that as per amended Section 148 of the N.I. Act, the appellants –
accused have to deposit the amount of compensation/fine as
directed by the appellate court within a period of 60 days which
can be further extended by a further period of 30 days as may be
directed by the Court on sufficient cause being shown by the
appellants. However, in the facts and circumstances of the case
and considering the fact that the appellants were bonafidely
litigating before this Court challenging the order passed by the
21
first appellate court, in exercise of powers under Article 142 of
the Constitution of India and in the peculiar facts and
circumstances of the case and the amount to be deposited is a
huge amount, we grant further four weeks’ time from today to the
appellants to deposit the amount as directed by the first appellate
court, confirmed by the High Court and further confirmed by this
Court.
12. In view of the above and for the reasons stated above, we
see no reason to interfere with the impugned common judgment
and order passed by the High Court dismissing the revision
application/s, confirming the order passed by the first appellate
court directing the appellants to deposit 25% of the amount of
fine/compensation pending appeals.
The instant appeals are accordingly dismissed with the
aforesaid observations and appellants are now directed to deposit
the amount directed by the first appellate court within extended
period of four weeks from today.
…………………………………….J.
[M.R. SHAH]
NEW DELHI; ……………………………………J.
MAY 29, 2019. [A.S. BOPANNA]
22
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.917944 OF 2019
(Arising out of SLP(Criminal) Nos. 49484975/2019
Surinder Singh Deswal @ Col. S.S.Deswal
and others …Appellants
versus
Virender Gandhi …Respondent
J U D G M E N T
M.R. SHAH, J.
Leave granted.
2. As common question of law and facts arise in this group of
appeals and, as such, all these appeals, arise out of the
impugned common judgment and order passed by the High
Court, are being decided and disposed of together by this
common judgment and order.
3. Feeling aggrieved and dissatisfied with the impugned
common order passed by the High Court of Punjab and Haryana
at Chandigarh, by which the High Court has dismissed the
respective revision applications and has confirmed the order
passed by the first appellate court – learned Additional Sessions
Judge, Panchkula, directing the appellants herein – original
1
appellants – original accused to deposit 25% of the amount of
compensation, in view of the provisions of amended Act No. 20 of
2018 in Section 148 of the Negotiable Instruments Act, 1881
(hereinafter referred to as the ‘N.I. Act’), the original appellants –
original accused have preferred the present appeals.
4. The facts leading to the present appeals in nutshell are as
under:
That criminal complaints were filed against the appellants
herein – original accused for the offence under Section 138 of the
N.I. Act. That the said criminal complaints were filed prior to
2.8.2018. That the learned trial Court vide judgment and order
dated 30.10.2018 convicted the appellants for the offence under
Section 138 of the N.I. Act and sentenced them to undergo
imprisonment of two years and to pay cheque amount + 1% as
interest and litigation expenses as fine.
4.1 Feeling aggrieved and dissatisfied with the order of
conviction passed by the learned trial Court, convicting the
appellants – original accused for the offence under Section 138 of
the N.I. Act and the sentence imposed by the learned trial Court,
the appellants – original accused have preferred criminal appeals
before the first appellate Court – learned Additional Sessions
2
Judge, Panchkula. In the said appeals, the appellants – original
accused submitted application/s under Section 389 of the Cr.
P.C. for suspension of sentence and releasing them on bail,
pending appeal/s.
4.2 That considering the provisions of amended Section 148 of
the N.I. Act, which has been amended by Amendment Act No.
20/2018, which came into force w.e.f. 1.9.2018, the first
appellate Court, while suspending the sentence and allowing the
application/s under Section 389 of the Cr.P.C, directed the
appellants to deposit 25% of the amount of compensation/fine
awarded by the learned trial Court.
4.3 Feeling aggrieved by the order passed by the learned first
appellate Court – learned Additional Sessions Judge, Panchkula
directing the appellants – original accused – original appellants to
deposit 25% of the amount of compensation/fine awarded by the
learned trial Court, pending appeal challenging the order of
conviction and sentence imposed by the learned trial Court, the
appellants approached the High Court of Punjab and Haryana at
Chandigarh by way of revision application/s.
4.4 It was the case on behalf of the appellants that Section 148
of the N.I. Act, as amended by Act No. 20/2018, shall not be
3
applicable with respect to criminal proceedings already initiated
prior to the amendment in Section 148 of the N.I. Act.
4.5 The High Court by a detailed judgment and order has not
accepted the aforesaid contention and has dismissed the revision
application/s and has confirmed the order passed by the learned
first appellate Court – learned Additional Sessions Judge,
Panchkula directing the appellants original appellantsoriginal
accused to deposit 25% of the amount of compensation awarded
by the learned trial Court considering Section 148 of the N.I. Act,
as amended.
4.6 Feeling aggrieved and dissatisfied with the impugned
common judgment and order passed by the High Court in
dismissing the revision application/s and confirming the order/s
passed by the learned first appellate Court directing the
appellants – original appellants – original accused to deposit 25%
of the amount of compensation awarded by the learned trial
Court under Section 148 of the N.I. Act, as amended, the original
appellants – original accused have preferred the present appeals.
5. Shri Vijay Hansaria, learned Senior Advocate has appeared
on behalf of the appellants – original appellants – original
4
accused and Shri Alok Sangwan, learned Advocate has appeared
on behalf of the original complainant.
5.1 Shri Vijay Hansaria, learned Senior Advocate appearing on
behalf of the appellants has vehemently submitted that in the
present case, both, the High Court as well as the learned first
appellate Court have materially erred in directing the appellants
to deposit 25% of the amount of compensation as per Section 148
of the N.I. Act, as amended.
5.2 It is vehemently submitted by the learned Senior Advocate
appearing on behalf of the appellants that in the present case as
the criminal proceedings were initiated and the complaints were
filed against the accused for the offence under Section 138 of the
N.I. Act, prior to the amendment Act came into force, Section 148
of the N.I.Act, as amended shall not be applicable.
5.3 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that the legal proceedings,
whether civil or criminal, are to be decided on the basis of the law
applicable on the date of the filing of the suit or alleged
commission of offence by the trial Court or the appellate Court,
unless the law is amended expressly with retrospective effect,
subject to the provisions of Article 20(1) of the Constitution of
5
India. In support of his above submission, learned Senior
Counsel appearing on behalf of the appellants has heavily relied
upon the decisions of this Court in the case of Garikapatti
Veeraya v. N. Subbiah Choudhury, reported in AIR 1957 SC 540;
and Videocon International Limited v. Securities and Exchange
Board of India, reported in (2015) 4 SCC 33.
5.4 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that even otherwise in the
present case, the first appellate Court has interpreted the word
“may” as “shall” in Section 148 of the N.I. Act and proceeded on
the basis that it is mandatory for the appellate Court to direct
deposit of minimum of 25% of the fine or compensation awarded
by the trial Court for suspension of sentence.
5.5 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that the first appellate
Court heavily relied upon the decision of the Punjab and Haryana
High Court in the case of M/s Ginni Garments and another v. M/s
Sethi Garments (CRR No. 9872 of 2018, decided on 04.04.2019),
in which it was held that the appellate Court continues to have
discretion as to the condition to be imposed or not to be imposed
6
for suspension of sentence and it was further held that however
in case discretion is exercised to suspend the sentence subject to
payment of compensation/fine, such order must commensurate
with Section 148 of the N.I. Act. It is submitted, however, in the
present case, the appellate Court did not exercise discretion and
proceeded on the assumption that it is mandatory to deposit 25%
of the fine or compensation as a condition for suspension of
sentence. It is submitted that therefore the High Court ought to
have remanded the matter back to the appellate Court to decide
on the question of suspension of sentence as per the decision in
the case of M/s Ginni Garments (supra).
5.6 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that a similar view is taken
by the Bombay High Court in the case of Ajay Vinodchandra
Shah v. The State of Maharashtra (Criminal Writ Petition No. 258
of 2019). It is submitted that in the said decision, the Bombay
High Court has also observed and held that as per Section 148 of
the N.I. Act as amended, the appellate Court has the discretion to
direct deposit the sum pending appeal, but if at all such direction
is given, that sum shall not be less than 20% of the amount of
fine or compensation awarded by the trial Court. It is submitted
7
that in the present case, the appellate Court wrongly presumed
that the requirement under Section 148 of the N.I. Act is the
deposit of 25% of the fine or compensation.
5.7 It is further submitted by the learned Senior Advocate
appearing on behalf of the appellants that in the present case the
learned trial Court imposed the fine under Section 138 of the N.I.
Act, equal to the amount of cheque plus 1%. It is submitted that
as per Section 357(2) of the Cr.P.C., no such fine is payable till
the decision of the appeal. It is submitted that therefore also the
first appellate Court ought not to have passed any order directing
the appellants to deposit 25% of the amount of
fine/compensation, pending appeal/s. In support of his above
submission, learned Senior Counsel has heavily relied upon the
decision of this Court in the case of Dilip S. Dhanukar v. Kotak
Mahindra Bank, reported in (2007) 6 SCC 528.
5.8 Making the above submissions and relying upon the
aforesaid decisions, it is prayed to allow the present appeals and
quash and set aside the impugned order passed by the first
appellate court, confirmed by the High Court, by which the
appellants are directed to deposit 25% of the amount of
8
compensation considering Section 148 of the N.I. Act as
amended.
6. While opposing the present appeals, Shri Alok Sangwan,
learned Advocate appearing on behalf of the original complainant
has vehemently submitted that the order passed by the first
appellate Court directing the appellants to deposit 25% of the
amount of compensation/fine pending appeal and while
suspending the sentence imposed by the learned trial Court is
absolutely in consonance with the Statement of Objects and
Reasons of the amendment in Section 148 of the N.I. Act. It is
submitted that having found that because of delay tactics of
unscrupulous drawers of dishonoured cheques due to easy filing
of appeals and obtaining stay on proceedings, the object and
purpose of N.I. Act was being frustrated and having found that
due to such delay tactics, injustice is caused to the payee of a
dishonoured cheque who has to spend considerable time and
resources in court proceedings to realize the value of the cheque,
the Parliament thought it fit to amend Section 148 of the N.I. Act,
which confers powers on the first appellate court to direct the
appellant (the convict for the offence under Section 138 of the
N.I. Act) to deposit such sum which shall be minimum of 20% of
9
the fine or compensation awarded by the trial court. It is
submitted that therefore the High Court has rightly refused to
interfere with the order passed by the first appellate court, which
was just in consonance with the provisions of Section 148 of the
N.I. Act as amended.
6.1 It is further submitted by the learned Advocate appearing on
behalf of the original complainant that the submission on behalf
of the appellants – original accused that Section 148 of the N.I.
Act would not be made applicable retrospectively and shall not be
applicable to the appeals arising out of the criminal proceedings
which were initiated much prior to the amendment in Section
148 of the N.I. Act is concerned, it is vehemently submitted that
the aforesaid submission has no substance. It is submitted that
first of all amendment in Section 148 of the N.I. Act is procedural
in nature and therefore there is no question of applying the same
retrospectively. It is submitted that as such no vested right of
the appeal of the appellants has been taken away or affected by
amendment in Section 148 of the N.I. Act. It is submitted that in
the present case, admittedly, the appeals were preferred after the
amendment in Section 148 of the N.I. Act came into force and
therefore Section 148 of the N.I. Act, as amended, is rightly
10
invoked/applied by the learned first appellate Court. It is
submitted that therefore the amendment so brought in the Act by
insertion of Section 148 of the N.I. Act is purely procedural in
nature and not substantive and does not affect the vested rights
of the appellants, as such, the same can have a retrospective
effect and can be applied in the present case also.
6.2 Now so far as the reliance placed on Section 357(2) of the
Cr.P.C. and the submission of the learned Senior Advocate
appearing on behalf of the appellants that in view of Section
357(2) of the Cr.P.C., fine during the pendency of the appeal is
not recoverable is concerned, it is vehemently submitted that in
the present case in Section 148 of the N.I. Act as amended, it is
specifically stated that “Notwithstanding anything contained in
the Code of Criminal Procedure, 1973…..”. It is submitted that
therefore Section 148 of the N.I. Act as amended shall be
applicable and it is always open for the appellate court to direct
deposit of such sum, but not less than 20% of the amount of
compensation/fine imposed by the learned trial court.
6.3 Making the above submissions, it is prayed to dismiss the
present appeals.
11
7. We have heard the learned counsel for the respective parties
at length.
7.1 The short question which is posed for consideration before
this Court is, whether the first appellate court is justified in
directing the appellants – original accused who have been
convicted for the offence under Section 138 of the N.I. Act to
deposit 25% of the amount of compensation/fine imposed by the
learned trial Court, pending appeals challenging the order of
conviction and sentence and while suspending the sentence
under Section 389 of the Cr.P.C., considering Section 148 of the
N.I. Act as amended?
7.2 While considering the aforesaid issue/question, the
Statement of Objects and Reasons of the amendment in Section
148 of the N.I. Act, as amended by way of Amendment Act No.
20/2018 and Section 148 of the N.I. Act as amended, are
required to be referred to and considered, which read as under:
“The Negotiable Instruments Act, 1881 (the Act)
was enacted to define and amend the law relating
to Promissory Notes, Bills of Exchange and
Cheques. The said Act has been amended from
time to time so as to provide, inter alia, speedy
disposal of cases relating to the offence of
dishonour of cheques. However, the Central
Government has been receiving several
representations from the public including trading
12
community relating to pendency of cheque
dishonour cases. This is because of delay tactics of
unscrupulous drawers of dishonoured cheques due
to easy filing of appeals and obtaining stay on
proceedings. As a result of this, injustice is caused
to the payee of a dishonoured cheque who has to
spend considerable time and resources in court
proceedings to realize the value of the cheque.
Such delays compromise the sanctity of cheque
transactions.
2. It is proposed to amend the said Act with a view
to address the issue of undue delay in final
resolution of cheque dishonour cases so as to
provide relief to payees of dishonoured cheques
and to discourage frivolous and unnecessary
litigation which would save time and money. The
proposed amendments will strengthen the
credibility of cheques and help trade and commerce
in general by allowing lending institutions,
including banks, to continue to extend financing to
the productive sectors of the economy.
3. It is, therefore, proposed to introduce the
Negotiable Instruments (Amendment) Bill, 2017 to
provide, inter alia, for the following, namely:—
(i) to insert a new section 143A in the said Act
to provide that the Court trying an offence under
section 138, may order the drawer of the cheque to
pay interim compensation to the complainant, in a
summary trial or a summons case, where he
pleads not guilty to the accusation made in the
complaint; and in any other case, upon framing of
charge. The interim compensation so payable shall
be such sum not exceeding twenty per cent of the
amount of the cheque; and
(ii) to insert a new section 148 in the said Act
so as to provide that in an appeal by the drawer
against conviction under Section 138, the Appellate
13
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.
4. The Bill seeks to achieve the above objectives.”
‘‘148. Power to 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
subsection shall be in addition to any interim
compensation paid by the appellant under section
143A.
(2) The amount referred to in subsection (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
14
exceeding thirty days as may be directed by the
Court on sufficient cause being shown by the
complainant.’’
8. It is the case on behalf of the appellants that as the criminal
complaints against the appellants under Section 138 of the N.I.
Act were lodged/filed before the amendment Act No. 20/2018 by
which Section 148 of the N.I. Act came to be amended and
therefore amended Section 148 of the N.I. Act shall not be made
applicable. However, it is required to be noted that at the time
when the appeals against the conviction of the appellants for the
offence under Section 138 of the N.I. Act were preferred,
Amendment Act No. 20/2018 amending Section 148 of the N.I.
Act came into force w.e.f. 1.9.2018. Even, at the time when the
appellants submitted application/s under Section 389 of the
Cr.P.C. to suspend the sentence pending appeals challenging the
conviction and sentence, amended Section 148 of the N.I. Act
came into force and was brought on statute w.e.f. 1.9.2018.
Therefore, considering the object and purpose of amendment in
Section 148 of the N.I. Act and while suspending the sentence in
exercise of powers under Section 389 of the Cr.P.C., when the
first appellate court directed the appellants to deposit 25% of the
15
amount of fine/compensation as imposed by the learned trial
Court, the same can be said to be absolutely in consonance with
the Statement of Objects and Reasons of amendment in Section
148 of the N.I. Act.
8.1 Having observed and found that because of the delay tactics
of unscrupulous drawers of dishonoured cheques due to easy
filing of appeals and obtaining stay on proceedings, the object
and purpose of the enactment of Section 138 of the N.I. Act was
being frustrated, the Parliament has thought it fit to amend
Section 148 of the N.I. Act, by which the first appellate Court, in
an appeal challenging the order of conviction under Section 138
of the N.I. Act, is conferred with the power to direct the convicted
accused – appellant to deposit such sum which shall be a
minimum of 20% of the fine or compensation awarded by the trial
Court. By the amendment in Section 148 of the N.I. Act, it
cannot be said that any vested right of appeal of the accused –
appellant has been taken away and/or affected. Therefore,
submission on behalf of the appellants that amendment in
Section 148 of the N.I. Act shall not be made applicable
retrospectively and more particularly with respect to
cases/complaints filed prior to 1.9.2018 shall not be applicable
16
has no substance and cannot be accepted, as by amendment in
Section 148 of the N.I. Act, no substantive right of appeal has
been taken away and/or affected. Therefore the decisions of this
Court in the cases of Garikapatti Veeraya (supra) and Videocon
International Limited (supra), relied upon by the learned senior
counsel appearing on behalf of the appellants shall not be
applicable to the facts of the case on hand. Therefore,
considering the Statement of Objects and Reasons of the
amendment in Section 148 of the N.I. Act stated hereinabove, on
purposive interpretation of Section 148 of the N.I. Act as
amended, we are of the opinion that Section 148 of the N.I. Act as
amended, shall be applicable in respect of the appeals against the
order of conviction and sentence for the offence under Section
138 of the N.I. Act, even in a case where the criminal complaints
for the offence under Section 138 of the N.I. Act were filed prior to
amendment Act No. 20/2018 i.e., prior to 01.09.2018. If such a
purposive interpretation is not adopted, in that case, the object
and purpose of amendment in Section 148 of the N.I. Act would
be frustrated. Therefore, as such, no error has been committed
by the learned first appellate court directing the appellants to
deposit 25% of the amount of fine/compensation as imposed by
17
the learned trial Court considering Section 148 of the N.I. Act, as
amended.
9. Now so far as the submission on behalf of the appellants
that even considering the language used in Section 148 of the
N.I. Act as amended, the appellate Court “may” order the
appellant to deposit such sum which shall be a minimum of 20%
of the fine or compensation awarded by the trial Court and the
word used is not “shall” and therefore the discretion is vested
with the first appellate court to direct the appellant – accused to
deposit such sum and the appellate court has construed it as
mandatory, which according to the learned Senior Advocate for
the appellants would be contrary to the provisions of Section 148
of the N.I. Act as amended is concerned, considering the
amended Section 148 of the N.I. Act as a whole to be read with
the Statement of Objects and Reasons of the amending Section
148 of the N.I. Act, though it is true that in amended Section 148
of the N.I. Act, the word used is “may”, it is generally to be
construed as a “rule” or “shall” and not to direct to deposit by the
appellate court is an exception for which special reasons are to
be assigned. Therefore amended Section 148 of the N.I. Act
confers power upon the Appellate Court to pass an order
18
pending appeal to direct the AppellantAccused to deposit the
sum which shall not be less than 20% of the fine or
compensation either on an application filed by the original
complainant or even on the application filed by the AppellantAccused under Section 389 of the Cr.P.C. to suspend the
sentence. The aforesaid is required to be construed considering
the fact that as per the amended Section 148 of the N.I. Act, a
minimum of 20% of the fine or compensation awarded by the trial
court is directed to be deposited and that such amount is to be
deposited within a period of 60 days from the date of the order, or
within such further period not exceeding 30 days as may be
directed by the appellate court for sufficient cause shown by the
appellant. Therefore, if amended Section 148 of the N.I. Act is
purposively interpreted in such a manner it would serve the
Objects and Reasons of not only amendment in Section 148 of
the N.I. Act, but also Section 138 of the N.I. Act. Negotiable
Instruments Act has been amended from time to time so as to
provide, inter alia, speedy disposal of cases relating to the offence
of the dishonoured of cheques. So as to see that due to delay
tactics by the unscrupulous drawers of the dishonoured cheques
due to easy filing of the appeals and obtaining stay in the
19
proceedings, an injustice was caused to the payee of a
dishonoured cheque who has to spend considerable time and
resources in the court proceedings to realise the value of the
cheque and having observed that such delay has compromised
the sanctity of the cheque transactions, the Parliament has
thought it fit to amend Section 148 of the N.I. Act. Therefore,
such a purposive interpretation would be in furtherance of the
Objects and Reasons of the amendment in Section 148 of the N.I.
Act and also Sec 138 of the N.I. Act.
10. Now so far as the submission on behalf of the appellants,
relying upon Section 357(2) of the Cr.P.C. that once the appeal
against the order of conviction is preferred, fine is not recoverable
pending appeal and therefore such an order of deposit of 25% of
the fine ought not to have been passed and in support of the
above reliance placed upon the decision of this Court in the case
of Dilip S. Dhanukar (supra) is concerned, the aforesaid has no
substance. The opening word of amended Section 148 of the N.I.
Act is that “notwithstanding anything contained in the Code of
Criminal Procedure…..”. Therefore irrespective of the provisions
of Section 357(2) of the Cr.P.C., pending appeal before the first
appellate court, challenging the order of conviction and sentence
20
under Section 138 of the N.I. Act, the appellate court is conferred
with the power to direct the appellant to deposit such sum
pending appeal which shall be a minimum of 20% of the fine or
compensation awarded by the trial Court.
In view of the above and for the reasons stated herein above,
impugned Judgment and Order passed by the High Court does
not call for any interference.
11. At this stage, learned Senior Advocate appearing on behalf
of the appellants has requested to grant the appellants some
more time (three months’ time) to deposit the amount as per the
order passed by the first appellate court, confirmed by the High
Court. The said prayer is opposed by the learned Advocate
appearing on behalf of the original complainant. It is submitted
that as per amended Section 148 of the N.I. Act, the appellants –
accused have to deposit the amount of compensation/fine as
directed by the appellate court within a period of 60 days which
can be further extended by a further period of 30 days as may be
directed by the Court on sufficient cause being shown by the
appellants. However, in the facts and circumstances of the case
and considering the fact that the appellants were bonafidely
litigating before this Court challenging the order passed by the
21
first appellate court, in exercise of powers under Article 142 of
the Constitution of India and in the peculiar facts and
circumstances of the case and the amount to be deposited is a
huge amount, we grant further four weeks’ time from today to the
appellants to deposit the amount as directed by the first appellate
court, confirmed by the High Court and further confirmed by this
Court.
12. In view of the above and for the reasons stated above, we
see no reason to interfere with the impugned common judgment
and order passed by the High Court dismissing the revision
application/s, confirming the order passed by the first appellate
court directing the appellants to deposit 25% of the amount of
fine/compensation pending appeals.
The instant appeals are accordingly dismissed with the
aforesaid observations and appellants are now directed to deposit
the amount directed by the first appellate court within extended
period of four weeks from today.
…………………………………….J.
[M.R. SHAH]
NEW DELHI; ……………………………………J.
MAY 29, 2019. [A.S. BOPANNA]
22
