Surinder Singh Deswal @ Col. S. S. Deswal vs Virender Gandhi

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

JUDGMENT

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 Signature Not Verified

passed by the first appellate court – learned Additional Sessions Digitally signed by SANJAY KUMAR Date: 2019.05.29 16:03:26 IST Reason:

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 Appellant­

Accused 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]

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