Table of Content:-

• Background of the case
• Issues raised
• Statutory Provision Involved
• Submissions of the Appellants
• Judgment Analysis
• Conclusion
• Case Laws:

• J. Raja vs. Tejraj Surana [Criminal Appeal NO.1160 of 2019]
• Vinodchandra Shah vs. State of Maharashtra [(2019) 4 Mah LJ 705]
• Vivek Sahni and another vs. Kotak Mahindra Bank Ltd. [CRM-M-29187]

Surinder Singh Deswal @ Col S.S. & Ors vs Virender Gandhi [Criminal Appeal No. 1936- 1963/ 2019]

Background of the case

Appellant No. 1 and Appellant No. 2 are the partners of Appellant No. 3 known as GLMN Infratech Private Ltd. Respondent No. was also the partner with appellant no. 3. A cheque from Canara Bank was issued which amounts to Rs. 45, 84, 915 by the appellant firm to the respondent no. 1. The respondent deposited the same cheques in his bank, i.e. Karnataka Bank but the cheques got dishonoured and returned. Further, the other cheques issued to him were also got dishonoured. 

Later on May 16th, 2015 respondent no. 1 issued a statutory demand notice under section 138 of the Negotiable Instrument Act, 1881. Also, he filed a complaint under section 138 of the negotiable Instrument Act against the appellants. The complaint was filed before the judicial magistrate of the 1st class of Panchkula. The complaints that were filed by the respondent were 28 in total. The judicial magistrate held appellant no. 1 and appellant no. 2 were found guilty and hence convicted under the said section. The court ordered that the appellants are convicted for imprisonment up to 2 years and they have to jointly or severally pay the amount that is equal to the amount equivalent to the amount involved in the present case and interest and litigation expenses have to be paid by the appellant.

The appellant filed the appeal against the order of the judicial magistrate. In the appeal, an application under section 389 of Crpc had been filed by the appellants for the suspension of the sentence. The trial court suspended the sentence for 30 days. Further, the appellate court entertain the appeal and suspended the sentence during the pendency of the appeal proceedings but the appellants have to furnish bail bond and surety bond for the amount of Rs. 50, 000. The appellants were found guilty in all the cases and therefore ordered to pay the compensation of Rs. 9, 40, 24, 999. The appellants preferred the extension of time to pay off the compensation amount. 

Further, the appellants filed an application under section 482 Crpc seeking quashing of the order passed by the additional session judge. The High Court dismissed the petition of the appellant under section 482 Crpc. Then appellants preferred Special Leave Petition against the judgment of the High Court. 

Issues Raised

1. Whether the judgment of the session court to pay the amount of Rs. 9, 40, 24,999 under Section 148 of the Negotiable Instrument Act is justified?
2. Do Section 143A and 148 of the Negotiable Instrument Act have a retrospective effect?

Statutory provisions Involved

• Section 148 of the Negotiable Instrument Act, 1881

“Power of Appellate Court to order payment pending appeal against conviction

Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit1 such sum which shall be a minimum of twenty percent of the fine or compensation awarded by the trial Court:

Provided that the amount payable under this sub-section shall be in addition to

1. any interim compensation paid by the appellant under section 143A.The amount referred to in sub-section (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.

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:

1. 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 exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.”

• Section 143A of the Negotiable Instrument Act, 1881

“Power to direct interim compensation

1. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation1 to the complainant—

1. in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and
2. In any other case, upon framing of charge.

1.  
2. The interim compensation under sub-section (1) shall not exceed twenty percent of the amount of the cheque.

The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the

1.  Cheque.
2. If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, 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 exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.
3. The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973.
4. The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973, shall be reduced by the amount paid or recovered as interim compensation under this section.”

• Section 138 of the Negotiable Instrument Act, 1881

“Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—

(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation. – for the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]”

• Section 389 of the Code of Criminal Procedure, 1973

“Suspension of sentence pending the appeal; release of appellant on bail.

1. Pending any appeal by a convicted person, the Appellate Court may, for reasons to be recorded by it in writing, order that the execution of the sentence or order appealed against be suspended and, also, if he is in confinement, that he be released on bail, or on his own bond.
2. The power conferred by this section on an Appellate Court may be exercised also by the High Court in the case of an appeal by a convicted person to a Court subordinate thereto.
3. Where the convicted person satisfies the Court by which he is convicted that he intends to present an appeal, the Court shall,-

(i) Where such person, being on bail, is sentenced to imprisonment for a term not exceeding three years, or

(ii) where the offence of which such person has been convicted is a bailable one, and he is on bail, order that the convicted person be released on bail, unless there are special reasons for refusing bail, for such period as will afford sufficient time to present the appeal and obtain the orders of the Appellate Court under sub- section (1); and the sentence of imprisonment shall, so long as he is so released on bail, be deemed to be suspended.

4. When the appellant is ultimately sentenced to imprisonment for a term or to imprisonment for life, the time during which he is so released shall be excluded in computing the term for which he is so sentenced.”

• Section 482 of the Code of Criminal Procedure, 1973

“ Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”

Submissions of the Appellants

Learned Counsel Mr. Balbir Singh submitted the following on behalf of the appellants:-

1. A question was raised in respect of the judgment of the Additional Session Judge and of the High Court by contending that a mere non-deposit of compensation cannot result in vacation of the suspension of sentence.
2. He further added that it is open for the respondent to recover the said amount under the provisions of section 421 Crpc.
3. The order passed under section 148 of the Negotiable Instrument Act to deposit the 25% of the compensation amount is not valid as section 148 came into force on 1st September 2018, and the complaint was filed in 2015 under section 138 of the Negotiable Instrument Act.
4. The counsel further relies on the ruling of G.J. Raja vs. Tejraj Surana [Criminal Appeal NO.1160 of 2019] in which it was held that the provision of section 143 A of the Negotiable Instrument Act is prospective in nature.
5. He also placed reliance upon the cases of Vinodchandra Shah vs. State of Maharashtra [(2019) 4 Mah LJ 705]; and Vivek Sahni and another vs. Kotak Mahindra Bank Ltd. [CRM-M-29187].

Judgment Analysis

The court rejected all the contention of the appellants. It was added that the complaint was lodged under section 138 of the Negotiable Instruments Act and section 148 came into force by amendment and hence this section is not applicable. The ‘statement of object and reasons of the amended act of the Negotiable Instrument Act needs to be interpreted in a progressive manner otherwise it would defeat the purpose of the act. 

The court observed that under the amended act section 148 doesn’t snatch or take away any vested right of the appellant and therefore the contention of the appellant in respect of the retrospective effect of section 148 of the act is rejected. The court opined that section 148 of the act shall be applicable on appeals against the order of conviction under section 138 of the act. 

The court held that the judgment of the first appellate court is not in error. Further, the court also clears that this court in G.J. Raja vs. Tejraj Surana held that section 143A must be applied in prospective nature and held that if the accused prove innocent then the drawer has to return back the interim compensation.

Conclusion

The court in the present appeal held that Bombay High Court has the direction to deposit 25% of the total compensation has to be modified and the court passed the direction to deposit 20% of the total compensation. And the said amount has to be deposited within 90 days. And the court dismissed the present appeal as it lacks merit.

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