Judgement Summary

Surinder Singh Deswal @ Col. S.S. Deswal & Ors. v Virender Gandhi

Coram – M R Shah, A S Bopanna JJ.

Provisions used – Negotiable Instruments Act, 1881, S148 (as amended by Act 20 of 2018 w.e.f. 1-9-2018)

Held – use of word “may” in S148 has to be read as “shall” and appellate  courts must ordinarily order deposit of minimum 20% of compensation or fine amount imposed by trial court. S357(2) CrPC inapplicable to S148 in ordering to deposit minimum 20% of fine amount. S148 NI Act was amended 1-9-2018 so prior to that date some appeal proceedings must be pending in the courts. Amended S148 says interim compensation can be paid pending appeal. Question before the court was whether S148 shall be applicable for those cases which were in appeal before 1-9-2018. Court held its applicable.

S357(2) – Compensation for fine can be collected after exhaustion of appeal process

S148 – Interim compensation during trial

Background –

  1. Appeals arise out of the impugned common judgment and order (Surinder Singh Deswal v Virendra Gandhi, 2019, P&H). Trial court was magistrate court where the case was tried for offence u/s 138 NI Act against the accused before amendment of the act. He was convicted sentenced to undergo for prison for 2 years and pay the cheque amount and 1% interest.
  2. The accused filed appeal in the Additional Sessions Judge court u/s 389 of CrPC and submitted application u/s389 CrPC for suspension of sentence and bail. The appellate court suspended the sentence but directed to deposit 25% of the amount as interim compensation as per the amended S148 NI Act
  3. The accused challenged the order of appellate court in the HC with the plea that the case was initiated prior to the amendment of S148
  4. HC dismissed the application and confirmed the order of appellate court. The accused appealed against the order of HC in the SC

Arguments on behalf of appellants –

  1. The present case was initiated u/s 138 of NI act prior to the amendment of the act hence amended section 148 not applicable
  2. Unless law is amended expressly with retrospective effect subject to the provisions of A21(1) of Constitution of India, criminal or civil proceedings is to be decided on the basis of law applicable at that point – Garikapatti Veeraya v N Subbaih Chaoudhary, 1957 and Videocon International Ltd. v SEBI, 2015
  3. In S148 the word “may” is present but the appellate court interpreted the word as “shall” and provided mandatory deposit of 25% of fine
  4. HC referred Ginni Garments v Sethi Garments, 2019 where it is held court has a discretion to impose conditions while suspending the sentence pending appeal but the amended S148 made it mandatory to deposit 25% of the fine hence the discretion of the court was compromised. Two provisions – interim compensation – 143A and 148, as soon as you file a case threre is prima facie case, bof defendant in these cases, accused, 143A – does not have retrospective effect – substantive provision – interim compensation, A148 – appeal deposit 20% of the cheque
  5. Bombay HC judgment in Ajay Vinodhchandra Shah v State of Maharashtra, 2019 held that as per S148 NI act, the appellate court has the discretion to direct deposit of the sum pending appeal. But if such direction is given it shall not be less than 20% of the amount. In the present case the court directing 25% is erroneous.
  6. Referring Dilip S Dahanukar v Kotak Mahindra Co Ltd, 2007, it has argued that S357(2) CrPC provides for no fine till the decision of the appeal. Hence, imposition of fine u/s 148 of NI act is erroneous.

Arguments for petitioners –

  1. S148 as amended provides for deposition of a minimum of 20% of the fine amount pending trial. Hence a court did not erred in ordering a 25% deposit.
  2. The amendment to S148 is procedural in nature hence no express requirement for retrospective effect
  3. Only when substantive changes are made then express provision is a must for having retrospective effect.

Findings of the court –

  1. By amendment of S148 of NI Act no vested interest of the accused is taken away of affected, hence it is applicable for the cases which are initiated earlier and is in appeal stage. This finding is arrived from considering the statement of objects and reasons of the Amendment Act and purposive interpretation of the same.
  2. Though in the section 148 the word “may” is used it is generally to be construed as a “rule” or “shall”. If a compensation is not directed by the court then special reasons needs to be assigned.
  3. A purposive interpretation of NI Act shows it is being amended from time to time to provide speedy disposal of justice in cheque dishonour cases. It is so because unscrupulous elements use dilatory techniques and the victim does not get compensation in time.
  4. The amendment in S148 is made to address such dilatory technique by providing for interim compensation or fine pending trial.
  5. The contradiction between S357(2) and S148 of NI Act is non-existent because of S148 of NI Act starts with a Non-obstante clause. Hence, S357 (2) is not applicable.
  6. The court dismissed the appeal but though NI act provides maximum 90 (60 days which can be extended to 30 days more on sufficient cause) days’ time for depositing of the interim fine in the present case because of peculiar circumstances the court gave a further 4 weeks extension.

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