India: Amendment To Section 148 of Negotiable Instruments Act Has Retrospective Effect Holds SC

Last Updated: 21 June 2019
Article by Richa K. Gaurav

The Bench comprising of Justice M. R. Shah and Justice A. S. Bopanna of Hon'ble Supreme Court of India in the judgement dated 29th May, 2019 in the matter of 'Surinder Singh Deswal @ Col. S.S. Deswal & others Versus Virender Gandhi' have held that 'purposive interpretation' to be accorded to Section 148 Negotiable Instruments Act, 1881 ("N.I. Act") as inserted by Negotiable Instruments (Amendment) Act, 2018 (20 of 2018) ("amendment") and is applicable retrospectively and shall be applicable qua appeals against order of conviction and suspension of sentence for offence under Section 138 N.I. Act even if the complaints were filed prior to the amendment i.e. prior to 01.09.2018. Resultantly, a minimum of 20% of the fine or compensation awarded by the trial court may be directed to be deposited pending appeal by the appellate court.

FACTS:

The criminal complaints under section 138 N.I. Act were filed against the appellants (original accused) prior to 01.09.2018 and the Learned Trial Court convicted them vide judgement and order dated 30.10.2018 and sentenced them to undergo two years of imprisonment, directed them to pay the cheque amount and also imposed fine of 1 % of the cheque amount towards interest and litigation expenses.

Aggrieved and dissatisfied by the trial court's order, the appellants (original accused) preferred Criminal Appeals before Learned Additional Sessions Judge, Panchkula (First Appellate Court) along with application under section 389 Code of Criminal Procedure, 1973 ("Cr.P.C.") for suspension of sentence and release on bail pending appeal(s).

Learned Additional Sessions Judge while allowing the application u/s 389 Cr.P.C. suspended the sentence pending appeal and directed the appellant(s) to deposit 25% of the compensation/fine awarded by the learned trial court in the light of amended section 148 N.I. Act that came into force on 01.09.2018.

The appellants moved Hon'ble High Court of Punjab and Haryana invoking revisional jurisdiction against the order directing 25% of the compensation/fine to be deposited contending that the amendment shall not be applicable on the complaints initiated prior to the amendment. However, Hon'ble High Court while rejecting the contention dismissed the revision petition and confirmed the orders passed by first appellate court.

Aggrieved by the orders of the Hon'ble High Court passed in the Revision Petition the appellant(s) preferred the present appeal(s) before the Hon'ble Supreme Court of India. The common question of law and facts arose from impugned common judgment, therefore, sting of appeals arising out of impugned common judgment were decided and disposed of together by the apex court.

ISSUES:

The Hon'ble Supreme Court considered the following Question of Law and facts:

  1. Whether the first appellate court is justified in directing the appellants (original accused) to deposit 25% of the compensation/fine awarded by the learned trial court while convicting them under section 138 of N.I. Act pending appeal while allowing application under section 389 Cr.P.C. in light of amended section 148 N.I. Act?

SUBMISSIONS:

Learned Senior Counsel appearing on behalf of the Appellant submitted that First Appellate Court 'materially erred' in directing the appellant(s) to deposit 25% of the compensation/fine awarded by the trial court in light of amended section 148 of the N.I. Act as the same came into effect after the filing of the complaint, henceforth, there can be no retrospective effect in the instant matter. It was further vehemently contended that both civil and criminal proceedings ought to be decided by the courts (trial/appellate) on the basis of law applicable on the date of filing of suit/alleged commission of offence unless the amended law is expressly given retrospective effect subject to provisions of Article 20(1) of Indian Constitution that prohibits conviction of person for an offence except for violation of law in force at the time of commission of offence and further prohibits imposition of penalty greater than which might have been inflicted under the law in force at the time of commission of offence.

Learned Senior Counsel for the appellant further submitted that the Learned Appellate Court misinterpreted the word 'may' as 'shall' in section 148 N.I. Act thereby proceeded on the basis that it was mandatory to direct to deposit 25% of compensation/fine awarded by the trial court for suspension of sentence pending appeal. He further submitted that as per Section 357(2) Cr.P.C. during pendency of appeal fine imposed is not recoverable.

The appellants placed reliance upon the decision of Hon'ble Punjab and Haryana High Court pronounced in "M/s Ginni Garments and Anr. versus Sethi Garments" on 04.04.2019 wherein it was held that appellate courts have discretion as to what conditions are/are not to be imposed during suspension of sentence and if at all discretion is exercised and order to deposit fine/compensation is ordered the same must commensurate with provisions of section 148 N.I. Act. The reliance was also placed upon the decision pronounced by Hon'ble Bombay High Court in "Ajay Vinodchandra Shah versus The State of Maharashtra" wherein it was held the appellate court has discretion to direct to deposit sum pending appeal however, the same shall not be less than 20% of the amount of compensation/fine awarded by the Trial Court. Resultantly, Learned Senior Counsel contended that appellate court failed to exercise discretion and assumed that it was mandatory to deposit 25% of the fine/compensation pending appeal as pre-condition to suspension of sentence and therefore, prayed to allow appeal and quash the impugned order passed by first appellate court.

On the contrary Learned Counsel for the original complainant while vehemently opposing the appeal contended that amendment to section 148 N.I. Act is merely procedural in nature that neither takes away nor affects vested right to appeal therefore, amended section 148 N.I. Act was rightly invoked by the first appellate court. It was further contended qua provisions of Section 357(2) Cr.P.C. that amended Section 148 N.I. Act categorically states "Notwithstanding anything contained in the Code of Criminal Procedure, 1973......." meaning thereby amended provisions of N.I. Act shall prevail over the provisions of Cr.P.C. as it is settled position in law that generalia specialibus non derogant.

It was further contended that the amended provisions are not substantive in nature and can be applied retrospectively, therefore, it is always open for the appellate court to direct to deposit any such amount but not less than 20% of the amount of compensation/fine awarded by the trial court.

JUDGMENT:

The Hon'ble Supreme Court while deciding the issue referred to and considered 'Statement of Objects and Reasons' of the amendment in section 148 N.I. Act and observed that N.I. Act has been amended time to time to cater to changing needs so as to defeat delay tactics of unscrupulous drawers of dishonoured cheques on account of easy filing of appeals and obtaining stay, resultantly, such delays compromise the sanctity of cheque transactions. Therefore, such amendments are necessary to strengthen the credibility of cheques to smoothen trade and commerce and discourage frivolous and unnecessary litigation.

The Hon'ble Bench further observed that amended Section 148 N.I. Act was into force on date of preferring appeal, on the date of order to deposit 25% of the compensation/fine awarded by the trial court and of suspension of sentence pending appeal was passed and held that impugned order was absolutely in consonance with the Statement of Objects and Reasons of amendment in Section 148 N.I. Act.

It was further held that though the word 'may' is used in the amended section but the same is to be construed as 'rule' or 'shall' and no direction to deposit by the appellate court is exception to general rule and special reasons must be assigned for such order; as far as section 357(2) Cr.P.C. is concerned the answer lies within the opening words "Notwithstanding anything contained in the Code of Criminal Procedure, 1973......." of the amended section 148 N.I. Act.

The Hon'ble Bench also observed that 'purposive interpretation' to be accorded to the amendment so as to not defeat and frustrate the purpose of the amendment, Section 138 and Section 148 N.I. Act and held that section 148 N.I. Act as amended shall be applicable in respect of the appeals against order of conviction and sentence under section 138 N.I. Act even when the complaints under section 138 N.I. Act were filed prior to amendment Act No. 20/2018. Therefore, Hon'ble Apex Court neither found any irregularity or error in the impugned order passed by the first appellate court and confirmed by the Hon'ble High Court.

CONCLUSION:

The Hon'ble Supreme Court harmoniously balanced the principles of natural justice and legislative intent to safeguard the interests of the drawee, as the amendment has been carried out to keep the sanctity of cheque transactions intact, defeat the delaying tactics of the unscrupulous drawer and to prevent wastage of time and resource of both courts and individuals. It is noteworthy to point out that by way of amended section 148 N.I. Act, the legislative intent is not only to safeguarded the interest of the drawee but also of drawer. It can be rightly concluded that purposive interpretation adopted by the Hon'ble Supreme Court serves the purpose of amendment in true letter and spirit.

Footnotes

1 Criminal Appeal Nos. 917-944 of 2019

2 CRR No. 9872 of 2018

3 Crl. W. P. 258 of 2019

4 Para 8.1 of Criminal Appeal Nos. 917-944 of 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions