TaxTMI 
TaxTMI 
2022 (5) TMI 701
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....hat the complainant/respondent no. 2, Galaxy Datamatics Pvt. Ltd., averred that the accused no. 1, M/S Takshila Retail Pvt. Ltd., earlier known as M/s Blues Clothing Pvt. Ltd., accused no. 2, Dinesh Sehgal and accused no. 3, Harsh Sehgal, approached the respondent no.2 for a short-term loan of Rs. 5 Crores for meeting short fall in cash flow and for immediate project requirements for implementation of various contracts. 3. A short-term loan agreement dated 9th June, 2011 was entered into by the parties and respondent no. 2 advanced the loan of Rs. 5 Crores to the accused for a period of three months at interest of 24% per annum. It was stated that the parties also agreed for execution of an irrevocable and unconditional personal guarantee of the accused no. 2 and 3, jointly and severally. It was further agreed that the accused were to pay a penal interest of 3% per month in case of default of repayment. 4. For repayment of the said loan the accused issued a cheque for the amount of Rs. 5 Crores bearing no. 017257 dated 10th September, 2011 drawn on Union Bank of India and when presented the cheque was returned dishonoured with the remarks "Insufficient Funds" vide memo dated ....
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.... be set aside. It is submitted that the newly added Sections 148 and 143A of the NI Act came into force on 1st September, 2018, whereas the appeal had been filed on 4th April, 2018, that is, before the said amendment, hence, the matter did not fall in the ambit of the same and the application under Section 148 of the NI Act in itself was not maintainable. 9. It is strongly submitted that Section 148 of the NI Act was never intended to be made applicable to all pending appeals but only for the appeals which were filed after the amendment came into force. The judgment of Hon'ble Supreme Court in Surender Singh Deswal @ Col S.S. Deswal & Ors vs. Virender Gandhi & Anr, (2019) 11 SCC 341, makes it abundantly clear that Section 148 is to apply to all appeals filed after 1st September, 2018 even when it pertains to a complaint case filed prior to the amendment. The relevant paragraphs no. 8, 8.1 and 9 of the judgment are relied upon and are reproduced hereunder:- "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 th....
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....eraya (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 the learned trial Court considering Section 148 of the N.I. Act, as amended. 9. Now so far a....
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....red cheques due to easy filing of the appeals and obtaining stay in the 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. Learned senior counsel for the petitioners further relied upon Abu Faizal vs. State of Kerala & Anr, 2019 SCC OnLine Ker 3980, wherein the following observations were made by the Kerala High Court:- "11. To see that the object and reasons behind enactment of Section 138 N.I Act, not being frustrated the Parliament has thought it fit to incorporate Section 148 into the N.I Act empowering the appellate court to issue direction to the accused to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial court vide the judgment convicting and sen....
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....n 148 in the N.I. Act was to prevent the prosecution under Section 142 N.I. Act from being dragged unnecessarily. Parliament thought it fit to put a restriction on the filing of frivolous appeals and therefore made provision for deposit of a portion, not less than 20% of the fine or compensation imposed by the trial court. This aspect is made clear in the provisions incorporated for refund of the amount, on the judgment turns in favour of the accused and ends in acquittal. 19. Therefore, the power is meant to be invoked at a point of time when appeal is preferred or to say more specifically, prior to passing of an order suspending the execution of sentence in an application preferred under Section 389(1) Cr.P.C in the Appeal. The application preferred by either party to the appeal beyond that time shall not be entertained by the appellate court in view of sub-sections (2) and (3) and proviso thereunder, which stipulate time for making deposits, provision for release of the amount deposited to the complainant and for refund of the amount to the appellant/accused on himself being acquitted. 22. ... At the time of passing Annexure A1 order to suspend the execution of....
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.... appeals filed prior to the amendment. It is submitted that even if the amendment is considered to be retrospective, the retrospectivity is limited to the extent that the complaint case in question had been filed before the amendment but the appeal against such an order/judgment passed in the complaint case is filed after the amendment. It is submitted that if the application of Section 148 of the NI Act was to be made retrospective to the extent of including pending appeals filed before the amendment, it will create a havoc, and the pendency of the appeals will be negatively affected with complainants in appeals under Section 138 of the NI Act approaching the Court invoking the provision and hence, the purpose of the amendment of speedy disposal will be defeated. 12. Learned senior counsel for the petitioners, relying upon the judgment of Hon'ble Supreme Court in G.J. Raja vs. Tejraj Sharma, (2019) 19 SCC 469, submitted that Section 148 only applies to the appeals filed after 1st September, 2018. Similar interpretation is to be applicable to Section 148 as has been given to Section 143A of the NI Act in so far as it is prospective in nature and shall not apply to pending appeal....
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....interim direction passed [G.J. Raja v. Tejraj Surana, 2019 SCC OnLine SC 1064] by this Court, shall be returned to the appellant along with interest accrued thereon within two weeks from the date of this order." 13. It is submitted that there is a discretion to be exercised by the Court concerned while imposing the condition of payment of 20% of the fine/compensation which is to be exercised upon judicial appreciation of facts and circumstances of each case. Learned senior counsel for the petitioner relied upon Ajay Vinod Chandra Shah vs. State of Maharashtra & Anr, 2019 SCC OnLine Bom 436, wherein the Bombay High Court observed as under:- "21. Let me advert to the powers of the Appellate Court under section 148, pending appeal against conviction. The recovery of compensation granted under section 148 can be necessarily done by following the procedure laid down and available under section 357 of the Code of Criminal Procedure and amount of fine is recoverable by following procedure under section 421 of the Code. The Section is worded as 'Appellate Court 'may' order'. Thus, it gives discretion to the Appellate Court to invoke its discretionary power under section 148 whi....
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.... Thus, the condition imposed at the time of pending appeal of the payment of the amount of compensation should not curtail the liberty of the appellant/accused. Such condition if not fulfilled, then, amount is recoverable finally, if the conviction is maintained. The amount can be recoverable with interest. If conviction is confirmed, the order of a higher rate of interest or commercial rate of interest, may be passed; or in default maximum sentence may be imposed. Moreover, the fine or compensation is made recoverable as per the provision of section 421 of Code of Criminal Procedure. 26. In the present case, the impugned orders are passed on 3-8-2018 by the learned Magistrate and the amendment came into force on 1-9-2018. Obviously, in the order dated 3-8-2018, section 148 is not mentioned by the learned Additional Sessions Judge. He did not intend to pass the order under section 148 but it is to be understood that the learned Sessions Judge passed the order under Code of Criminal Procedure by using the powers of the criminal Court to impose putting condition at the time of granting bail. Such a condition of bail can be imposed or it can be modified for non-compliance of ....
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.... have not made any specific provision for automatic cancellation of the bail granted by the trial court or the appellate court on account of default of payment of interim compensation or certain percentage of compensation or fine, it would not be appropriate to hold it otherwise. 26. Accordingly, Q. No. 2 is also answered in favour of the petitioners." 15. It is stated that the substantive sentence was suspended in the year 2018 and the order of cancellation/vacation of the suspension order in case of non-deposit has been made in 2022, after about four years, which in itself against the principles as established by law. There was no condition to the suspension of sentence when the order dated 5th April, 2018 was passed and a condition is being imposed at this stage by the Appellate Court, which puts the liberty of the petitioners at stake. 16. It is further submitted that even if the petitioners are directed to pay the fine/compensation amount, the period warranted under the provision is 60 days which may be extended for a period of 30 days, however, the Appellate Court granted a time period of one month for the payment of the fine/compensation while allowing the app....
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....n order to give force to the objectives as stated in the Statement of Objects and Reasons of the amendment. The purpose of introducing Section 148 of the NI Act is to avoid frivolous and ingenuine appeals and the same has to be given effect by extending the application of the provision to appeals that arise from complaints filed before the amendment was brought about. Hence, any appeal at any point of time arising out of a complaint case filed before the Court concerned could be subjected to an application under Section 148 of the NI Act. It is submitted that in light of the observations of Hon'ble Supreme Court the application under Section 148 of the NI Act was maintainable and the learned ASJ has committed no error while allowing the same. 21. Learned counsel for the respondent no. 2 further opposed the argument of the petitioners that the learned ASJ did not have the powers to modify its order dated 5th April, 2018 while passing the order dated 5th February, 2022, wherein it directed appellant/petitioners to deposit 20% of the fine/compensation amount to the complainant in default of which the suspension of sentence would stand vacated. It is submitted that the learned ASJ w....
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....lity of the order passed by the learned ASJ and whether the implications it has are affirmative or negative. 26. The first question posed is whether the amendment of 2018, introducing Section 148 of the NI Act, is retrospective in nature or not. The language of the provision is silent on the point that at which stage the application under Section 148 of the NI Act can be filed in an appeal against conviction under Section 138 of the NI Act, whether it may be filed at the first instance at the stage of initiation of the proceedings or at any stage during the pendency of appeal, and whether the provision is applicable to the appeals filed prior to the amendment. Since the provision itself does not make any suggestion to question of extent applicability of the provision, it is pertinent to refer to the judgment of Hon'ble Supreme Court in Surender Singh Deswal (2019). The Hon'ble Supreme Court made the following observations with respect to the nature and extent of retrospectivity attached with the provision:- "7.1. 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 ....
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....vered in the case of the present appellants i.e. Criminal Appeal Nos.917-944 of 2019 (Surinder Singh Deswal @ Col. S.S. Deswal and others vs. Virender Gandhi) (in which one of us M.R.Shah, J was also a member) was also cited before the Bench deciding the case of G.J. Raja. This Court in its judgment dated 29.05.2019 has rejected the submission of the appellants that Section 148 of N.I. Act shall not be made applicable retrospectively. This Court held that considering the Statement of Objects and Reasons of the amendment in Section 148 of the N.I. Act, on purposive interpretation of 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." 28. In G.J. Raja (Supra), the Hon'ble Supreme Court, while referring to Surinder Singh Deswal (2019) with respect to the question of retrospectivity of Section 148 of the NI Act, noted as under:- "22. We must, however, advert to a decision of this Co....
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....ainst the convict/appellant for such cases, that is, where the complaint case pertains to a time prior to the amendment and introduction of Section 148 of the NI Act, even though the appeal pertains to a time post the amendment. 30. The question before this Court, however, stands on a different footing. In the instant case, the complaint case as well as the appeal had been filed before the amendment. Moreover, the suspension of substantive sentence was also granted to the accused/petitioners prior to the amendment. From filing of the complaint case to filing of appeal and suspension of sentence, all proceedings pertain to a time when Section 148 of the NI Act was not even in existence. The analysis of the abovementioned judgments of Hon'ble Supreme Court is silent with respect to question that is before this Court since the facts of the said cases are different to the instant matter. The observations of the Hon'ble Supreme Court do not indicate the position of law with regard to the applicability of Section 148 of the NI Act on cases such as the instant matter and therefore, an observation is to be made, keeping in view the opinion of the Hon'ble Supreme Court. 31. For decidi....
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.... proceedings or any such other event. The third objective of the amendment is, hence, that the complainant is awarded some relief while the sentence of the appellant is stayed. The aim of the legislature was also to avoid frivolous litigations and to save time, money and other resources of the Courts as well as the parties. 33. Keeping in view the objective of the amendment, it is proper to say that to avoid frivolous, unnecessary and unscrupulous litigations and proceedings, the Court concerned may take the required steps to ensure that the appellant has approached the Court with a genuine and real case against the order of conviction and is not wasting the time and resources of the judicial machinery only to delay his conviction and punishment thereof. Such a check on filing of appeals cannot be said to be limited to the cases arising only after the amendment. If it is the intention of the legislature to provide for an effective measure to deal with the menace of unnecessary litigations, then such measure may be intended to be applied to cases where the proceedings under appeal are still underway and have been pending for years. In fact, the need to filter out the cases of gen....
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.... appeal even though remedial is substantive in nature. (iii) Every litigant has a vested right in substantive law but no such right exists in procedural law. (iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." 35. In case of Section 148 of the NI Act, there is no substantive right that is being taken away by the enforcement of the amendment. The Hon'ble Supreme Court in Surinder Singh Deswal (2019) has also rejected the argument that the amendment takes away the vested right of the convict to appeal. The only implication of the amendment is that some part of the amount of fine/compensation, which is accruing towards the complainant, is directed to be paid against the convict/appellant and in favour of the complainant. This is also done bearing in mind that appellant h....
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...., while passing the impugned order, re-appreciated the facts of the matter before it, for the purpose of adjudicating the application under Section 148, and then passed the order of imposition of the fine with the condition of cancellation of the suspension of sentence on non-payment. To this extent, it may be said that that the learned ASJ reviewed its original order dated 5th April, 2022 and imposed a condition in retrospective. The learned ASJ could not have exercised the powers granted to it as an Appellate Court to review its own order of suspension of sentence. The learned ASJ while passing the order, to an extent, imposed a condition to the suspension of sentence, which was granted prior in time, that is, 4 years back. 38. The general practice under Section 148 of the NI Act is that the Court concerned while passing the order considering suspension of sentence, imposes the condition of payment of atleast 20% of the fine/compensation amount and if the accused/convict fails to abide by or comply with any condition, as imposed upon him while grating bail and/or suspension of order, the concerned Court may make a finding to the effect of cancelling the bail of the convict/app....
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.... vacated. 17 With these observations, the application u/s 148 NI Act filed on behalf of respondent no. 1 stands disposed of." 41. The learned ASJ although did have the power to impose fine in accordance with Section 148 of the NI Act for an appeal arising out of a complaint case filed before the amendment, however, he did not have the power to go beyond the mandate of the provision. While passing the impugned order the learned ASJ granted one months' time to the petitioners for deposition of 20% of the amount imposed by the learned Trial Court, however, Section 148 affords a period of sixty days to the appellant to deposit the fine/compensation levied upon him by the Appellate Court. Reference is made to the decision of High Court of Kerala where the same question was entertained in Sreekandan Nair vs. State of Kerala, 2020 SCC OnLine Ker 776, and it observed as under:- "13. As per Annexure-II order, the appellate court granted only a period of fifteen days to the petitioner to deposit 20% of the amount of compensation. An appellant, who is ordered to deposit amount under Section 148(1) of the Act, is entitled to get a period of sixty days from the date of such....
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....vity, this Court is satisfied that the contentions and grounds raised on behalf of the petitioners do not stand ground in the peculiar facts and circumstances of this case. 44. However, considering the discussion as above, merits of the case and the contents of the impugned order, it is found that the order passed was impermissible by law and not in accordance with the statute, for the reason that, firstly, the period prescribed for depositing fine awarded under the provision is of sixty days which may be extended for thirty days, yet the learned ASJ only granted a period of one month to the petitioners to deposit 20% of the fine/compensation in favour of the complainant, and secondly, imposing the condition of vacation of suspension of substantive sentence amounted to a review of its own order which is unsustainable by law. Therefore, the impugned order is illegal to the extent as stated. 45. This Court deems, that in light of the sum involved in the matter, the sentence ordered against the petitioners of simple imprisonment of one year, the fact that the suspension of sentence was granted in 2018, that Rs. 5.82 Crores has already been paid by the petitioners towards their l....