Wednesday, 8 January 2020

Supreme Court reiterates that S 148 of NI Act is retrospective in nature

 Learned counsel for the appellant has placed
reliance on the judgment of this Court dated
30.07.2019 in Criminal Appeal No.1160 of 2019 (G.J.
Raja vs. Tejraj Surana). This Court in the above case
was considering provisions of Section 143A of the
N.I. Act which was inserted by the same Amendment Act
20 of 2018 by which Section 148 of the N.I. Act has
been inserted. This Court took the view that Section
143A is prospective in nature and confined to cases
where offences were committed after the introduction
of Section 143A i.e. after 01.09.2018. In paragraph
22 of the judgment following has been held:
“22. In our view, the applicability of
Section 143A of the Act must, therefore, be
held to be prospective in nature and
confined to cases where offences were
committed after the introduction of Section
143A, in order to force an accused to pay
such interim compensation.”
15. The judgment of this Court which was delivered 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.
16. The Bench deciding G.J. Raja’s case has noticed
the judgment of this Court in the appellants’ case
i.e. Surinder Singh Deswal’s case and has opined that
the decision of this Court in Surinder Singh Deswal’s
case was on Section 148 of the N.I. Act which is a
stage after conviction of the accused and

distinguishable from the stage in which the interim
compensation was awarded under Section 143A of the
N.I.Act. When the Bench deciding G.J. Raja’s
case(supra) itself has considered and distinguished
the judgment of this Court in appellants’ own case
i.e. Surinder Singh Deswal’s, reliance by the learned
counsel for the appellants on the judgment of this
Court in G.J. Raja’s case is misplaced. It is useful
to refer to paragraph 23 of the judgment in G.J.
Raja’s case which is to the following effect:
“23. We must, however, advert to a
decision of this Court in Surinder Singh
SCALE 445 where Section 148 of the Act
which was also introduced by the same
Amendment Act 20 of 2018 from 01.09.2018
was held by this Court to be retrospective
in operation. As against Section 143A of
the Act which applies at the trial stage
that is even before the pronouncement of
guilt or order of conviction, Section 148
of the Act applies at the appellate stage
where the Accused is already found guilty
of the offence Under Section 138 of the
Act. It may be stated that there is no
provision in Section 148 of the Act which
is similar to Sub-Section (5) of Section
143A of the Act. However, as a matter of
fact, no such provision akin to Sub-section
(5) of Section 143A was required as
Sections 421 and 357 of the Code, which
apply post-conviction, are adequate to take
care of such requirements. In that sense
said Section 148 depends upon the existing

machinery and principles already in
existence and does not create any fresh
disability of the nature similar to that
created by Section 143A of the Act.
Therefore, the decision of this Court in
Surinder Singh Deswal (2007) 13 SCC 492
stands on a different footing.”
In view of the above, the judgment of this Court in
the case of G.J. Raja does not help the appellants.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.1936-1963 OF 2019

SURINDER SINGH DESWAL @ COL. S.S. DESWAL Vs  VIRENDER GANDHI & ANR. 

ASHOK BHUSHAN, J.
Dated:January 08, 2020.

These appeals have been filed against a common
judgment of the Punjab and Haryana High Court dated
10.09.2019 dismissing 28 petitions filed by the
appellants under Section 482 of Cr.P.C.
2. Brief facts of the case giving rise to these
appeals are:
Appellant Nos. 1 and 2 are partners of appellant
No.3, M/s. Bhoomi Infrastructure Co., now known as
GLM Infratech Private Limited. Respondent No.1,
Virender Gandhi, who was also a partner of the Firm
retired with respect of which Memorandum of
Understanding dated 30.11.2013 was entered into. A

cheque No.665643 dated 31.03.2014 drawn on Canara
Bank amounting to Rs.45,84,915/- was issued by the
appellant to respondent No.1 against the part payment
of the retirement dues. Similarly, 63 other cheques
were issued by the appellants in favour of respondent
arising out of the same transaction. On 06.04.2015,
respondent No.1 deposited cheque No.665643 in his
Bank that is Karnataka Bank Ltd., Sector-11,
Panchkula. The cheque was dishonoured and returned
vide memo dated 07.04.2015 with the remarks “funds
insufficient”. Other 63 cheques were also
dishonoured.
3. Respondent No.1 sent the statutory demand notice
under Section 138 of the Negotiable Instruments Act,
1881 (hereinafter referred to as “NI Act”) on
06.05.2015. Complaints were filed by respondent No.1
against the appellants under Section 138 of the NI
Act before the Judicial Magistrate, Ist Class,
Panchkula. In all 28 complaints were filed. The
complaints were decided by Judicial Magistrate vide
his judgment dated 30.10.2018 holding the appellant
Nos.1 and 2 guilty for the offence punishable under

Section 138 of the NI Act, who were accordingly
convicted. By order dated 13.11.2018 the appellants
were sentenced to undergo imprisonment for a period
of two years and to pay jointly and severally an
amount equal to the amount involved in the present
case i.e. cheque amount plus 1% of this amount as
interest as well as litigation expenses.
4. The appeal was filed by the appellants against
the judgment dated 30.10.2018 and sentence dated
30.11.2018 in the Court of Sessions Judge, Panchkula.
In the appeal the appellants had filed an application
under Section 389 of Cr.P.C. for suspension of
sentence. The learned trial court has suspended the
sentence of the appellants by order dated 13.11.2018
for 30 days. The Appellate Court vide order dated
01.12.2018 entertained the appeal and suspended the
sentence during the pendency of the appeal, subject
to furnishing of bail bond and surety bond in the sum
of Rs.50,000/- with one surety in the like amount and
also subject to deposit of 25% of the amount of
compensation awarded by the learned trial court in
favour of the complainant. The appellants were

directed to deposit the amount within four weeks by
way of demand draft in the name of the Court.
5. The appellants were convicted in all 28 cases and
the total amount to be deposited under the order of
the Appellate Court was, in all cases,
Rs.9,40,24,999/-. The appellants preferred an
application seeking extension of time to deposit the
amount of 25% of the compensation amount. The learned
Sessions Judge allowed the application on 19.12.2018
granting time to deposit the amount till 28.01.2019.
The appellants filed an application under Section 482
Cr.P.C. seeking quashing of the part of the order
dated 01.12.2018 passed by the learned Additional
Sessions Judge, Panchkula, whereby the said Court has
imposed a condition to deposit 25% of the amount of
compensation while suspending the sentence.
6. The High Court vide its judgment dated 24.04.2019
dismissed the petition of the appellants under
Section 482 Cr.P.C. and other connected petitions.
The appellants preferred Special Leave
Petition(Criminal) Nos.4948-4975/2019 before this

Court against the judgment dated 24.04.2019 of the
Hight Court of Punjab and Haryana at Chandigarh.
7. This Court vide its judgment dated 29.05.2019
dismissed the criminal appeals arising out of the
SLPs(Criminal). Learned Additional Sessions Judge,
Panchkula in view of the non-compliance of the order
dated 20.07.2019 directed the appellants to surrender
in the trial court within four days. The appellants
were also not present when the case was taken by the
Additional Sessions Judge on 20.07.2019. Another
petition under Section 482 Cr.P.C. was filed by the
appellants challenging the order dated 20.07.2019
passed by the Additional Sessions Judge. The 28
petitions under Section 482 Cr.P.C. filed by the
appellants have been dismissed by the impugned
judgment of the Punjab and Haryana High Court dated
10.09.2019. Aggrieved by which judgment these appeals
have been filed by the appellants.
8. Shri Balbir Singh, learned senior counsel
appearing for the appellants questioning the order of
the Additional Sessions Judge dated 20.07.2019 and
judgment of the High Court submits that by mere non-

deposit of 25% of the amount of compensation as
directed on 01.12.2018 cannot result in vacation of
suspension of sentence. Learned counsel submits that
the direction to deposit 25% of the compensation as
directed by the trial court could not have been made
under Section 148 of the NI Act. Section 148 of the
NI Act having come into force on 01.09.2018 could not
have been relied by the Courts below. Since, the
complaint was filed in the year 2015 alleging offence
under Section 138 of the NI Act which was much before
the enforcement of Section 148 of the NI Act. He
further submits that non-deposit of 25% of the amount
of compensation could not lead to vacation of the
order suspending the sentence rather it was open to
the respondents to recover the said amount as per the
procedures prescribed under Section 421 Cr. P.C.
9. Learned counsel for the appellants submits that
this Court in Criminal Appeal No.1160 of 2019 (G.J.
Raja vs. Tejraj Surana) decided on 30.07.2019 has
held the provisions of Section 143A of NI Act to be
prospective only that is to apply with respect to
offence committed after insertion of Section 143A

w.e.f. 01.09.2018. He submits that both Sections 143A
and Section 148 inserted in NI Act by amendment Act
20 of 2018, hence Section 148 was not attracted in
the present case which was only prospective and could
have been utilised in offences which were committed
after 01.09.2018. He has also placed reliance on the
judgment of Bombay High Court in Ajay Vinodchandra
Shah vs. State of Maharashtra, (2019) 4 Mah LJ 705
and another judgment of Punjab and Haryana High Court
at Chandigarh dated 18.07.2019 in CRM-M-29187 of
2019(O&M)(Vivek Sahni and another vs. Kotak Mahindra
Bank Ltd.).
10. We have considered the submissions of learned
counsel for the parties and have perused the records.
11. The appellants had challenged the order dated
01.12.2018 passed by the Additional Sessions Judge,
Panchkula by which while entertaining the criminal
appeal of the appellants, Appellate Court has
suspended the substantive sentence of the appellants
subject to deposit 25% of the compensation awarded by
the trial court in favour of the complainant. The

petitions under Section 482 Cr.P.C. filed by the
appellants questioning the order dated 01.12,2019
were dismissed by the High Court vide its judgment
dated 24.04.2019 against which judgment the
appellants have also filed SLP(Criminal)Nos.4948-4975
of 2019) which were dismissed by this Court on
29.05.2019. All arguments raised by the appellants
questioning the order dated 01.12.2018 have been
elaborately dealt with by this Court and rejected.
The submissions regarding challenge to the order
dated 01.12.2018 of the learned Additional Sessions
Judge which have been addressed before us have been
considered by this Court and rejected. It is useful
to refer paragraph 8., 8.1 and 9 of the judgment of
this Court which are to the following effect:
“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 Code of Criminal
Procedure 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
Code of Criminal Procedure, when the first
appellate court directed the Appellants to
deposit 25% of the 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 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 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 pending
appeal to direct the Appellant-Accused 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 Code of Criminal
Procedure 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 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 Section 138 of the N.I. Act.”
12. This Court having already upheld the order of the
Appellate Court dated 01.12.2018 suspending the
sentence subject to deposit 25% of the amount of
compensation any submission questioning the order of
the Appellate Court directing the suspension of
sentence subject to deposit of 25% of the
compensation amount needs no further consideration.
By dismissal of the criminal appeals of the

appellants on 29.05.2019 by this Court the challenge
stands repelled and cannot be allowed to be reopened.
13. The second round of litigation which was
initiated by the appellant by filing application
under Section 482 Cr.P.C. was against the order dated
20.07.2019 passed by the Additional Sessions Judge,
Panchkula by which Additional Sessions Judge held
that the appellant having not complied with the
direction dated 01.12.2018 to deposit 25% of the
amount of compensation, the order of suspension of
sentence shall be deemed to have been vacated. The
order dated 20.07.2019 was an order passed by the
Additional Sessions Judge on account of failure of
the appellant to deposit 25% of the amount of
compensation. The suspension of sentence on
01.12.2018 was subject to the condition of deposit of
25% of the amount of compensation, when the condition
for suspension of sentence was not complied with,
learned Additional Sessions Judge was right in taking
the view that order of suspension of sentence shall
be deemed to have been vacated. Challenge to order
dated 20.07.2019 has rightly been repelled by the

High Court by its elaborate and well considered
judgment dated 10.09.2019.
14. Learned counsel for the appellant has placed
reliance on the judgment of this Court dated
30.07.2019 in Criminal Appeal No.1160 of 2019 (G.J.
Raja vs. Tejraj Surana). This Court in the above case
was considering provisions of Section 143A of the
N.I. Act which was inserted by the same Amendment Act
20 of 2018 by which Section 148 of the N.I. Act has
been inserted. This Court took the view that Section
143A is prospective in nature and confined to cases
where offences were committed after the introduction
of Section 143A i.e. after 01.09.2018. In paragraph
22 of the judgment following has been held:
“22. In our view, the applicability of
Section 143A of the Act must, therefore, be
held to be prospective in nature and
confined to cases where offences were
committed after the introduction of Section
143A, in order to force an accused to pay
such interim compensation.”
15. The judgment of this Court which was delivered 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.
16. The Bench deciding G.J. Raja’s case has noticed
the judgment of this Court in the appellants’ case
i.e. Surinder Singh Deswal’s case and has opined that
the decision of this Court in Surinder Singh Deswal’s
case was on Section 148 of the N.I. Act which is a
stage after conviction of the accused and

distinguishable from the stage in which the interim
compensation was awarded under Section 143A of the
N.I.Act. When the Bench deciding G.J. Raja’s
case(supra) itself has considered and distinguished
the judgment of this Court in appellants’ own case
i.e. Surinder Singh Deswal’s, reliance by the learned
counsel for the appellants on the judgment of this
Court in G.J. Raja’s case is misplaced. It is useful
to refer to paragraph 23 of the judgment in G.J.
Raja’s case which is to the following effect:
“23. We must, however, advert to a
decision of this Court in Surinder Singh
SCALE 445 where Section 148 of the Act
which was also introduced by the same
Amendment Act 20 of 2018 from 01.09.2018
was held by this Court to be retrospective
in operation. As against Section 143A of
the Act which applies at the trial stage
that is even before the pronouncement of
guilt or order of conviction, Section 148
of the Act applies at the appellate stage
where the Accused is already found guilty
of the offence Under Section 138 of the
Act. It may be stated that there is no
provision in Section 148 of the Act which
is similar to Sub-Section (5) of Section
143A of the Act. However, as a matter of
fact, no such provision akin to Sub-section
(5) of Section 143A was required as
Sections 421 and 357 of the Code, which
apply post-conviction, are adequate to take
care of such requirements. In that sense
said Section 148 depends upon the existing

machinery and principles already in
existence and does not create any fresh
disability of the nature similar to that
created by Section 143A of the Act.
Therefore, the decision of this Court in
Surinder Singh Deswal (2007) 13 SCC 492
stands on a different footing.”
In view of the above, the judgment of this Court in
the case of G.J. Raja does not help the appellants.
17. The judgment of Punjab and Haryana High Court in
Vivek Sahni and another(supra) which has been relied
by the learned counsel for the appellants has been
noted and elaborately considered by the High Court in
the impugned judgment. In paragraph 14 and 15 of the
impugned judgment of the High Court reasons have been
given for distinguishing the Vivek Sahni’ case.
18. The High Court is right in its opinion that
question No.2 as framed in Vivek Sahni’s case was not
correctly considered. When suspension of sentence by
the trial court is granted on a condition, noncompliance
of the condition has adverse effect on the
continuance of suspension of sentence. The Court
which has suspended the sentence on a condition,
after noticing non-compliance of the condition can

very well hold that the suspension of sentence stands
vacated due to non-compliance. The order of the
Additional Sessions Judge declaring that due to noncompliance
of condition of deposit of 25% of the
amount of compensation, suspension of sentence stands
vacated is well within the jurisdiction of the
Sessions Court and no error has been committed by the
Additional Sessions Judge in passing the order dated
20.07.2019.
19. It is for the Appellate Court who has granted
suspension of sentence to take call on non-compliance
and take appropriate decision. What order is to be
passed by the Appellate Court in such circumstances
is for the Appellate Court to consider and decide.
However, non-compliance of the condition of
suspension of sentence is sufficient to declare
suspension of sentence as having been vacated.
20. Insofar as the judgment of the Bombay High Court
in Ajay Vinodchandra Shah (supra) which has been
relied by the learned counsel for the appellant, it
is sufficient to observe that the High Court did not
have benefit of judgment of this Court dated

29.05.2019 in Surinder Singh Deswal’s case. The
judgment of the Bombay High Court was delivered on
14.03.2019 whereas judgment of this Court in
appellants’ case is dated 29.05.2019. In view of the
law laid down by this Court in Surinder Singh
Deswal’s case decided on 29.05.2019, the judgment of
Bombay High Court in Ajay Vinodchandra Shah’s case
cannot be said to be a good law insofar as
consequences of non-compliance of condition of
suspension of sentence is concerned.
21. It is further to note that even Bombay High Court
while modifying the direction to deposit 25% of the
amount of total compensation directed the accused to
deposit 20% of the amount of compensation within 90
days.
22. In view of the foregoing discussion, we do not
find any merit in the submission of the appellants.
The appeals are dismissed.
......................J.
( ASHOK BHUSHAN )
......................J.
( M.R. SHAH )
New Delhi,
January 08, 2020.

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