Supreme Court: Appellate court may not order deposit of 20% of compensation in appeal against conviction in checque dishonour case

We may take the discussion a little forward to emphasize

our point of view. There could arise a case before the Appellate

Court where such court is capable of forming an opinion, even in

course of considering as to what would be the appropriate

quantum of fine or compensation to be kept in deposit, that the

impugned conviction and the consequent sentence

recorded/imposed by the trial court is so wholly incorrect and

erroneous that it is only a matter of time for the same to be set

aside and that ordering a deposit would be unnecessarily

burdensome for the appellant. Such firm opinion could be formed

on a plain reading of the order, such as, the conviction might have

been recorded and sentence imposed without adherence to the

mandatory procedural requirements of the N.I. Act prior to/at the

time lodging of the complaint by the complainant rendering the

proceedings vitiated, or the trial court might have rejected

admissible evidence from being led and/or relied on inadmissible

evidence which was permitted to be led, or the trial court might

have recorded an order of conviction which is its ipse dixit, without

any assessment/analysis of the evidence and/or totally

misappreciating the evidence on record, or the trial court might

have passed an order failing to disclose application of mind and/or

sufficient reasons thereby establishing the link between the

appellant and the offence, alleged and found to be proved, or that

the compensation awarded is so excessive and outrageous that it

fails to meet the proportionality test : all that, which would evince

an order to be in defiance of the applicable law and, thus, liable to

be labelled as perverse. These instances, which are merely

illustrative and not exhaustive, may not arise too frequently but its

possibility cannot be completely ruled out. It would amount to a

travesty of justice if exercise of discretion, which is permitted by

the legislature and could indeed be called for in situations such as

these pointed out above, or in any other appropriate situation, is

not permitted to be exercised by the Appellate Court by a judicial interpretation of ‘may’ being read as ‘shall’ in sub-section (1) of Section 148 and the aggrieved appellant is compelled to make a deposit of minimum 20% of the fine or compensation awarded by the trial court, notwithstanding any opinion that the Appellate Court might have formed at the stage of ordering deposit as regards invalidity of the conviction and sentence under challenge on any valid ground. Reading ‘may’ as ‘may’ leads to the text matching the context and, therefore, it seems to be just and proper not to denude the Appellate Court of a limited discretion conferred by the legislature and that is, exercise of the power of not ordering deposit altogether albeit in a rare, fit and appropriate case which commends to the Appellate Court as exceptional. While there can be no gainsaying that normally the discretion of the Appellate Court should lean towards requiring a deposit to be made with the quantum of such deposit depending upon the factual situation in every individual case, more so because an

order under challenge does not bear the mark of invalidity on its

forehead, retention of the power of such court not to order any

deposit in a given case (which in its view and for the recorded

reasons is exceptional) and calling for exercise of the discretion to

not order deposit, has to be conceded. If indeed the legislative

intent were not to leave any discretion to the Appellate Court,

there is little reason as to why the legislature did not also use

‘shall’ instead of ‘may’ in sub-section (1). Since the self-same

section, read as a whole, reveals that ‘may’ has been used twice

and ‘shall’ thrice, it must be presumed that the legislature was

well and truly aware of the words used which form the skin of the

language. Reading and understanding the words used by the

legislature in the literal sense does not also result in manifest

absurdity and hence tinkering with the same ought to be avoided

at all costs. We would, therefore, read ‘may’ as ‘may’ and ‘shall’ as ‘shall’, wherever they are used in Section 148. This is because, the words mean what they say. {Para 27}

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL No. 5491/2024

MUSKAN ENTERPRISES & ANR. Vs THE STATE OF PUNJAB & ANR. 

DIPANKAR DATTA, J.

Citation: 2024 INSC 1046.

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Supreme Court: 20% deposit of compensation amount in appeal against conviction for offence U/S 138 of NI Act is not an absolute rule and can be relaxed in exceptional cases

What is held by this Court is that a purposive interpretation should be made of Section 148 of the N.I. Act. Hence, normally, Appellate Court will be justified in imposing the condition of deposit as provided in Section 148. However, in a case where the Appellate Court is satisfied that the condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of the right of appeal of the Appellant, exception can be made for the reasons specifically recorded. {Para 6}

7. Therefore, when Appellate Court considers the prayer Under Section 389 of the Code of Criminal Procedure of an Accused who has been convicted for offence Under Section 138 of the N.I. Act, it is always open for the Appellate Court to consider whether it is an exceptional case which warrants grant of suspension of sentence without imposing the condition of deposit of 20% of the fine/compensation amount. As stated earlier, if the Appellate Court comes to the conclusion that it is an exceptional case, the reasons for coming to the said conclusion must be recorded.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 2741 of 2023 

Decided On: 04.09.2023

Jamboo Bhandari Vs. M.P. State Industrial Development Corporation Ltd. and Ors

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Pankaj Mithal, JJ.

Author: Abhay Shreeniwas Oka, J.

Citation: 2023 INSC 822, MANU/SC/1005/2023.

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Interim Compensation In Cheque Dishonour Cases U/S 143A NI Act Isn't Mandatory : Supreme Court Lays Down Broad Parameters

19. Subject to what is held earlier, the main conclusions can be summarised as follows:

a. The exercise of power Under Sub-section (1) of Section 143A is discretionary. The provision is directory and not mandatory. The word "may" used in the provision cannot be construed as "shall."

b. While deciding the prayer made Under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors.

c. The broad parameters for exercising the discretion Under Section 143A are as follows:

i. The Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the Accused in the reply to the application. The financial distress of the Accused can also be a consideration.

ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case.

iii. If the defence of the Accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation.

iv. If the Court concludes that a case is made out to grant interim compensation, it will also have to apply its mind to the quantum of interim compensation to be granted. While doing so, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the Accused and the complainant, etc.

v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated. The parameters stated above are not exhaustive.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 741 of 2024

Decided On: 15.03.2024

Rakesh Ranjan Shrivastava Vs. The State of Jharkhand and Ors.

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Ujjal Bhuyan, JJ.

Author: Abhay Shreeniwas Oka, J.

 Citation: 2024 INSC 205,MANU/SC/0204/2024.

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Supreme Court: What factors Appellate court should consider while deciding application for grant of interim compensation U/S 143A of N I Act?

 FACTORS TO BE CONSIDERED WHILE EXERCISING DISCRETION

16. When the court deals with an application Under Section 143A of the N.I. Act, the Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the Accused in the reply to the application Under Sub-section (1) of Section 143A. The presumption Under Section 139 of the N.I. Act, by itself, is no ground to direct the payment of interim compensation. The reason is that the presumption is rebuttable. The question of applying the presumption will arise at the trial. Only if the complainant makes out a prima facie case, a direction can be issued to pay interim compensation. At this stage, the fact that the Accused is in financial distress can also be a consideration. Even if the Court concludes that a case is made out for grant of interim compensation, the Court will have to apply its mind to the quantum of interim compensation to be granted. Even at this stage, the Court will have to consider various factors such as the nature of the transaction, the relationship, if any, between the Accused and the complainant and the paying capacity of the Accused. If the defence of the Accused is found to be prima facie a plausible defence, the Court may exercise discretion in refusing to grant interim compensation. We may note that the factors required to be considered, which we have set out above, are not exhaustive. There could be several other factors in the facts of a given case, such as, the pendency of a civil suit, etc. While deciding the prayer made Under Section 143A, the Court must record brief reasons indicating consideration of all the relevant factors.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 741 of 2024

Decided On: 15.03.2024

Rakesh Ranjan Shrivastava Vs. The State of Jharkhand and Ors.

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Ujjal Bhuyan, JJ.

Author: Abhay Shreeniwas Oka, J.

Citation: MANU/SC/0204/2024,2024 SCC OnLine SC 309.

Read full Judgment here: Click here.

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Supreme Court: Appellate court has discretion to grant interim compensation U/S 143A of negotiable instruments Act

At this stage, we may note Sub-section (1) of Section 148. Section 148 reads thus:

148. Power of Appellate Court to order payment pending appeal against conviction.-(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal by the drawer against conviction Under Section 138, the Appellate Court may order the Appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court:

Provided that the amount payable under this Sub-section shall be in addition to any interim compensation paid by the Appellant Under Section 143A.

(2) 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.

(3) 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:

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.

Sub-section (1) of Section 148 confers on the Appellate Court a power to direct the Appellant/Accused to deposit 20 per cent of the compensation amount. It operates at a different level as the power thereunder can be exercised only after the Appellant/Accused is convicted after a full trial. {Para 13}

14. In the case of Section 143A, the power can be exercised even before the Accused is held guilty. Sub-section (1) of Section 143A provides for passing a drastic order for payment of interim compensation against the Accused in a complaint Under Section 138, even before any adjudication is made on the guilt of the Accused. The power can be exercised at the threshold even before the evidence is recorded. If the word 'may' is interpreted as 'shall', it will have drastic consequences as in every complaint Under Section 138, the Accused will have to pay interim compensation up to 20 per cent of the cheque amount. Such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice. If such an interpretation is made, the provision may expose itself to the vice of manifest arbitrariness. The provision can be held to be violative of Article 14 of the Constitution. In a sense, Sub-section (1) of Section 143A provides for penalising an Accused even before his guilt is established. Considering the drastic consequences of exercising the power Under Section 143A and that also before the finding of the guilt is recorded in the trial, the word "may" used in the provision cannot be construed as "shall". The provision will have to be held as a directory and not mandatory. Hence, we have no manner of doubt that the word "may" used in Section 143A, cannot be construed or interpreted as "shall". Therefore, the power Under Sub-section (1) of Section 143A is discretionary.

15. Even Sub-section (1) of Section 148 uses the word "may". In the case of Surinder Singh Deswal v. Virender Gandhi   MANU/SC/0793/2019 : 2019:INSC:688 : 2019:INSC:688 : (2019) 11 SCC 341, this Court, after considering the provisions of Section 148, held that the word "may" used therein will have to be generally construed as "rule" or "shall". It was further observed that when the Appellate Court decides not to direct the deposit by the Accused, it must record the reasons. After considering the said decision in the case of Surinder Singh Deswal   MANU/SC/0793/2019 : 2019:INSC:688 : 2019:INSC:688 : (2019) 11 SCC 341, this Court, in the case of Jamboo Bhandari v. Madhya Pradesh State Industrial Development Corporation Limited and Ors. MANU/SC/1005/2023 : 2023:INSC:822 : (2023) 10 SCC 446, in paragraph 6, held thus:

6. What is held by this Court is that a purposive interpretation should be made of Section 148 NI Act. Hence, normally, the appellate court will be justified in imposing the condition of deposit as provided in Section 148. However, in a case where the appellate court is satisfied that the condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of the right of appeal of the Appellant, exception can be made for the reasons specifically recorded.

(Emphasis added)

15.1. As held earlier, Section 143A can be invoked before the conviction of the Accused, and therefore, the word "may" used therein can never be construed as "shall". The tests applicable for the exercise of jurisdiction Under Sub-section (1) of Section 148 can never apply to the exercise of jurisdiction Under Sub-section (1) of Section 143A of the N.I. Act.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 741 of 2024

Decided On: 15.03.2024

Rakesh Ranjan Shrivastava Vs. The State of Jharkhand and Ors.

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Ujjal Bhuyan, JJ.

Author: Abhay Shreeniwas Oka, J.

Citation: MANU/SC/0204/2024,2024 SCC OnLine SC 309.

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Whether appellate court can refuse to admit appeal in cheque dishonour case if convict fails to deposit interim compensation directed by it?

 Section 374 Cr.P.C. as reproduced above does not prescribe any condition for admission of an appeal. In other words, the provisions of the statute which vests a convict with a valuable right to challenge his conviction are not circumscribed by any conditions. Nor does any provision of the Negotiable Instruments Act, 1881 refer to any pre-condition for availing a valuable right of first appeal. Section 148 of the Act just vests the Appellate Court with the power to direct the appellant to deposit an amount not less than 20% of the compensation amount but under no circumstances the same can be interpreted to be a condition pre-requisite for availing the right of appeal. Imposition of any condition at the time of suspending of sentence may be a different matter and the trial Court may in its wisdom, impose such a condition failing which the order suspending sentence may be vacated. In other words, his bail during the pendency of appeal may be cancelled upon failure of the appellant to comply with the direction of deposit of such amount as may have been directed by the Appellate Court.

As an upshot of the discussion made above, all the aforesaid three petitions are accepted in the following terms:

(i) The condition made in the impugned orders wherein the

admission of appeal has been made subject to deposit of 20% of

the compensation amount is set aside and it is ordered that the

appeals shall stand admitted before the lower Appellate Court.

The petitioners are, however, directed to deposit an amount

equivalent to 20% of the amount of compensation awarded by

the trial Court within 60 days from today.

 IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH.

( I ) CRM-M-15131-2020 (O&M)

Sudarshan Kumar Vs Manish Manchanda

Date of decision : 15.12.2020

CORAM : Hon'ble Mr. Justice Gurvinder Singh Gill

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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

Deswal and Ors. v. Virender Gandhi (2019) 8

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.

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