2019 (8) TMI 1818 - HC - Indian Laws

Dishonor of Cheque - effect of amendment in section 148 of NI Act - case of appellant is that Section 148 was brought into N.I. Act, by Amendment Act 20 of 2018 and was effective only from 01.09.2018 and cannot have application in an appeal filed on 15.11.2016, wherein the sentence under challenge was suspended forthwith - HELD THAT - Section 148 is a new provision incorporated into N.I Act by Negotiable Instruments (Amendment) Act, 2018, directed by the Parliament to be effective from 01.09.2018. On a reading of the provision it is unambiguous that the Parliament intends it to be invoked in appeals preferred by the accused challenging the judgment passed against them. The power under Section 148 is meant to be invoked by the appellate court while entertaining an appeal from a judgment of conviction imposing sentence on the accused. That is why, it was held as applicable to complaints filed to launch the prosecution under Section 142 N.I. Act and pending before the courts, prior to 01.09.2018 - That does not mean that the provision is meant to be invoked in all Crl.Appeals pending before the appellate court which are at the fag end of trial or pronouncement of judgment, why because, with the pronouncement of the judgment there is possibility for the accused being acquitted also. Therefore, no purpose will be served by directing the accused to deposit any sum, at that stage in view of the provision incorporated under Proviso to sub-Section (3) of Section 148 N.I Act directing to refund the amount in deposit within 60 days or 90 days as the case may be, after the judgment turns against the complainant. 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. Section 148 can have only prospective application i.e. invocation of Section 148 N.I Act is confined only to appeals filed after 01.09.2018. Application allowed.

Summary

Issues Involved:
1. Application of Section 148 of the Negotiable Instruments Act, 1881.
2. Retrospective application of amendments to the N.I. Act.
3. Compliance with conditions for suspension of sentence.
4. Legality of the appellate court's order directing further deposit of compensation.

Detailed Analysis:

1. Application of Section 148 of the Negotiable Instruments Act, 1881:
The primary issue revolves around the applicability of Section 148 of the N.I. Act, which was introduced by the Amendment Act 20 of 2018, effective from 01.09.2018. The accused, convicted by the Judicial First Class Magistrate Court for an offence under Section 138 of the N.I. Act, challenged the appellate court's order directing him to deposit 20% of the compensation awarded by the trial court. The appellate court relied on the Supreme Court's dictum in Surinder Singh Deswal @ Col.S.S.Deswal and others v. Virender Gandhi [2019 (3) KHC 355(SC)], which upheld the power of the appellate court to order such deposits.

2. Retrospective Application of Amendments to the N.I. Act:
The appellant contended that the amendment to the N.I. Act, effective from 01.09.2018, should not apply retrospectively to appeals filed before that date. The appeal in question was filed on 15.11.2016, and the appellant had already complied with the conditions imposed by the appellate court for suspension of the sentence. The court held that Section 148 could not have retrospective application to appeals filed prior to 01.09.2018. The provision was intended to be invoked in appeals preferred by the accused challenging the judgment passed against them, but only prospectively from the date of its enactment.

3. Compliance with Conditions for Suspension of Sentence:
The appellant had complied with the conditions imposed by the appellate court in 2016, which included depositing Rs.75,000/- towards compensation and executing a bond for Rs.25,000/-. The court noted that the appellant had fulfilled these conditions and had his sentence suspended accordingly. The subsequent order directing the appellant to deposit an additional 20% of the compensation was deemed unjust and illegal as it imposed further obligations on the appellant who had already complied with the initial conditions.

4. Legality of the Appellate Court's Order Directing Further Deposit of Compensation:
The court scrutinized the appellate court's order directing the appellant to deposit 20% of the compensation awarded by the trial court. It was observed that the order was passed at a stage when the appeal was already heard and posted for judgment. The court held that the appellate court's order was against the intention of the Parliament while incorporating Section 148 into the N.I. Act. The provision was meant to prevent the prosecution under Section 142 N.I. Act from being dragged unnecessarily and to limit the filing of frivolous appeals. The court concluded that the order under challenge was erroneous and set it aside.

Conclusion:
In conclusion, the court allowed the appellant's petition and set aside the appellate court's order directing the deposit of 20% of the compensation. The court emphasized that Section 148 of the N.I. Act could not be applied retrospectively to appeals filed before its enactment on 01.09.2018 and that the appellant had already complied with the conditions for suspension of the sentence. The appellate court's order was found to be unjust and contrary to the legislative intent behind the amendment.