2022 (1) TMI 754 - HC - Indian Laws

Dishonor of Cheque - Suspension of order passed by the lower court - right ot appeal - insufficient funds - Section 148 of the N.I. Act, having retrospective effect or not - HELD THAT - It is true that the right to appeal is an absolute right. However, in a case where a judgment and order of conviction and sentence is passed, the Court may order release of the accused on bail having regard to the nature of offence as also to other relevant factors, including its effect on society. In the present case, the cheques in question were issued in November December 2013 and there is no quarrel on the issue that the amounts involved are the legal dues payable by the applicant-accused to the respondent-complainant. While allowing the application (Exhibit-5) filed under Section 389 of Cr.P.C., the Sessions Court has directed the applicant-appellant to deposit 30% of the cheque amount as one of the conditions for suspending the judgment and order of conviction and sentence passed by the trial Court. Applicability of the amended provision of Section 148 of the N.I. Act - HELD THAT - It has to be followed stricto sensu with purposive interpretation. Section 148 of the N.I. Act provides for the deposit of a minimum of 20% of the fine amount or compensation by the appellant-accused in an appeal preferred against conviction under Section 138 of the N.I. Act - In this case, the applicant-accused has been ordered to pay compensation of ₹ 19 Lacs by the trial Court, which, of course, is equivalent to the cheque amount and thus, to that effect, the provisions of Section 357(2) of Cr.P.C. would not apply to the present case. However, there is an error in the nomenclature adopted by the Sessions Court while passing the order dated 25.02.2019 inasmuch as the applicant-appellant has been directed to deposit 30% of the cheque amount instead of the amount of fine or compensation , which is the term used in the provision of Section 148 of the N.I. Act. Hence, the terminology used by the Sessions Courts in the operative part of the impugned order deserves to be modified to that extent. Considering the provisions of Section 148 of the N.I. Act and the Statement of Object and Reasons for the amendment, this Court finds no illegality in the direction issued by the Sessions Court in the order dated 25.02.2019 - the terminology used in the operative part of the order dated 25.02.2019 passed by the Sessions Court is modified so to be read that the conviction and sentence imposed by the trial Court shall stand suspended pending the appeal on condition that the applicant-appellant deposits 30% of the amount of compensation instead of the words - cheque amount . Rest of the directions issued in the impugned order dated 25.02.2019 remains unaltered - Application disposed off.

Summary

Issues Involved:
1. Quashing and setting aside the conditional order of deposit passed by the Sessions Court.
2. Applicability of Section 148 of the Negotiable Instruments Act, 1881 (N.I. Act) to cases filed before its amendment on 01.09.2018.
3. Interpretation and retrospective application of Section 148 of the N.I. Act.
4. Right to appeal under Section 374 of the Code of Criminal Procedure (Cr.P.C.) and its conditions.

Detailed Analysis:

1. Quashing and Setting Aside the Conditional Order of Deposit:
The applicant, the original accused, sought to quash the order dated 25.02.2019 by the 2nd Additional Sessions Judge, Rajkot, which required the applicant to deposit 30% of the cheque amount as a condition for suspending the conviction and sentence under Section 138 of the N.I. Act. The applicant argued that this condition caused undue hardship and restricted his substantive right to appeal. The Sessions Court had imposed this condition while allowing the suspension of the judgment and order of conviction and sentence.

2. Applicability of Section 148 of the N.I. Act to Pre-Amendment Cases:
The applicant contended that Section 148 of the N.I. Act, which mandates the deposit of a minimum of 20% of the fine or compensation awarded by the trial court, should not apply to cases filed before its amendment on 01.09.2018. The criminal case against the applicant was instituted in 2016, and thus, the applicant argued that the amended provision should not be applicable retrospectively.

3. Interpretation and Retrospective Application of Section 148 of the N.I. Act:
The court examined whether Section 148 of the N.I. Act should have retrospective effect. The court noted that the provision was introduced to address undue delays in cheque dishonor cases and to prevent unscrupulous drawers from exploiting the legal system by filing frivolous appeals. The court held that the amendment should apply to all pending cases, regardless of when the complaint was filed, to fulfill the legislative intent of ensuring timely resolution and justice for the payees of dishonored cheques.

4. Right to Appeal Under Section 374 of Cr.P.C. and Its Conditions:
The applicant emphasized that the right to appeal under Section 374 of Cr.P.C. is a substantive right and should not be restricted by conditions such as the deposit of a portion of the cheque amount. The court, however, referred to precedents and the Statement of Objects and Reasons for the amendment, concluding that the condition imposed by the Sessions Court was in line with the legislative intent and did not infringe upon the applicant's right to appeal. The court also cited the Supreme Court's judgment in Surinder Singh Deswal v. Virender Gandhi, which supported the applicability of Section 148 to pending appeals.

Conclusion:
The court found no merit in the applicant's contentions and upheld the Sessions Court's order directing the deposit of 30% of the cheque amount. However, it modified the terminology used in the order to specify "compensation" instead of "cheque amount." The application was disposed of with this modification, and the rule was discharged. The court emphasized that the amended Section 148 of the N.I. Act should be applied purposively to ensure justice and prevent misuse of the legal process by drawers of dishonored cheques.