Date of Judgement:
8 January 2020
Bench:
Justice Ashok Bhushan
Justice M.R. Shah
Parties:
Appellate – Surinder Singh Deswal @ Col. S. S. & Ors.
Respondent – Virender Gandhi
Subject
The following judgement decided the effect of Section 143A and Section 148 of the Negotiable Instrument Act, 1881. Thereby, it clarified the power of the trial courts and appellate courts to impose conditions like payment of interim compensation for suspension of sentence.
Overview
- Appellants no.1 and 2 along with the respondent were partners of a firm called GLM Infratech Pvt. Ltd. A cheque was issued by the appellants to the respondent on 31.03.2014, amounting to Rs. 45,84,915/- as a part payment on his retirement dues. Similarly, 63 other cheques were also issued for the same transaction mentioned above in favour of the respondent.
- However, on 06.04.2015, when the respondent deposited the cheque, it was dishonoured along with the other 63 cheques on account of insufficient funds. Subsequently, the respondent filed a complaint under Section 138 of the Negotiable Instrument Act, 1881 (NI Act) before the Judicial Magistrate of the First Class. 28 complaints were filed in total against the two appellants.
- On 13.11.2018, both the appellants were found guilty under Section 138 NI Act and sentenced to 2 years of imprisonment. The Magistrate also directed the appellants to pay the entire amount involved in the case of dishonour of total 64 cheques and plus 1% of the entire amount as interest and litigation expenses. The appellants, aggrieved by this, appealed to the Sessions Court under Section 389 CrPC for suspension of the sentence.
- The Sessions Court agreed to suspend their sentence till the pendency of the appeal, on a condition that they furnish a bail bond and surety bond of Rs.50,000/- and also deposit Rs.9,40,24,999/- (i.e. 25% of compensation amount decided by the trial court) that is to be paid to the complainant, before 28.01.2019.
- In response, the appellants approached before the High Court of Punjab and Haryana under Section 482 CrPC against the order of Sessions Court to deposit Rs.9,40,24,999/-. Nevertheless, the appeal was dismissed. Hence, the appellants, invoking Article 136, moved to the Supreme Court of India.
Legal Provisions
- Section 138 Negotiable Instrument Act,1881 – Punishment for cheque dishonour due to insufficient funds, etc.
- Section 389 CrPC – Power of the court to suspend a sentence and release on bail when the case is in appeal.
- Section 482 CrPC – Inherent powers of the High Court.
- Section 143A Negotiable Instrument Act,1881 – Power of the court to order the drawer of a cheque to pay interim compensation.
- Section 148 Negotiable Instrument Act,1881 – Appellate Courts power to order payment during a pending appeal against a conviction under Section 138.
Issues
- Whether the Sessions Court was justified to direct the appellants to deposit Rs.9,40,24,999/- under Section 148 NI Act?
- Do Sections 143A and 148 of the NI Act have a retrospective effect?
Judgement
- The learned counsel for the appellant challenged the order of the lower court directing them to pay 25% of the compensation amount. He said that the order of the lower court is invalid because the cheque was dishonoured in the year 2015 and Section 143A and 148 NI Act were inserted into the Act by an amendment in the year 2018 and they have a prospective effect only. To prove his point he relied upon G.J. Raja vs. Tejraj Surana (2019).
- He further contended that failure to deposit 25% of the amount of compensation will not lead to the end of the order suspending the sentence. On the other hand, he said the respondents have an open option to recover the amount according to the provision prescribed in Section 421 of CrPC.
- After going through the facts of the case and listening to both the parties, the Supreme Court rejected all the contentions of the appellants. Based on the ‘statements of object and reasons’ of the NI Act, it was quite evident that a purposive interpretation of this Section was required, otherwise, it would defeat its object and purpose. It held that the object of the legislation was to give Section 148 a retrospective effect. It also said that the case of G.J. Raja does not help the appellants.
- Apart from this, Section 143A makes a provision for interim compensation. It said that it applies at the trial stage that is even before the pronouncement of guilt or order of conviction. Hence, if the accused is found innocent, the drawer has to pay back the interim compensation he has received. The Apex Court held that this provision was made with the intention to have a prospective effect.
- On the second contention, the Supreme Court upheld the order of the High Court and clearly stated that if the appellant fails to deposit 25% of the amount of compensation to the complainant, then the order of suspension of sentence shall be deemed to have been vacated. Hence, a legal proposition was established that when a suspension of sentence is granted by a trial court on a condition, then non-compliance with that condition will result in the suspension of the sentence.
Conclusion
The Negotiable Instruments Act, 1881 was incorporated for the purpose of imposing penalties for the dishonour of cheques due to insufficient funds, with a view to encourage the culture of using cheques and to enhance the credibility of the instrument.
Keeping this in mind, Sections 143A and 148 were added to the Act by the Negotiable Instrument Act (Amendment) Act, 2018. Hence, the Court interpreted the effect of these Sections.
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