Surinder Singh Desawal v Virender Gandhi

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CASE: Surinder Singh Deswal & Ors. V. Virender Gandhi & Anr.


The appellants were partners in a venture, now known as GLM Infratech Private Limited, called Bhoomi Infrastructure Co. Respondent No. 1 was also a former partner of the same business, and a cheque dated 31.03.2014 was drawn on Canara Bank amounting to Rs.45,84,915/- and released by the appellant against the part payment of the retirement dues to respondent No.1. Similarly, the appellants gave 63 additional cheques in favor of the respondent, resulting from the same transaction. On 06.04.2015, a check was deposited in his bank by respondent No.1, Karnataka Bank Ltd., Sector-11, Panchkula. With the remarks funds inadequate, the cheque was dishonored and returned vide memo dated 07.04.2015. The remaining 63 cheques were also dishonored. Complaints were lodged by respondent No.1 against the appellants before the Judicial Magistrate, Ist Class, Panchkula under section 138 of the Negotiable Instruments Act. There were 28 grievances filed in total. Judicial Magistrate vide his judgment of 30.10.2018 holding the appellant Nos.1 and 2 guilties for the crime punishable under Section 138 of the NI Act, who were convicted accordingly, determined the complaints. The appellants lodged an appeal against the judgment of 30.10.2018 and the sentence of 30.11.2018 before the Judge of the Court of Sessions, Panchkula. Under Section 389 of Cr. P.C, the appellants filed an appeal for the suspension of the sentence, but the court suspended the sentence during the pendency of the appeal, subject to the provision of bail bonds and security bonds in the amount of Rs.50,000/- with one security in the same amount and also subject to the deposit of 25% of the amount of compensation granted to the learned trial court in favor of the learned trial court. The appellants refused to do so and, under Section 482 Cr.P.C., filed another petition. The appellants have lodged an appeal to the order adopted by the Additional Sessions on 20.07.2019.


• The prime issue considered by the Supreme Court bench was whether the first appellate court is justified in directing the appellants – original accused who has been convicted for the offense under Section 138 of the N.I. Act to deposit 25% of the amount of compensation/fine imposed by the learned trial Court, since the amendment of sec, 148 of the Negotiable Instruments Act was done after the case arose and why does it have a retrospective effect when sec. 143 A, brought in the same amendment has a prospective effect.

• The second issue raised by the appellants was that the first appellate court has interpreted the word “may” in section 148 has been interpreted as “shall” by the first appellate court and hence, it has proceeded on the basis that it is mandatory for the appellate court to direct deposit of a minimum of 25% of the fine or compensation awarded by the trial court for suspension of sentence.


The mere non-deposit of 25 percent of the amount of compensation as directed on 01.12.2018 can not result in the termination of the sentence being vacated by the appellants. They also argued that under Section 148 of the NI Act, the direction for the deposit of 25 percent of the settlement by the trial court can not be granted. The courts below should not have relied on Section 148 of the NI Act coming into force on 01.09.2018. The lawsuit was lodged in 2015 claiming a crime under Section 138 of the NI Act, which was long before Section 148 of the NI Act was implemented. It was further argued that a 25% non-deposit of the amount of compensation does not lead to the suspension of the sentence by the vacation of the order, but it was open to the respondents to recover the said amount in accordance with the procedures laid down in Section 421 Cr. P.C.[1]

In dealing with the current appeal, the Court referred to the 'Statement of Objects and Reasons' of the NI Amendment Act and found the first issue relating to the applicability of the amended section 148, noting that due to the delay tactics of some unscrupulous drawers of dishonored cheques due to the ease of filing appeals and the stay of proceedings, the object, and intent of the proceedings It was also noted that the amendment in section 148 would not eliminate and/or impair any reserved right of appeal of the appellants and, accordingly, the Court did not recognize on behalf of the appellants the claim that the amendment in section 148 may not be applied to grievances filed prior to the entry into force of amended section 148. The Court held that the aim and objective of the amendment set out in section 148 would be hindered if such a deliberate interpretation were not adopted.

With regard to the second question, the Supreme Court observed that while the word "can" was used in the amended section 148, it is generally to be interpreted as a "law" or "must" and not as an exception for which the appeal court could grant special reasons for directing the payment of the deposit in accordance with section 148. In those previous opinions, the Supreme Court held that the amended Section 148 confers on the appeal court due power to issue an order pending an appeal directing the appellants to deposit an amount not less than 20% of the fine or compensation, either on an application lodged by the original appellant or on an application lodged by the appellant pursuant to Section 389 of the CrPC.