Section 148 of Negotiable Instruments Act apply retrospectively to offence u/s 138 – SC

Section 148 of Negotiable Instruments Act 1881 Act apply retrospectively to offence u/s 138 even where criminal complaints were filed prior to amendment Act prior to 01.09.2018.

ABCAUS Case Law Citation:
ABCAUS 2975 (2019) (05) SC

Important Case Laws Cited/relied upon by the parties:
Garikapatti Veeraya v. N. Subbiah Choudhury, reported in AIR 1957 SC 540;

In the instant case the contention of the appellants was that Section 148 of  the  Negotiable Instruments Act, 1881 (N.I. Act),  as amended by Act No. 20/2018, shall not be applicable with respect to criminal proceedings already initiated prior to the amendment in  Section  148  of  the  N.I. Act.

Earlier, the appellant (original accused) had been convicted by the trial Court for the offence under Section 138 of the N.I. Act and sentenced them to undergo imprisonment of two years and to  pay cheque amount + 1% as interest and litigation expenses as fine.

Considering the provisions of amended Section 148 of the N.I. Act, which had been amended w.e.f. 1.9.2018, the first appellate Court suspended the sentence and allowed the application/s under Section 389 of the Cr.P.C, while directing the appellants to deposit 25% of the amount of compensation/ fine awarded by the trial Court.

Against the order of the appellate court to deposit 25% of the amount of compensation /fine awarded by the trial Court, pending appeal challenging the order of conviction and sentence, the appellants approached the High Court by way of revision application/s.

The High Court by a detailed judgment dismissed the revision application/s  and confirmed the order passed by the first appellate Court  directing the appellants­ to deposit 25% of the amount of compensation awarded by the trial Court considering Section 148 of the N.I. Act, as amended.

The Hon’ble Supreme Court observed that at the time when the appeals against the conviction of the appellants for the offence u/s 138 of the N.I. Act  were   preferred, Amendment Act No. 20/2018 amending Section 148 of the N.I. Act had come into force w.e.f. 1.9.2018.  Even, at the time when the appellants submitted application/s   u/s 389 of the Cr.P.C. to suspend the sentence pending appeals challenging the conviction and sentence, amended Section 148 had come into force and was brought on statute w.e.f. 1.9.2018.

The Hon’ble Supreme Court opined that the action of the first appellate court directing the appellants to deposit 25% of the fine, the same can be said to be absolutely in consonance with the Statement of Objects and Reasons of amendment in Section 148 of the N.I. Act.

The Hon’ble Supreme Court observed that because of the delay tactics of unscrupulous drawers of dishonoured cheques due by filing easy appeals and obtaining stay on proceedings, the object and purpose of the enactment of Section 138 of the N.I. Act was being frustrated, the Section 148 of the N.I. Act was amended, by which the first appellate Court, in an appeal challenging the order of conviction under Section 138 of the N.I. Act, is conferred  with  the  power to direct the convicted accused to deposit such sum which shall be a minimum  of  20%  of  the  fine or compensation awarded by the trial Court.   

The Hon’ble Supreme Court opined that by the amendment in Section 148 of the N.I. Act, it could not be said that any vested right of appeal of the accused has been taken away and/or affected. Therefore,  the submission of the appellants that amendment in Section 148 of the N.I. Act shall not be made applicable retrospectively   and   more   particularly   with   respect  to cases /complaints filed prior to 1.9.2018 shall not be applicable has no substance and cannot be accepted.

Accordingly, the Hon’ble Supreme 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.

Also, with respect to the contention that considering the language “may” used in Section 148 of the N.I. Act as amended, the appellate Court has been vested with the discretion and the fine is not mandatory, the Hon’ble Supreme Court opined that considering the amended Section 148 of the N.I. Act as a whole to be read with the Statement of Objects and Reasons of the amending  Section 148 of the N.I. Act, though it is true that in amended Section 148 of the N.I. Act, the  word used is “may”, it is generally to be construed as a “rule” or “shall” and  not to direct to deposit by the appellate court is an exception for which special reasons are to be assigned. Only such a purposive interpretation would be in furtherance of the Objects and Reasons  of  the  amendment  in  Section 148 of the N.I. Act and also Sec 138 of the N.I. Act.

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