Amendment to Section 148 of Negotiable Instruments Act has retrospective application, Supreme Court

The Supreme Court yesterday ruled that Section 148 of the Negotiable Instruments Act (NI Act) as amended with effect from September 1, 2018 shall have retrospective operation and will be applicable to complaints which are filed even after September 1, 2018..A Bench of Justice MR Shah and AS Bopanna held that the “submission on behalf of the appellants that amendment in Section 148 of the NI 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”.The ruling came in an appeal against a judgment of the Punjab & Haryana High Court..Facts.Criminal complaints were filed against the appellants – original accused for the offence under Section 138 of the Negotiable Instruments Act. The said criminal complaints were filed prior to August 2, 2018. The trial court by its judgment dated October 30, 2018, convicted the appellants. It sentenced them to imprisonment of two years and also ordered the appellants to pay cheque amount + 1 percent as interest and litigation expenses as fine.Aggrieved by the same, the appellants preferred criminal appeals before the first appellate Court, the court of Additional Sessions Judge, Panchkula. In the said appeals, the appellants submitted application/s under Section 389 of the CrPC for suspension of sentence and to release them on bail, pending appeal..Taking into consideration the amended Section 148 of the Negotiable Instruments Act which came into force from September 1, 2018, the first appellate Court, while suspending the sentence and allowing the application/s under Section 389 of the CrPC, directed the appellants to deposit 25 percent of the amount of compensation/fine awarded by the trial court..The appellants challenged this order by way of revision applications before the Punjab & Haryana High Court..It was the case on behalf of the appellants that Section 148 as amended shall not be applicable with respect to criminal proceedings already initiated prior to the amendment. The High Court turned down the said contention and upheld the order passed by the first appellate court. This led to the present appeal in the Supreme Court..Submissions.Senior Advocate Vijay Hansaria appearing for the appellant submitted that as the criminal proceedings were initiated and the complaints were filed against the accused prior to the Amendment Act came into force, Section 148 as amended shall not be applicable..It was his argument that the legal proceedings, whether civil or criminal, are to be decided on the basis of the law applicable on the date of the filing of the suit or alleged commission of offence by the trial court or the appellate court, unless the law is amended expressly with retrospective effect, subject to the provisions of Article 20(1) of the Constitution..It was further submitted by Hansaria that even otherwise in the present case, the first appellate court interpreted the word “may” as “shall” in Section 148 and proceeded on the basis that it is mandatory for the appellate court to direct deposit of minimum of 25 percent of the fine or compensation awarded by the trial court for suspension of sentence..Hansaria placed reliance on the Bombay High Court judgment in Ajay Vinodchandra Shah v. The State of Maharashtra. It was argued by him that in the said decision, the Bombay High Court had held that as per Section 148 of the Negotiable Instruments Act as amended, the appellate court has the discretion to direct deposit the sum pending appeal, but if at all such direction is given, that sum shall not be less than 20 percent of the amount of fine or compensation awarded by the trial Court. In the present case, the appellate Court wrongly presumed that the requirement under Section 148 is the deposit of 25 percent of the fine or compensation..Advocate Alok Sangwan appearing for the respondent made arguments with respect to the object of the amendment to Section 148..Because of delay tactics of unscrupulous drawers of dishonoured cheques due to the easy filing of appeals and obtaining stay on proceedings, the object and purpose of the NI Act were being frustrated. Due to such delay tactics, injustice was caused to the payee of a dishonoured cheque who was being forced to spend considerable time and resources in court proceedings to realize the value of the cheque..Hence, the Parliament thought it fit to amend Section 148, which confers powers on the first appellate court to direct the accused to deposit such sum which shall be minimum of 20 percent of the fine or compensation awarded by the trial court. It was, therefore, submitted that the High Court rightly refused to interfere with the order passed by the first appellate court, which was in consonance with the provisions of amended Section 148..Regarding the retrospective applicability of the amended provision, it was the contention of Sangwan that the amendment to Section 148 is purely procedural in nature and not substantive and does not affect the vested rights of the appellants..Hence, the same can have a retrospective effect and can be applied in the present case also. In the present case, the appeals were preferred after the amendment to Section 148 came into force. Therefore, Section 148 of the NI Act, as amended, was rightly invoked/applied by the first appellate court..Verdict.The Supreme Court noted that at the time when the appeals against the conviction of the appellants for the offence under Section 138 of the NI Act were preferred, the amendment to Section 148 had come into force. Even, at the time when the appellants submitted application/s under Section 389 of CrPC to suspend the sentence during the pendency of the appeals, amended Section 148 of the NI Act had come into force..Therefore, considering the object and purpose of amendment to Section 148, when the first appellate court directed the appellants to deposit 25 percent of the amount of fine/compensation as imposed by the trial court, the same can be said to be absolutely in consonance with the Statement of Objects and Reasons of amendment in Section 148 of the NI Act, the Court ruled..Regarding the retrospective application of the amended provision, the Court noted that by the amendment to Section 148 no vested right of appeal of the accused-appellant has been taken away and/or affected..“Having observed and found that because of the delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of 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 Parliament has thought it fit to amend Section 148 of the N.I. Act, 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 –appellant to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial Court. By the amendment in Section 148 of the N.I. Act, it cannot be said that any vested right of appeal of the accused – appellant has been taken away and/or affected.” .Therefore, the Court held that the submission on behalf of the appellants that amendment to Section 148 of the NI Act shall not be made applicable retrospectively and more particularly with respect to cases/complaints filed prior to September 1, 2018, has no substance and cannot be accepted..Thus, considering the objects for the amendment to Section 148 and on purposive interpretation of Section 148, the Court held that Section 148 as amended, shall be applicable in respect of appeals against the order of conviction and sentence for the offence under Section 138 of the NI Act, even in a case where the criminal complaints for the offence under Section 138 of the NI Act were filed prior to the amendment coming into force, i.e. September 1, 2018..If such a purposive interpretation is not adopted, the object and purpose of amendment to Section 148 would be frustrated..The Court, therefore, dismissed the appeal and upheld the judgment of Punjab & Haryana High Court..Earlier, the Bombay High Court had also held that the amendments to the Negotiable Instruments Act that came into effect from September 1, 2018, are applicable to those cases filed prior to the said date which are pending in the trial courts as well as the appellate courts..[Read Judgment].Bar & Bench is available on WhatsApp. For real-time updates on stories, click here to subscribe to our WhatsApp.