Gujarat High Court
Shahjahan Sayed Ali Mulla vs State Of Gujarat on 30 January, 2025
NEUTRAL CITATION
R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 10128 of 2024
With
CRIMINAL MISC.APPLICATION (FOR VACATING INTERIM RELIEF) NO.
1 of 2024
In R/SPECIAL CRIMINAL APPLICATION NO. 10128 of 2024
With
R/SPECIAL CRIMINAL APPLICATION NO. 30 of 2025
With
R/SPECIAL CRIMINAL APPLICATION NO. 14872 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
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Approved for Reporting Yes No
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SHAHJAHAN SAYED ALI MULLA
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR GHANSHYAM UPADHYAH FOR MR SMIT P VAGHELA(10653) for the
Applicant(s) No. 1
HARI K BRAHMBHATT(9070) for the Respondent(s) No. 2
MR MANAN MEHTA, APP for the Respondent(s) No. 1
SANKUL K KABRA(9304) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 30/01/2025
ORAL JUDGMENT
1. Special Criminal Application No.10128 of 2024 is filed by the original accused against the order dated 20.7.2024 passed by the learned 3 rd Additional Sessions Page 1 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined Judge, Valsad at Vapi in Criminal Miscellaneous Application No.461 of 2024, by which the delay caused in filing the appeal was condoned on condition to deposit 50% of the compensation amount. Criminal Miscellaneous Application No.1 of 2024 is filed by the original complainant praying to vacate the interim relief granted by this Court in favour of the original accused.
2. Special Criminal Application No.14872 of 2024 is filed by the original complainant against the order dated 23.10.2024 passed by the learned 2 nd Additional Sessions Judge, Valsad at Vapi in Criminal Miscellaneous Application No.800 of 2024, by which the appeal was directed to be registered as the condition to deposit 50% of the compensation amount was stayed by this Court.
3. Special Criminal Application No.30 of 2025 is filed by the original accused against the order dated 8.11.2024 passed by the learned 2 nd Additional Sessions Judge, Valsad at Vapi in Criminal Appeal No.130 of 2024, by which the appellate court allowed the suspension of sentence till the disposal of appeal challenging the order to the extent of condition to pay 20% amount of compensation passed by the learned trial Court.
4. As the facts of the cases are common, the orders impugned arise from the common transactions, the parties are common and the arguments advanced by both the sides are Page 2 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined interconnected, all the three matters are disposed of by this common judgment, at the request of learned advocates for the parties.
5. Rule returnable forthwith. Respective learned advocates waive service of notice of rule for respective parties. The parties are referred to as original complainant and original accused, for the sake of convenience.
6. The brief facts leading to filing of these petitions in nutshell, as stated in the memo of the petitions, are such that the original complainant filed the complaint under Section 138 of the Negotiable Instruments Act (`the NI Act' for short) dated 11.12.2015 before the learned Additional Chief Judicial Magistrate, Vapi which came to be numbered as Criminal Case No.3683 of 2015 against the accused (i.e. Printex Graphix (I) Pvt.Ltd.) and Shahjahan Saiyedali Mulla (Director of Printex Graphix) for disnohour of three cheques dated 27.10.2015 totalling to Rs.4,94,23,884/-. 6.1 The trial proceeded and the accused was convicted vide judgment and order dated 3.2.2024 by the learned Additional Chief Judicial Magistrate, Vapi and the accused was ordered to undergo imprisonment for a period of one year and pay an amount of Rs.9,00,00,000/- towards compensation under Section 357 of Code of Criminal Procedure (`the Code' for short) to the complainant and as the accused did not remain present, the non-bailable warrant Page 3 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined was issued against the accused.
6.2 Being aggrieved by the said order of conviction, the accused approached the learned Additional Sessions Judge, Valsad at Vapi by way of Criminal Appeal No.20 of 2024, however, as the accused has not surrendered, the appeal was disposed of vide order dated 21.2.2024, with a direction to comply with the provisions of Section 389(3) of the Code.
6.3 The accused preferred revision application under Section 397 of the Code being Criminal Miscellaneous Application No.355 of 2024 against the said order conviction, however, the said application was rejected vide order dated 1.5.2024, by holding that the revision application was not maintainable as the alternate remedy to file appeal was available with the accused.
6.4 The accused was taken into judicial custody on 7.5.2024 and thereafter the accused preferred application under Section 389(3) of the Code for suspension of sentence, which came to be dismissed vide order dated 8.5.2024, by holding that the said application was preferred after 30 days of the judgment and therefore the Court cannot exercise powers under Section 389(3) of the Code.
6.5 The accused, thereafter, preferred an application on 23.5.2024 being Criminal Miscellaneous Application No.461 of 2024 for condonation of delay in preferring the appeal against Page 4 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined the judgment and order dated 3.2.2024 passed by the learned Additional Chief Judicial Magistrate, Vapi. The said application was allowed by order dated 23.5.2024 and the delay was condoned on condition that the accused shall deposit 50% of the compensation amount as security as awarded by the learned trial Court in Criminal Case No.3683 of 2015 within a period of seven days from the date of the order. The said order is challenged by Special Criminal Application No.10128 of 2024, wherein, vide order darted 20.8.2024 came to be stayed by this Court. 6.6 The complainant preferred Criminal Miscellaneous Application No.1 of 2024 in Special Criminal Application No.10128 of 2024 for vacating the said interim relief, which is also decided by this common judgment.
6.7 Thereafter, the accused preferred another application being Criminal Miscellaneous Application No.800 of 2024 seeking direction to register the appeal, which came to be allowed vide order dated 23.10.2024 by the learned 2 nd Additional Sessions Judge, Valsad at Vapi, which is challenged by the original complainant, by filing Special Criminal Application No.14872 of 2024.
6.8 Thereafter, the learned appellate Court has suspended the sentence imposed upon the accused and directed the accused to deposit 20% of the amount of compensation vide order dated 8.11.2024, which is challenged Page 5 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined by the accused by preferring Special Criminal Application No.30 of 2025.
7. Heard learned advocates for the parties. 7.1 Learned advocate for the original complainant has submitted that the learned appellate court has erred in registering the appeal as the order of deposit of 50% is only stayed by this Court and it is not quashed, cancelled, waived or varied by this Court and by registered the appeal, the learned appellate Court has acted on the basis of the stay order and has created a situation wherein whatever order this Court passes in the said petition, would not have any force. Further, the criminal case was pending since 2015 and the accused had barely remained present before the Court, unnecessary adjournments were sought, did not leave any stone unturned to delay the proceedings and even on the date of pronouncement of the judgment and order, the accused did not remain present. Therefore, the registration of the appeal by the appellate court only on the basis of the stay order granted by this Court is an abuse of process of law. He also submitted that the application is filed for vacating of the said interim relief, which is pending before this Court. Under these circumstances, the learned appellate court ought not to have passed the order of registration of Page 6 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined the appeal. He, therefore, prayed that the Special Criminal Application No.14872 of 2024 be allowed and the order of registering of the appeal be quashed and set aside. 7.2 Against these submissions, learned advocate for the accused has submitted that the learned appellate court has heard the accused and the original complainant also in detail, and after considering all the submissions, directed to register the appeal. He submitted that in view of the subsequent developments before the appellate court inasmuch as the appeal before the appellate court is numbered and the same is heard and consequently, the accused is granted bail by the appellate court, Special Criminal Application No.14872 of 2024 and the Criminal Miscellaneous Application No.1 of 2024 in Special Criminal Application No.10128 of 2024 have become infructuous. He, therefore, prayed to dismiss the petition and the application.
8. In connection with Special Criminal Application No.30 of 2025, by which, the condition to deposit 20% amount of compensation passed by the learned trial Court, is granted, is challenged, learned advocate for the accused has submitted that the applicant was prosecuted vicariously and it is the company who was the principal accused, however, the company has not been convicted and not even a single Page 7 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined penny of compensation and/or fine amount has been awarded against the company and conviction deserves to be set aside and this could be a very strong exceptional circumstances, thereby making exception which can be made use of by the appellate court for dispensing with the condition of 20% deposit of compensation under Section 148 of the NI Act. He submitted that the application was filed before the learned trial Court for exemption of personal appearance on medical grounds and prayed to adjourn the matter, however, the learned trial Court rejected the said applications and pronounced the judgment on the very same and issued conviction warrant against the accused. He submitted that the accused was in jail for six months and thus half of the sentence of imprisonment awarded by the learned trial Court was undergone and the compensation which has been awarded to be paid by the accused was to the extent of almost twice of the cheques amount and all these facts coupled with the arguments advanced were enough to make the case of the accused as exceptional one, however, the appellate court emphasized on the issue that the accused was not present before the learned trial Court at the time of pronouncement of judgment and imposed the said condition. He, therefore, submitted that this petition be allowed and condition of deposit of 20% of the compensation amount be quashed and set aside.
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9. As regards Special Criminal Application No.10128 of 2024 is concerned, learned advocate for the accused has took this Court to the sequence of the proceedings and submitted that the condition to deposit 50% of the compensation amount was stayed by this Court, as the accused was languishing in jail for almost five months and the appeal was not numbered on account of the said condition coupled with the fact that the captioned application was likely to take sometime for being finally heard and decided, this Court stayed the said order. He submitted that thereafter the appeal was registered and the sentence was also suspended on condition to deposit 20% of the compensation amount. He, therefore, submitted this petition is required to be allowed and the condition to deposit 50% of the compensation amount be quashed and set aside.
10. Against the said submissions, learned advocate for the original complainant has submitted in common for both the petitions that the complaint was filed in the year 2015 and the order of conviction was passed in 2024 due to the delay tactics of the accused; that the very purpose of the provisions of the NI Act would be defeated if the direction for deposit of 20% of the compensation amount is varied and there is no infirmity in the order passed by the learned Page 9 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined appellate Court. He submitted that the accused has failed to make any exceptional case before the learned trial Court and no circumstances have been brought on the record to even remotely suggest that there exists an exceptional case for exercise of discretion and therefore the condition to deposit 20% of the compensation amount is fair and reasonable. He submitted that the accused has not disputed his signature on the cheque and in cross-examination of the accused, the accused has himself admitted that he has signed the cheque and he himself takes care of the day to day activities of the company; that the accused has not paid a single penny towards their legally enforceable debt since 2015 and has resorted to multiplicity of proceedings only with a view to evade its liability. He, therefore, submitted that the petitions filed by the accused are required to be dismissed.
11. In support of the submissions, learned advocate for the original accused as relied on the following citations:
1. Jamboo Bhandari V/s Madhya Pradesh State Industrial Development Corporation Ltd. & Ors. Reported in (2023)10 SCC 446.
2. A.C.Narayanan V/s State of Maharashtra & Anr. Reported in (2014) 11 SCC 70 and A.C.Narayanan V/s State of Maharashtra & Anr. Reported in (2015) 12 SCC 203.Page 10 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025
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3. Shibu L.P. V/s Neelakantan & Anr. Reported in 2022 SCC Online SC 3738.
4. Muskan Enterprises & Anr. V/s The State of Punjab & Anr. Reported in Criminal Appeal No.5491 of 2024.
5. Dilip S Dahanukar V/s Kotak Mahindra Co.Ltd. & Anr. Reported in (2007) 6 SCC 528.
6. Shri Gurudata Sugar Marketing Pvt. Ltd. V/s Prithviraj Sayajirao Deshmukh & Ors., reported in (2004) SSC Online SC 1800.
7. Nikhil V/s State of Maharashtra reported in 2024 SCC Online SC 3322.
8. S.P.Mani and Mohan Dairy V/s Snehalatha Elangovan reported in (2023) 10 SCC 685.
9. Gunmala Sales Pvt. Ltd. V/s Anu Mehta and Ors. Reported in (2015) 1 SCC 103.
10. S.M.S.Pharmaceuticals Ltd. V/s Neeta Bhalla and Ors. Reported in MANU/SC/7125/2007.
11. Anneta Hada V/s Godfather Travels and Tours Private Limited reported in (2012) 5 SCC 661.
12. I have considered the submissions made at the bar, the material produced on the record, the impugned orders and the citations cited at the bar. From the petition and the submissions made at the bar, the questions which arise before me are (i) whether the learned appellate court Page 11 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined was justified in ordering to deposit 50% of the compensation amount as a condition for the condonation of delay? (ii) whether the learned appellate Court was justified in permitting the appeal to be registered when the order of deposit of 50% as a condition for condonation of delay is challenged before this Court and the said order is stayed? and (iii) whether the learned appellate court was justified in ordering deposit of 20% of the compensation amount as a condition for suspension of sentence?
13. As regards the first question, if we peruse the sequence of the facts, it transpires that the learned trial Court had convicted the company-accused as well as petitioner after a full fledged trial and the discussion in paragraphs 12 and 14 of the judgment of trial Court in Criminal Case No.3683 of 2015 clearly indicates that accused no.2 has carried business transactions with complainant as in-charge of accused no.1-company, and issued a non-bailable warrant as the accused was not present on the date of pronouncement of judgment, the accused preferred appeal without complying with the provisions of Section 389(3) of the Code which was disposed of, the accused preferred revision application against the order of the learned trial court which was also rejected as the alternate remedy of appeal was available to the accused; thereafter, again the appeal was Page 12 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined filed with a condonation of delay application as the appeal was filed after a delay of 77 days. While going through this sequence, it seems that the accused deliberately caused the delay in filing the appeal; it also seems that though the order of conviction was passed and non-bailable warrant was issued, instead of pursuing any remedy for cancellation of the non-bailable warrant or for obtaining stay of the said conviction, the accused preferred appeal and then filed revision application, for the reasons best known to the accused. It seems that the accused tried all ways to avoid arrest and when no try clicked, he surrendered and then filed appeal, which he could have been done at the first instance. However, in all this exercise, the delay of 77 days occurred in availing the proper remedy. Further, it also transpires that the accused remained absent in most of the occasions before the learned trial Court during the trial and trial went on from the year 2015 to year 2024. The money of the complainant which is a huge sum was being stuck during all these years and he could not enjoy the fruits of the litigation even after the order of conviction and compensation amount was passed. Further, the learned appellate Court, while passing the impugned order, only directed to deposit 50% of the compensation amount. It did not grant permission to the complainant to withdraw the said amount, which means that the amount which will be Page 13 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined deposited will lie with the Court and therefore, the hue and cry made by the accused about the deposit of the amount does not sustain. The accused was held guilty and convicted and the deposit of the compensation amount as a condition to condone the delay in filing appeal is just to check the bonafide of the accused. Therefore, I find no illegality or infirmity in the impugned order passed by the learned appellate court. However, as the appeal is already registered subsequently and the sentence is suspended, the delay in filing the appeal is deemed to be condoned and the conditional order of condonation of delay does not exist anymore.
14. As regards the second question is concerned, the conditional order of condonation of delay is passed at the first instance, the same is challenged before this Court, this Court granted the stay of the said condition and without waiting for the outcome of the said petition, it was not proper on the part of the accused to approach the learned appellate court to register the appeal and also the learned appellate Court was not justified in registering the appeal, when the matter is pending before this Court, though the stay is granted. The learned appellate Court proceeded further in registering the appeal and grant the suspension of sentence on condition to deposit 20% of the compensation Page 14 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined amount. In the opinion of this Court, the learned appellate Court showed hastiness in doing so, as, if at the end of the petition, the conditional order of 50% was upheld, then the delay would be deemed to be condoned and then only the appeal could be registered. Only on the basis of stay granted by this Court, the appeal could not have been registered and the sentence could not have been suspended. However, this Court does not deem it fit to apply the reverse gear and put the proceedings at naught when the proceedings are proceeded further substantially, with a note of caution to the learned appellate court to take care in future so that the persons like the accused may not succeed in their tactics to delay the proceedings.
15. As regards the third question, the provisions of the NI Act are required to be seen. Section 148 of the NI Act reads as under:
"148. Power of Appellate Court to order payment pending appeal against conviction.--(1) Notwithstanding anything contained in 9 the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal by the drawer against conviction under Section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court:
Provided that the amount payable under this sub-section Page 15 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined shall be in addition to any interim compensation paid by the appellant under Section 143-A. (2) The amount referred to in sub-section (1) shall be deposited within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the appellant.
(3) The Appellate Court may direct the release of the amount deposited by the appellant to the complainant at any time during the pendency of the appeal:
Provided that if the appellant is acquitted, the Court shall direct the complainant to repay to the appellant the amount so released, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant."
(emphasis supplied)
16. The said section is interpreted by the Hon'ble Apex Court in the case of Muskan Enterprises & Anr.V/s The State of Punjab & Anr. Decided in Criminal Appeal No.5491 of 2024 and by referring to various judgments, which are cited by learned advocates for the parties, has observed in paragraph 24, 25, 27 and 29 as under:
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NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined "24. Law is well-settled that user of the verbs 'may' and 'shall' in a statute is not a sure index for determining whether such statute is mandatory or directory in character.
The legislative intent has to be gathered looking into other provisions of the enactment, which can throw light to guide one towards a proper determination. Although the legislature is often found to use 'may', 'shall' or 'must' interchangeably, ordinarily 'may', having an element of discretion, is directory whereas 'shall' and 'must' are used in the sense of a mandatory provision. Also, while the general impression is that 'may' and 'shall' are intended to have their natural 10 meaning, it is the duty of the court to gather the real intention of the legislature by carefully analyzing the entire statute, the section and the phrase/expression under consideration. A provision appearing to be directory in form could be mandatory in substance. The substance, rather than the form, being relevant, ultimately it is a matter of construction of the statute in question that is decisive. 25. It is also a well-accepted rule that interpretation must depend on the text and the context - the text representing the texture and the context giving it colour - and, that interpretation would be best, which makes the textual interpretation match the contextual. While wearing the glasses of the statute-maker, the enactment has to be looked at as a whole and it needs to be discovered what each section, each clause, each phrase and each word means and Page 17 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined whether it is designed to fit into the scheme of the entire enactment. While no part of a statute and no word of a statute can be construed in isolation, statutes have to be construed so that every word has a place and everything is in its place. We draw inspiration for the above understanding of the manner of interpreting a statute from the decision of this Court in Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd.
27. We may take the discussion a little forward to emphasize our point of view. There could arise a case before the Appellate Court where such court is capable of forming an opinion, even in course of considering as to what would be the appropriate quantum of fine or compensation to be kept in deposit, that the impugned conviction and the consequent sentence recorded/imposed by the trial court is so wholly incorrect and erroneous that it is only a matter of time for the same to be set aside and that ordering a deposit would be unnecessarily burdensome for the appellant. Such firm opinion could be formed on a plain reading of the order, such as, the conviction might have been recorded and sentence imposed without adherence to the mandatory procedural requirements of the N.I. Act prior to/at the time lodging of the complaint by the complainant rendering the proceedings vitiated, or the trial court might have rejected admissible evidence from being led and/or relied on inadmissible evidence which was permitted to be led, or the Page 18 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined trial court might have recorded an order of conviction which is its ipse dixit, without 13 any assessment/analysis of the evidence and/or totally misappreciating the evidence on record, or the trial court might have passed an order failing to disclose application of mind and/or sufficient reasons thereby establishing the link between the appellant and the offence, alleged and found to be proved, or that the compensation awarded is so excessive and outrageous that it fails to meet the proportionality test : all that, which would evince an order to be in defiance of the applicable law and, thus, liable to be labelled as perverse. These instances, which are merely illustrative and not exhaustive, may not arise too frequently but its possibility cannot be completely ruled out. It would amount to a travesty of justice if exercise of discretion, which is permitted by the legislature and could indeed be called for in situations such as these pointed out above, or in any other appropriate situation, is not permitted to be exercised by the Appellate Court by a judicial interpretation of 'may' being read as 'shall' in sub- section (1) of Section 148 and the aggrieved appellant is compelled to make a deposit of minimum 20% of the fine or compensation awarded by the trial court, notwithstanding any opinion that the Appellate Court might have formed at the stage of ordering deposit as regards invalidity of the conviction and sentence under challenge on any valid ground. Reading 'may' as 'may' leads to the text matching the context and, therefore, it seems to be just and 14 Page 19 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined proper not to denude the Appellate Court of a limited discretion conferred by the legislature and that is, exercise of the power of not ordering deposit altogether albeit in a rare, fit and appropriate case which commends to the Appellate Court as exceptional. While there can be no gainsaying that normally the discretion of the Appellate Court should lean towards requiring a deposit to be made with the quantum of such deposit depending upon the factual situation in every individual case, more so because an order under challenge does not bear the mark of invalidity on its forehead, retention of the power of such court not to order any deposit in a given case (which in its view and for the recorded reasons is exceptional) and calling for exercise of the discretion to not order deposit, has to be conceded. If indeed the legislative intent were not to leave any discretion to the Appellate Court, there is little reason as to why the legislature did not also use 'shall' instead of 'may' in sub-section (1). Since the self-same section, read as a whole, reveals that 'may' has been used twice and 'shall' thrice, it must be presumed that the legislature was well and truly aware of the words used which form the skin of the language. Reading and understanding the words used by the legislature in the literal sense does not also result in manifest absurdity and hence tinkering with the same ought to be avoided at all costs. We would, therefore, read 'may' as 'may' and 'shall' as 15 'shall', wherever they are used in Section 148. This is because, the words mean what they Page 20 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined say.
29. Consequently, the impugned order of the High Court dated 18th May, 2024 and the Sessions Court's order dated 17th October, 2022, stand set aside. The matter is remitted to the Sessions Court to re-examine the issue of ordering deposit. Whether sufficient ground has been made out by the appellants to persuade the Sessions Court not to order any deposit is left entirely to its discretion and satisfaction. We do not express any opinion on the plea that the appellants have sought to advance before us, lest any party seeks to derive any advantage. All points are left open." The issue whether the case of the accused falls under the Jamboo Bhandari (supra) V/s Madhya Pradesh State Industrial Development Corporation Ltd. And Ors., 2023 10 SCC 446, the Hon'ble Apex Court has observed that deposit of minimum 20% amount is not an absolute rule. It was further held that it is not mandatory for accused to specifically plead that the case falls in exception to the 20% minimum deposit rule, since when accused applies under section 389 Cr.P.C. for suspension of sentence, he normally applies for grant of relief of suspension of sentence without any condition. The Hon'ble Apex Court has further held that, in Surinder Singh Deswal V/s Virendra Gandhi reported in 2019 11 SCC 341, it was held that a purposive interpretation should be made of section 148 of NI Act and, hence, normally appellate court will be justified in imposing Page 21 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined condition of deposition as provided in section 148 of NI Act; however, in a case where appellate court is satisfied that condition of deposit of 20% will be unjust or imposing such a condition will amount to deprivation of right of appeal of appellant, exception can be made for reasons specifically recorded. It was, therefore, held that when appellate Court considers prayer under section 389 Cr.P.C. of an accused who has been convicted for offence under section 138 N.I.Act, it is always open to appellate court to consider whether it is an exceptional case which warrants grant of suspension of sentence without imposing condition of deposit of 20% of fine/compensation amount."
17. Thus, from the object and reason of Section 148 of the NI Act, it was brought into force "with a view to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relied to payees of dishoboured cheques and to discourage frivolous and unnecessary litigation which would save time and money." From the provision of law and from the observations held by the Hon'ble Apex Court, it is clear that the deposit of 20% amount at the time of suspension of sentence is a discretion left to the appellate court. In the case on hand, the complaint is filed in the year 2015 and till today, i.e. in the year 2025, the complainant is left penniless and his huge amount is at stake. The accused is filing one after another Page 22 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined application with a view to avoid the payment of the amount, which is evident from the sequence of the events. Further, the accused could not point out any exceptional case for suspension of sentence without the condition. The accused has not disputed his signature on the cheque and in cross- examination of the accused, the accused has himself admitted that he has signed the cheque and he himself takes care of the day to day activities of the company. There seems substance in the argument on behalf of the complainant that the accused has not paid a single penny towards their legally enforceable debt since 2015 and has resorted to multiplicity of proceedings only with a view to evade its liability. Therefore, there is no need of any interference with the said condition to deposit 20% of the amount. Accordingly, this petition is required to be dismissed.
18. It is also relevant to note the observations of Hon'ble Apex Court in the case of Bijoy Kumar Moni V/s Paresh Manna and Another reported in 2024 SCC Online SC 3833, wherein in in paragraphs 50 to 52, 55 and 61, it is observed and held by the Hon'ble Apex Court as under:
"50. A catena of decisions of this Court have settled the position of law that in case of a cheque issued on behalf of a company by its authorized signatory, prosecution cannot Page 23 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined proceed against the such authorised signatory or other post- holders of the company as described under Section 141 of the NI Act, unless the company who is the drawer of the cheque is arraigned as an accused in the complaint case filed before the magistrate. Further, vicarious liability can only be affixed against the directors, authorised signatories, etc. of the company after the company is held liable for the commission of offence under Section 138.
51. It is not the case of the complainant that the cheque in question was drawn by the accused on a bank account maintained by him, rather the case is that the cheque was issued in discharge of the personal liability of the accused towards the complainant, and hence there was no occasion for it to implead the company as an accused.
iv. Scope of the expression "any debt or other liability"
appearing in Section 138 of the NI Act
52. Section 138 of the NI Act does not envisage that only those cases where a cheque issued towards the discharge of the personal liability of the drawer towards the payee gets dishonoured would come within the ambit of the provision. The expression "of any debt or other liability"
appearing in Section 138 when read with the Explanation to the provision is wide enough to bring any debt or liability which is legally enforceable within its fold. Thus, the requirement under the provision is that the debt or any other liability has to be legally enforceable and the emphasis Page 24 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined is not on the existence of such debt or other liability between the drawer and the payee. A number of decisions of this Court have clarified that even those cases where a person assumes the responsibility of discharging the debt of some other person, and in furtherance thereof draws a cheque on an account maintained by him, which subsequently gets dishonoured upon being presented before the drawee, would be covered by Section 138 if the payee is able to establish that there was some sort of an arrangement by way of which the debt was assumed by the drawer.
55. A perusal of the above two decisions indicates that even if the cheque might have been issued for the discharge of personal liability of the accused towards the complainant, had the company Shilabati Hospital Pvt. Ltd. been arraigned as an accused in the complaint case before the Trial Court, it would have remained open to the complainant to establish with the aid of the presumption under Section 139 that the cheque issued by the company was in discharge of a legally enforceable debt. However, in the absence of the drawer of the cheque having been arraigned as an accused, it was rightly held by the High Court that no prosecution could have proceeded against the accused in his personal capacity. The only way by which the accused could be held liable was under Section 141 of the NI Act, however the same could not have been done in the absence of the company being arraigned as an accused. This position of law has been Page 25 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined explained by a number of decisions of this Court. A three- Judge Bench of this Court in Aneeta Hada v. Godfather Travels and Tours Private Limited reported in (2012) 5 SCC 661 observed thus:
"17. The gravamen of the controversy is whether any person who has been mentioned in Sections 141(1) and 141(2) of the Act can be prosecuted without the company being impleaded as an accused. To appreciate the controversy, certain provisions need to be referred to.
xxx xxx xxx
58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.Page 26 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025
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59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove."
(Emphasis supplied)
61. This Court's decision in Ashok Shewakramani v. State of Andhra Pradesh, (2023) 8 SCC 473 acknowledged the normal rule that there cannot be any vicarious liability under a penal provision but however, held that Section 141 of the NI Act is an exception to this rule. It further stated that vicarious liability would only be fastened when the person who is sought to be held vicariously liable was "in charge of" and "responsible to the Company" for the conduct of the Page 27 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined business of the Company at the time when the offence under Section 138 was committed. In circumstances where such persons are indeed found vicariously liable, those persons as well as the Company shall be deemed to be guilty of the offence under Section 138 of the NI Act. The relevant observations made by the Court are reproduced hereinbelow:
"21. Section 141 is an exception to the normal rule that there cannot be any vicarious liability when it comes to a penal provision. The vicarious liability is attracted when the ingredients of sub-section (1) of Section 141 are satisfied. The section provides that every person who at the time the offence was committed was in charge of, and was responsible to the Company for the conduct of business of the Company, as well as the Company shall be deemed to be guilty of the offence under Section 138 of the NI Act."
(Emphasis supplied)
19. The contention that the original accused-petitioner being the director of the company viz.Printek Graphix (I) Pvt.Ltd. which though is the principal accused but still appears have not been convicted and which alone is the `drawer of cheques' under question and that being the case, u/s.148 of N.I.Act, Appellate Court is not empowered to direct any commission to be paid by the applicant during pendency of his appeal as condition to grant bail and suspend the Page 28 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined sentence is negated as in cross-examination of the accused, the accused has himself admitted that he has signed the cheque and he himself takes care of the day to day activities of the company. Therefore, the citations relied on by learned advocate for the original accused are not applicable to the facts of the present case.
20. The other contentions raised by the accused whether the director/authorized signatory of the company can be held liable to pay the amount or not or whether the conviction is justified or not and whether the learned trial Court has considered all the aspects while convicting the accused will be taken care in the appeal by the learned appellate Court.
21. Before parting, it will be noteworthy to observe that the objective of Section 138 of the Negotiable Instruments Act (N.I. Act) was being undermined due to delay tactics employed by unscrupulous drawers of dishonored cheques due to easy filing of appeals and obtaining stays on proceedings and therefore Parliament deemed it necessary to amend Section 148 of the Act. This amendment grants the first appellate court the authority to direct a convicted accused-appellant, challenging a conviction under Section 138, to deposit a minimum of 20% of the fine or compensation Page 29 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025 NEUTRAL CITATION R/SCR.A/10128/2024 JUDGMENT DATED: 30/01/2025 undefined awarded by the trial court. This change does not take away or affect any vested right of appeal of the accused-appellant. The complainant whose huge amount is stuck has to spend considerable time and resources in the court proceedings to realise the value of the cheque and the delay caused has compromised the sanctity of the cheque transactions and therefore the amendment to Section 148 for deposit of the amount and the appellate court is conferred with the power to direct the appellant to first deposit such sum pending appeal which shall be a minimum of 20% of the fine or compensation awarded by the learned trial Court. The persons like the accused, who have sought all means to delay the proceedings and frustrate the complainant to realise the value of cheque for years, cannot be permitted to do so. The order of suspension of sentence was given effect and the accused was released on bail, however, even though there is no stay in the petition staying the deposit of 20% of the amount, the accused did not deposit the said amount. The conduct of the accused althroughout shows the delay tactics on his part to avoid the payment to the complainant, which cannot be viewed lightly. In the opinion of this Court, without any further delay, the complainant has to be given the opportunity to reap the fruits of the litigation for which he has waited for a long time.
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22. In view of the above discussion, the following order is passed:
22.1 Special Criminal Application No.10128 of 2024 of the original accused is disposed of in view of the observation made in paragraph no.13 hereinabove. Criminal Miscellaneous Application No.1 of 2024 in Special Criminal Application No.10128 of 2024 is disposed of as no order are required to be passed thereon.
22.2 Special Criminal Application No.14872 of 2024 of the original complainant is disposed of in view of the observation made in paragraph no.14 hereinabove.
22.3 Special Criminal Application No.30 of 2025 of the original accused is dismissed. The applicant of the said petition-original accused is directed to comply with the impugned order within a period of ten days from today.
23. Rule is discharged. All earlier orders of interim relief are vacated in view of above mentioned directions.
(SANDEEP N. BHATT,J) SRILATHA Page 31 of 31 Uploaded by U. SRILATHA(HC00185) on Thu Jan 30 2025 Downloaded on : Thu Jan 30 23:30:13 IST 2025