Gujarat High Court
Sewang Real Estate Developers vs State Of Gujarat on 1 March, 2021
Bench: A.Y. Kogje
R/CR.MA/18334/2020 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 18334 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18404 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18425 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18410 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18374 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18411 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18407 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18409 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 18371 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19499 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19560 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19497 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19455 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19459 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19461 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19553 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19551 of 2020
With
R/CRIMINAL MISC.APPLICATION NO. 19555 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.Y. KOGJE Sd/
===========================================================
Page 1 of 28
Downloaded on : Mon Aug 23 21:28:20 IST 2021
R/CR.MA/18334/2020 JUDGMENT
1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
===========================================================
M/S KALAPI DEVELOPERS
Versus
STATE OF GUJARAT
===========================================================
Appearance in:
CRIMINAL MISC.APPLICATION NO. 18334 of 2020
CRIMINAL MISC.APPLICATION NO. 18404 of 2020
CRIMINAL MISC.APPLICATION NO. 18425 of 2020
CRIMINAL MISC.APPLICATION NO. 18410 of 2020
CRIMINAL MISC.APPLICATION NO. 18374 of 2020
CRIMINAL MISC.APPLICATION NO. 18411 of 2020
CRIMINAL MISC.APPLICATION NO. 18407 of 2020
CRIMINAL MISC.APPLICATION NO. 18409 of 2020
CRIMINAL MISC.APPLICATION NO. 18371 of 2020
MR YOGESH S.LAKHANI, SENIOR ADVOCATE assisted by MR MAULIN G
PANDYA for the Applicants
MR LB DABHI, APP for Respondent No. 1
DHANESH R PATEL with MR DHRUV TOLIYA for Respondent No. 2
Appearance in:
CRIMINAL MISC.APPLICATION NO. 19499 of 2020
CRIMINAL MISC.APPLICATION NO. 19560 of 2020
CRIMINAL MISC.APPLICATION NO. 19497 of 2020
CRIMINAL MISC.APPLICATION NO. 19455 of 2020
CRIMINAL MISC.APPLICATION NO. 19459 of 2020
CRIMINAL MISC.APPLICATION NO. 19461 of 2020
CRIMINAL MISC.APPLICATION NO. 19553 of 2020
CRIMINAL MISC.APPLICATION NO. 19551 of 2020
CRIMINAL MISC.APPLICATION NO. 19555 of 2020
MR DHANESH R PATEL with DHRUV TOLIYA for the Applicant
MR LB DABHI, APP for the Respondent No. 1
MR ZUBIN BHARDA with MR BS RAJU and MR MAULIN G PANDYA for
Respondent Nos.2 and 3
===========================================================
Page 2 of 28
Downloaded on : Mon Aug 23 21:28:20 IST 2021
R/CR.MA/18334/2020 JUDGMENT
CORAM: HONOURABLE MR. JUSTICE A.Y. KOGJE
Date : 01/03/2021
ORAL JUDGMENT
1. RULE. Learned Advocate APP Mr.L.B.Dabhi waives
service of Rule on behalf of the respondent-State in all these
matters and learned Advocate Mr.Dhanesh Patel waives service of
Rule on behalf of respondent No.2 in Criminal Misc.Application
No.18334 of 2020 and group matters and learned Advocate
Mr.Maulin Pandya waives service of Rule on behalf of respondent
Nos.2 and 3 in Criminal Misc.Application No.19499 of 2020 and
group matters.
2. This group of applications is filed against the respective
orders of the appellate Court in the proceedings under the
provisions of Section 138 of the Negotiable Instruments Act.
Criminal Misc.Application Nos.18334 of 2020, 18404 of 2020, 18425 of
2020, 18410 of 2020, 18374 of 2020, 18411 of 2020, 18407 of 2020, 18409 of 2020
and 18371 of 2020 are filed by the original accused and Criminal
Misc.Application Nos.19499 of 2020, 19560 of 2020, 19497 of 2020, 19455 of
2020, 19459 of 2020, 19461 of 2020, 19553 of 2020, 19551 of 2020 and 19555 of
2020 are filed filed by the original complainant. The dispute
between the parties which requires consideration is imposition of
condition by the appellate Court while enlarging the convict on
bail.
3. With consent of both the sides these applications are
R/CR.MA/18334/2020 JUDGMENT
taken up for hearing and final disposal jointly. The facts are
recorded from lead matters being Criminal Misc.Application
no.18334 of 2020 and Criminal Misc.Application No.19499 of 2020,
filed each by the original accused and original complainant
respectively.
4. In the application filed by the original accused being
Criminal Misc.Application No.18334 of 2020, the prayers are as
under:-
"B) Your Lordships be pleased to delete Condition
Nos.3 and 4 imposed while passing an order
dated 01.10.2020 below Exh.4 by the learned 2 nd
Additional District & Sessions Judge, Vadodara in
Criminal Appeal No.133 of 2020.
C) Pending admission, final hearing and disposal of
this application, Your Lordships be pleased to stay
implementation and operation of Condition Nos.3
and 4 imposed while passing an order dated
01.10.2020 below Exh.4 by the learned 2 nd
Additional District & Sessions Judge, Vadodara in
Criminal Appeal No.133 of 2020."
4.1 In the application filed by the original complainant
being Criminal Misc.Application No.19499 of 2020, the prayer is as
under:-
"(b) To modify the order dated 01.10.2020 passed
below Exhibit no.4 by the Ld. 2Nd Addl. District
and Sessions Judge, Vadodara in Criminal Appeal
R/CR.MA/18334/2020 JUDGMENT
No.139 of 2020 and to suitably enhance the
amount to be deposited by the Respondent Nos.2
and 3 - original accused, as a percentage of fine
or compensation awarded by the Trial Court;"
5. The facts which are not in dispute are that Pratham
Reality Pvt. Ltd. is the complainant who has filed Criminal Case
No.48441 of 2011 (old case No.4865 of 2011) under Section 138 of
the Negotiable Instruments Act ("the Act" for short) against
M/s.Kalapi Developers and the proprietor of M/s.Kalapi Developers.
After due trial, 14th Additional Chief Judicial Magistrate, Vadodara
recorded conviction by judgment and order dated 12.03.2020 and
recorded as under:-
"1. It is hereby ordered that as per the provisions of
Section-255(2) of the Criminal Procedure Code,
both the accused of this case are held guilty for
the offence of Section-138 of the Negotiable
Instrument Act and sentenced to undergo simple
imprisonment of two years and fine of
Rs.1,80,00,000/-. The accused persons shall
undergo further simple imprisonment of three
months if they commit default in payment of fine.
2. Out of the amount of fine paid by the accused
persons, the amount of Rs.1,50,00,000/- (Rupees
One Crore Fifty Lakh only) shall be paid to the
complainant towards compensation as per
Section-357 of the Criminal Procedure Code.
3. Provide copy of this judgment to the accused free
of cost."
R/CR.MA/18334/2020 JUDGMENT
6. Against the aforesaid judgment and order recording
conviction, appeal being Criminal Appeal No.33 of 2020 is filed by
M/s.Kalapi Developers and proprietor of M/s.Kalapi Developers
under Section 374 of the Criminal Procedure Code. Along with the
appeal, application Exh.4 is also filed under Section 389(3) of the
Criminal Procedure Code for suspending the sentence. Upon by-
parte hearing, 2nd Additional District and Sessions Judge, Vadodara
has passed order dated 01.10.2020 below application Exh.4,
relevant part of which reads as under:-
"1. The present application is hereby allowed.
2. order passed by Ld. Trial Court in Cr. Case
No.48441 of 2011 (Old CC No.4865/2011)
dtd.12/03/2020 is hereby suspended till final
disposal of the appeal on submission of surety
bond of Rs.25,000/- and personal bond of like
amount.
3. The applicants are directed to deposit 20%
amount of the disputed cheque before the Nazir
of this Court.
4. The applicants are further directed to pay
Rs.10,000/- towards the cost to original
complainant and present original complainant."
6.1 It is the aforesaid order which is subject matter of
challenge by both the sides, more particularly clause-3 of the order
which provides for deposit of 20% of the amount of disputed
R/CR.MA/18334/2020 JUDGMENT
cheques before the Nazir of the appellate Court.
6.2 The details regarding all the appeals before this Court
are reproduced in tabular form as under:-
CRMA by CRMA by CC No. Accu. name Cheq. no. Cheq. Judg dt. Sentence Order of Cr.App
accused complaina Amt. compen. l No.
nt
18410/20 19461/20 48433/ Kalapi CDP 035063 87,50,000 12.03.20 SI for two years, fine 1,30,00,000 135/20
11 (old 035070 of Rs,1,60,00,000/-,
No.653 in default, SI for
5/11) three months and
compensation of
Rs.1,30,00,000 to
Kalapi DCP out of
the fine of
Rs.1,60,00,000
18407/20 19551/20 48427/ Sewang 035220 37,50,000 11.03.20 SI for two years, fine 55,00,000 137/20
11 (old RGP of Rs,70,00,000/-,
No.653 in default, SI for
4/11) three months and
compensation of
Rs.55,00,000 to
Sewang RGP out of
the fine of
Rs.,70,00,000
18425/20 19553/20 48436/ Sewang 035226 50,00,000 11.03.20 SI for two years, fine 75,00,000 138/20
11 (old RGP of Rs,90,00,000/-,
No.724 in default, SI for
4/11) three months and
compensation of
Rs.75,00,000 to
Sewang RGP out of
the fine of
Rs.,90,00,000
18374/20 19553/20 48434/ Kalapi CDP 035076 1,68,50,00 12.03.20 SI for two years, fine 2,50,00,000 136/20
11 (old 0 of Rs,3,00,00,000/-,
No.699 in default, SI for
6/11) three months and
compensation of
Rs.2,50,00,000 to
Kalapi DCP out of
the fine of
Rs.3,00,00,000
18409/20 19497/20 48439/ Sewang 035240 32,10,000 11.03.20 SI for two years, fine 48,00,000 141/20
11 (old RGP of Rs,60,00,000/-,
No.770 in default, SI for
6/11) three months and
compensation of
Rs.48,00,000 to
Sewang RGP out of
the fine of
Rs.,60,00,000
18404/20 19499/20 48610/ Sewang 026876 1,45,00,00 11.03.20 SI for two years, fine 2,15,00,000 139/20
11 (old RGP 0 of Rs,2,45,00,000/-,
No.770 in default, SI for
7/11) three months and
compensation of
Rs.2,15,00,000 to
Sewang RGP out of
the fine of
Rs.,2,45,00,000
18411/20 19459/20 48443/ Kalapi CDP -- 8,925,000 12.03.20 SI for two years, fine 1,30,00,000 134/20
11 (old of Rs,1,50,00,000/-,
No.770 in default, SI for
R/CR.MA/18334/2020 JUDGMENT
9/11) three months and
compensation of
Rs.1,30,00,000 to
Kalapi DCP out of
the fine of
Rs.1,50,00,000
18371/20 19553/20 48442/ Sewang -- 17,500,00 11.03.20 SI for two years, fine 2,60,00,000 140/20
11 (old RGP 0 of Rs,3,00,00,000/-,
No.770 in default, SI for
8/11) three months and
compensation of
Rs.2,60,00,000 to
Sewang RGP out of
the fine of
Rs.,3,00,00,000
18334/20 19455/20 48441/ Kalapi CDP - 10,500,00 12.03.20 SI for two years, fine 1,50,00,000 133/20
11 (old 0 of Rs,1,80,00,000/-,
No.486 in default, SI for
5/11) three months and
compensation of
Rs.1,50,00,000 to
Kalapi DCP out of
the fine of
Rs.1,80,00,000
7. It is the case that such a condition ought not to be
imposed keeping in view the special facts of the case which include
civil litigation in the form of Summary Suit before the Commercial
Court, which is also challenged before this Court. The other
ground is financial difficulties in the present time of Covid
pandemic situation.
7.1 While on the other hand, the original complainant has
challenged the very clause contending the same to be against the
very provision of law for imposing condition by referring to Section
148(3) of the Act.
8. Learned Senior Advocate for the applicants-accused in
Criminal Misc.Application No.18334 of 2020 and group matters at
the outset submitted that the applicant is facing trying time in view
of the present situation of pandemic which has affected the
business and it would be virtually impossible for the applicant to
R/CR.MA/18334/2020 JUDGMENT
deposit such a huge amount and therefore, condition imposed is to
harsh and therefore, requests that the same be deleted. It is
submitted that by recording conviction of the applicant, the trial
Court was pleased to impose fine of Rs.1,80,00,000/- and it is now
ordered to pay an amount of Rs.1,50,00,000/- towards
compensation as provided under Section 357 of the Criminal
Procedure Code and while suspending the sentence and enlarging
the applicant on bail, it is by the impugned condition, ordered to
deposit 20% of the cheque amount. Therefore, the applicant is to
face double jeopardy as the applicant is to pay twice the amount. It
is therefore submitted that on one hand, a huge fine has been
imposed in crores of rupees and on the other hand, it is ordered to
deposit 20% of the disputed cheque, which is also running in lakhs
of rupees, which is a huge financial burden upon the applicant in
the present time of Covid pandemic.
8.1 Learned Senior Advocate for the applicant-accused also
tried to convince the Court on merits by submitting that the
cheques in question were towards security with regard to land
transaction, which the complainant was to undertake with the
accused person so that the amount to be paid to the concerned
land owners is secured. However, such cheques have also been
deposited by the complainant with malafide intention and knowing
full well that the cheques in question are issued towards security
and would therefore be dishonoured.
R/CR.MA/18334/2020 JUDGMENT
8.2 It is submitted that against the applicant-accused,
similar other complaints adopting similar modus have been filed by
the complainant by giving exaggerated figures and therefore, the
appellate Court ought to have taken this aspect into consideration
while imposing condition of bail.
8.3 It is also submitted that the Courts below have not
properly considered the conduct of the original complainant, who
from the very beginning was having an intention to cheat the
applicants-accused because behind the back of the applicants-
accused when the payment was made to the applicants-accused, it
was noted as loan transaction and on the other hand, when the
transaction had taken place with the original land owners, sale
deed has been executed in favour of family members of the original
complainant-original complainant herein and payment has been
made to the original land owners in cash. It is submitted that when
the original complainant had done is that for the transaction with
the original land owners, amount has been deposited in the account
of the applicants herein, out of which, there would be part of it i.e.
some portion had to be given to the farmers and remaining thereof
would be given back to the person of the original complainant. It is
further submitted that even except the transactions mentioned in
the complaint filed by the original complainant, there are other
transactions from the back of the original complainant herein to the
bank of the applicants herein, which falsify the story put forward by
R/CR.MA/18334/2020 JUDGMENT
the original complainant herein and the said fact is also reflected in
the bank statement of the applicants-accused. It is, therefore,
submitted that from the very beginning, the modus operandi of the
original complainant herein was to cheat the applicants and pocket
entire amount and did not want to give any amount as agreed
between the parties, wherein he had succeeded. Even during trial
also, the authorized person of the Company has been examined,
whereas the Director of the Company viz., Jayant Sanghavi was
never summoned for giving his version. It is further submitted that
as per the Company Law, one Company can give loan to another
Company, however, not to any individual person and in the facts of
the present case, it is clear that the Company of the original
complainant had given loan to the individual i.e. the applicants
herein, however, the said aspect has not been properly considered
by the learned Courts below, which adversely affects the rights of
the applicants herein. Therefore, considering the facts of the
present case, the impugned conditions may be deleted.
8.4 Learned Senior Advocate for the applicant-accused
emphatically submitted that the entire premise of initiating the
proceedings under the Act is missing as there was no loan
transaction as is canvassed in the complaint. Attention if drawn to
the observations made by the High Court while dealing with
proceedings of Summary Suit initiated with regard to the very
same transaction and cheques before the Commercial Court. It is
R/CR.MA/18334/2020 JUDGMENT
submitted that the conduct of the complainant is strangulating the
applicant-accused from doing any type of commercial business as
with regard to same cheques, proceedings of various nature at
various forums have been initiated to demonstrate the Shylockian
attitude of the complainant.
8.5 It is submitted that the provision of law relating to
imposing of condition under Section 143 has to be treated as
directory and not mandatory.
9. As against this, learned Advocate for the original
complainant-respondent No.2 in Criminal Misc.Application
No.18334 of 2020 and group matters submitted that the order
impugned is correct in so far as directing deposit of amount by the
applicant is concerned and therefore the challenge by the applicant
must necessarily fail. It is submitted that in fact there is severe
prejudice and loss caused to the original complainant due to the
applicants being directed to deposit only 20% of the cheque
amount and not a higher amount linked to the fine which was
required looking to the facts and circumstances of the present
case. It is further submitted that an application being a Criminal
Miscellaneous Application has been preferred by the original
complainant before this Hon'ble Court, whereby, the original
complainant has sought the modification of the order of the
Sessions Judge dated 01.10.2020 and to suitably enhance the
amount to be deposited by the applicants-original accused as a
R/CR.MA/18334/2020 JUDGMENT
percentage of the fine or compensation awarded by the trial Court.
9.1 It is submitted that the observations of this Court in its
order dated 31.07.2013 passed in Special Civil Application No.
8894 of 2013 as averred and Interpreted by the applicants herein
in para 2.7 of the captioned application are misleading and
fallacious in nature. | further say and submit that what were
actually the arguments of the learned Advocate for the applicants
in Special Civil Application No. 8894 of 2013 have been deviously
portrayed as the observations of this Court only with a view to
create a false merit in the captioned application. I also say and
submit the parameters to determine a conditional leave to defend
in a summary suit before a Trial Court are different and do not
have a bearing on the parameters that would determine the
ingredients of offence under Section 138 of the Ni Act. At the time
of the hearing of the Special Civil Application No. 8894 of 2013, the
evidence pertaining to the criminal case preferred by the
Respondent no. 2 under Section 138 of the NI Act had not come on
record and also the same had not been appreciated by the Ld. Trial
Court thereby, making the observations of the Ld. Magistrate in the
order dated 12.03.2020 convicting the applicants herein
independent of the summary suit initiated against the applicants
before the Ld. Trial Court. That further the observations by this
Hon'ble Court are at an interim and preliminary stage. The
deponent submits that in fact telling the judgment in the summary
R/CR.MA/18334/2020 JUDGMENT
suit has been pronounced on 09.12.2020 and the same is
categorically in favour of the Respondent No. 2. The deponent
submits that the Ld. Principal 'Senior Civil Judge, Commercial
Court has decreed that the 'Respondent No. 2 is entitled to recover
the principal amount of Rs. 4,50,25,000/along with interest @ 6%
from the applicant-accused. The trial Court has further rejected
the counterclaim of the applicant-accused holding that the
applicant has failed to prove the claim.
9.2 It is further submitted that present petition is itself not
maintainable and the prayers made by the applicants-accused
herein are required to be rejected in the light of ratio laid down by
the Hon'ble Apex Court in the case of Surinder Singh Deswal and
Ors. Vs. Virender Gandhi reported in (2019) 11 SCC 341. That
considering the intent of the legislation and the ratio laid down by
the Hon'ble Apex Court, the condition supposed to be Imposed.
while suspending the sentence by the Appellate Court is a
"minimum" 20% of the fine/penalty imposed by the Ld. Lower
Court. That the Hon'ble Apex Court was pleased to hold that the
provisions of Section 357(2) of CrPC would have no applicability to
the proceedings under the NI Act and that further the word "may"
in Section 148 of the NI Act is to be read as "shall and that a
direction not to deposit any amount is an exception for which
special reasons are to be assigned. The deponent submits that the
applicant has not brought anything on record to indicate the
R/CR.MA/18334/2020 JUDGMENT
special reasons why such an order is required to be passed and in
fact the facts and circumstances and the conduct of {ne applicant
in fact indicate that the order passed by the Ld, Sessions Judge is
in fact required to be enhanced, for which the Respondent No. 2
has already moved an appropriate application. That on bare
interpretation of the prayer of the present application sought by
the applicants herein, the same is in stark contradiction of
provisions of the NI Act and guidelines laid down by the Apex
Court.
10. Having considered the rival submissions of learned
Advocates for the parties, the question that comes up for
consideration is the order of the appellate Court with regard to
deposit of the amount as provided under Section 148 of the Act.
The grounds which have been elaborately argued by both the sides
are on merits, especially contention raised by the accused side
about invoking of provisions of Section 138 of the Act in the facts of
this case with due regard to other litigation in the form of Summary
Suit and the arguments advanced in this regard. The Court does
not deem it fit to enter into it on merits as the main appeals are still
pending before the appellate Court which will, in due course, have
to examine such contentions raised and answered by the respective
parties.
11. It is also pertinent to observe that even in the summary
proceedings, the Commercial Court has allowed the application of
R/CR.MA/18334/2020 JUDGMENT
the complainant, which is reportedly subject matter of challenge in
a separate proceeding before this Court and hence also, this Court
refrains from entering into the issue of the findings, if any, given in
favour of any of the parties while dealing with Summary Suit
proceedings by the Commercial Court.
12. For the purpose these applications, what is relevant is
application of Section 148 of the Act, which reads as under:-
"148. Power of Appellate Court to order payment
pending appeal against conviction. - (1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973, in an appeal by the drawer
against conviction under section 138, the Appellate
Court may order the appellant to deposit1 such sum
which shall be a minimum of twenty percent of the fine
or compensation awarded by the trial Court:
Provided that the amount payable under this sub-
section shall be in addition to any interim compensation
paid by the appellant under section 143A.
(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
R/CR.MA/18334/2020 JUDGMENT
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."
13. The facts which are not in dispute are that the
complainant herein preferred a criminal complaint against the
accused under Section 138 of the Act for a cheque bearing cheque
no.35075 for a total amount of Rs.1,05,00,000/-. The said
complaint was registered vide Criminal Case No.48441 of 2011.
Upon completion of trial, the learned 14th Additional Chief Judicial
Magistrate was pleased to convict the respondent no.2 and 3 vide
order and judgment dated 12.03.2020 and the respondents herein
were ordered to undergo 2 years of simple imprisonment and the
learned Judge further imposed penalty of Rs.1,80,00,000/- and in
default of payment, the respondents were directed to undergo more
than 3 months of imprisonment. That it was further directed that
out of the amount of Rs.1,80,00,000/- paid by the accused,
Rs.1,50,00,000/- would be paid to the applicant (original
complainant) as compensation. Since the learned Trial Court after
examining all the oral as well as documentary evidence, was
pleased to confirm that the said cheques in question was with
respect to legally enforceable debt payable to the applicant herein.
R/CR.MA/18334/2020 JUDGMENT
Hence, the respondents herein have been found guilty of
committing offence under Section 138 of the Act. Being aggrieved
and dissatisfied by the order and judgment dated 12.03.2020
passed by the 14th Additional chief Judicial Magistrate in Criminal
Case No.48441 of 2011, the respondent nos.2 and 3 preferred an
appeal being Criminal Appeal No.133 of 2020 before the learned
Sessions Court along with an application for suspension of
sentence below Exh.4. The Sessions Court passed the order dated
01.10.2020 below Exh.4 in Criminal Appeal No.133 of 2020 for
suspension of sentence (herein after referred to as "impugned
order"), whereby the said learned Court was pleased to allow the
application and suspended the sentence passed by the learned Trial
Court by imposing certain conditions amongst which condition
nos.2, 3 and 4 are reproduced herein under:-
"2 Order passed by the learned Trial Court in
Criminal Case No.48441 of 2011 (Old CC
No.4865/2011) dated 12.03.2020 is hereby suspended
till final disposal of appeal on submissions of surety
bond of Rs.25,000/- and personal bond of like amount.
3. The applicants are directed to deposit 20% amount
of the disputed cheque before the Nazir of this Court.
4. The applicants are further directed to pay
Rs.10,000/- towards the cost to original complainant
and present respondent no.2"
14. Section 148 came to be inserted by Amendment Act 20
R/CR.MA/18334/2020 JUDGMENT
of 2018. It is nobody's case that the said amendment is not
applicable to the facts of the case and as such, the accused has also
not raised this issue and hence, proceedings on the footing that
Section 148 is squarely applicable to the facts of the case. The new
Act came into effect from September 2018 by the Negotiable
Instruments (Amendment) Bill, 2017. The Court would refer to the
Statement of Objects and Reasons, which read as under:-
"The Negotiable Instruments Act, 1881 (the Act) was
enacted to define and amend the law relating to
Promissory Notes, Bills of Exchange and Cheques. The
said Act has been amended from time to time so as to
enforceable provide, inter alia, speedy disposal of cases
relating to the offence of dishonour of cheques.
However, the enforceable Central Government has been
receiving several representations from the public
including trading community relating to pendency of
cheque dishonour cases. This is because of delay tactics
of unscrupulous drawers of dishonoured cheques due to
easy filing of appeals and obtaining stay on
proceedings. As a result of this,enforceable injustice is
caused to the payee of a dishonoured cheque who has
to spend considerable time and resources in court
proceedings to realise the value of the cheque. Such
delays compromise the sanctity of cheque transactions.
2. It is proposed to amend the said Act with a view
to address the issue of undue delay in final resolution of
cheque dishonour cases so as to provide relief to
payees of dishonoured cheques and to discourage
frivolous and unnecessary litigation which would save
R/CR.MA/18334/2020 JUDGMENT
time and money. The proposed amendments will
strengthen the credibility of cheques and help trade
and commerce in general by allowing lending
institutions, including banks, to continue to extend
financing to the productive sectors of the economy.
3. It is, therefore, proposed to introduce the
Negotiable Instruments (Amendment) Bill, 2017 to
provide, inter dishonor alia, for the following, namely:--
(i) to insert a new section 143A in the said Act to
provide that the Court trying an offence under section
138 may order the drawer of the cheque to pay interim
compensation to the complainant, in a summary trial or
a summons case, where he pleads not guilty to the a
ccusation made in the complaint; and in any other case,
upon framing of charge. The interim compensation so
payable shall be such sum not exceeding twenty per
cent. of the amount of the cheque; and
(ii) to insert a new section 148 in the said Act so as to
provide that 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.
4. The Bill seeks to achieve the above objectives."
15. The Apex Court in case of Surinder Singh Deswal
alias Colonel S.S.Deswal & Ors. Vs. Virender Gandhi, reported
in (2019) 11 SCC, 341 has given meaning to Section 148 to be in
R/CR.MA/18334/2020 JUDGMENT
furtherance of the objects and reasons of the Amendment Act and
has proceeded to hold as under:-
"7.1 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, submission on behalf 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, as by amendment in Section 148 of the N.I.
Act, no substantive right of appeal has been taken away
and/or affected. Therefore the decisions of this Court in
the cases of Garikapatti Veeraya (supra) and Videocon
International Limited (supra), relied upon by the
learned senior Counsel appearing on behalf of the
Appellants shall not be applicable to the facts of the
case on hand. Therefore, considering the Statement of
Objects and Reasons of the amendment in Section 148
of the N.I. Act stated hereinabove, on purposive
R/CR.MA/18334/2020 JUDGMENT
interpretation of Section 148 of the N.I. Act as
amended, we are of the opinion that 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. If such a purposive interpretation is not
adopted, in that case, the object and purpose of
amendment in Section 148 of the N.I. Act would be
frustrated. Therefore, as such, no error has been
committed by the learned first appellate court directing
the Appellants to deposit 25% of the amount of
fine/compensation as imposed by the learned trial Court
considering Section 148 of the N.I. Act, as amended.
8. Now so far as the submission on behalf of the
Appellants that even considering the language used in
Section 148 of the N.I. Act as amended, the appellate
Court "may" order the Appellant to deposit such sum
which shall be a minimum of 20% of the fine or
compensation awarded by the trial Court and the word
used is not "shall" and therefore the discretion is vested
with the first appellate court to direct the Appellant -
Accused to deposit such sum and the appellate court
has construed it as mandatory, which according to the
learned Senior Advocate for the Appellants would be
contrary to the provisions of Section 148 of the N.I. Act
as amended is concerned, 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
R/CR.MA/18334/2020 JUDGMENT
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. Therefore amended Section 148 of the N.I.
Act confers power upon the Appellate Court to pass an
order pending appeal to direct the Appellant-Accused to
deposit the sum which shall not be less than 20% of the
fine or compensation either on an application filed by
the original complainant or even on the application filed
by the Appellant-Accused Under Section 389 of the
Code of Criminal Procedure to suspend the sentence.
The aforesaid is required to be construed considering
the fact that as per the amended Section 148 of the N.I.
Act, a minimum of 20% of the fine or compensation
awarded by the trial court is directed to be deposited
and that such amount is to be deposited within a period
of 60 days from the date of the order, or within such
further period not exceeding 30 days as may be
directed by the appellate court for sufficient cause
shown by the Appellant. Therefore, if amended Section
148 of the N.I. Act is purposively interpreted in such a
manner it would serve the Objects and Reasons of not
only amendment in Section 148 of the N.I. Act, but also
Section 138 of the N.I. Act. Negotiable Instruments Act
has been amended from time to time so as to provide,
inter alia, speedy disposal of cases relating to the
offence of the dishonoured of cheques. So as to see that
due to delay tactics by the unscrupulous drawers of the
dishonoured cheques due to easy filing of the appeals
and obtaining stay in the proceedings, an injustice was
caused to the payee of a dishonoured cheque who has
to spend considerable time and resources in the court
R/CR.MA/18334/2020 JUDGMENT
proceedings to realize the value of the cheque and
having observed that such delay has compromised the
sanctity of the cheque transactions, the Parliament has
thought it fit to amend Section 148 of the N.I. Act.
Therefore, 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
Section 138 of the N.I. Act.
9. Now so far as the submission on behalf of the
appellants,realize relying upon Section 357(2) of the
Cr.P.C. that once the appeal against the order of
conviction is preferred, fine is not recoverable pending
appeal and therefore such an order of deposit of 25% of
the fine ought not to have been passed and in support
of the above reliance placed upon the decision of this
Court in the case of Dilip S. Dhanukar (supra) is
concerned, the aforesaid has no substance. The opening
word of amended Section 148 of the N.I. Act is that
"notwithstanding anything contained in the Code of
Criminal Procedure.....". Therefore irrespective of the
provisions Hanuka of Section 357(2) of the Cr.P.C.,
pending appeal before the first appellate court,
challenging the order of conviction and sentence 20
under Section 138 of the N.I. Act, the appellate court is
conferred with the power to direct the appellant
to deposit such sum pending appeal which shall be
a minimum of 20% of the fine or compensation awarded
by the trial Court."
16. The law, therefore, on the aforesaid subject being
crystal clear, the Court has no hesitation in holding that the 2nd
Additional District & Sessions Judge, Vadodara has committed an
R/CR.MA/18334/2020 JUDGMENT
error in operative part of the order in Clause-3, directing the
applicant-accused to deposit 20% amount of the disputed cheque
before the Nazir of the Court and hence, to that extent the
impugned order needs to be interfered with to read that, "the
accused is directed to deposit 20% amount of the compensation as
per the order of the trial Court, viz. 14 Th Additional Chief Judicial
Magistrate, Vadodara dated 12.03.2020.
17. The provisions of Section 148 of the Act use phrase as
under:-
" .....the Appellate Court may order the appellant to
deposit1 such sum which shall be a minimum of twenty
percent of the fine or compensation awarded by the
trial Court...."
18. In the instant case, the trial Court has awarded fine of
Rs.1,80,00,000/- along with simple imprisonment for two years and
at the same time, has awarded compensation of Rs.1,50,00,000/- by
invoking Section 357 of the Criminal Procedure Code.
19. The language of Section 138 of the Act provides for the
punishment with imprisonment for a term which may be extended
to two years or with fine, which may extend to twice the amount of
the cheque or with both. Therefore, the word used in Section 138
is "fine" and therefore, discretion is available to the Court under
Section 148 to impose condition for preferring an appeal to deposit
minimum of 20% of the "fine" or "compensation" awarded by the
R/CR.MA/18334/2020 JUDGMENT
trial Court.
20. The Court is of the opinion that in a given facts of the
case, where accused person is facing convictions in 9 complaints
and in each of these complaints, accused has faced conviction,
wherein fine is separately imposed and compensation is also
separately imposed, therefore, considering the financial crunch
that the accused will have to face in this trying time, the Court
deems it fit to directed the accused to deposit 20% of compensation
instead directing to deposit 20% of the fine imposed. The Court
has also taken into consideration the submission made on behalf of
the accused regarding financial inability to arrange for such huge
deposits in these appeals. However, considering the documents
placed on record along with evidence led before the trial Court in
the form of deposits, more particularly evidence of accused-
Chandrakant D.Patel at Exh.152, wherein turnover of the company
at the relevant time only with the complainant company was to the
tune of Rs.120 crores, which may lead to presume the financial
strength of the accused. Over and above, in the pleadings before
this Court, nothing has come on record which could establish
financial crises which the accused side is facing. The application
Exh.4 filed under Section 389(3) of the Criminal Procedure Code
also does not plead of any grave financial difficulties being faced by
the accused. The complainant side has argued to exercise
discretion to enhance the amount of pre-appeal deposit to more
R/CR.MA/18334/2020 JUDGMENT
than 20% in view of the discretion available under the provision
itself, which provides for minimum of 20% and there being scope of
imposing more than 20%. It has been argued that considering the
length of time for which the litigation has been dragged, it is a case
enhancing the deposit from 20% to more than 20% as per the
discretion of this Court. Considering the overall fact situation,
where the accused person is ordered to pay fine of Rs.1,80,00,000/-
in one of the 9 complaints and similar amount ordered to be paid as
fine over and above this, an amount of Rs.1,50,00,000/- awarded as
compensation under Section 357 of the Criminal Procedure Code
and what has been brought on the record of this case regarding
decree issued by the Commercial Court in Commercial Civil Suit
No.43 of 2919 dated 09.12.2020 holding the plaintiff company to
entitle to recover Rs.4,50,25,000/- with accrued rate of interest at
the rate of 6% from 26.10.2012 till realization of the full amount, in
the facts of this case, the Court does not deem it fit to enhance the
amount of deposit to more than 20% of the compensation awarded
and hence, no interference on that count.
21. In view of the aforesaid, Criminal Misc.Application
Nos.18334 of 2020, 18404 of 2020, 18425 of 2020, 18410 of 2020,
18374 of 2020, 18411 of 2020, 18407 of 2020, 18409 of 2020 and
18371 of 2020 filed by the accused are hereby dismissed. Rule is
discharged. The applications filed by the complainant being
Criminal Misc.Application Nos.19499 of 2020, 19560 of 2020,
R/CR.MA/18334/2020 JUDGMENT
19497 of 2020, 19455 of 2020, 19459 of 2020, 19461 of 2020,
19553 of 2020, 19551 of 2020 and 19555 of 2020 are hereby
allowed to the aforesaid extent. Rule is made absolute.
22. At this stage, learned Advocate Mr.Maulin Pandya
requests that the period for depositing the amount as per the order
of the first appellate Court be reasonably extended considering the
present situation as well as financial condition. The request being
reasonable, the time period to deposit the amount as per the
direction of the first appellate Court under the impugned order is
extended by three months from today.
Sd/
(A.Y. KOGJE, J)
SHITOLE
