Gujarat High Court
Shahjahan Sayed Ali Mulla vs State Of Gujarat on 30 January, 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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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
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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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"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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
