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Amendment to Section 148 of Negotiable Instruments Act has retrospective application


7th of June

While considering the objects for the amendment to Section 148 of the Negotiable Instruments Act, 1881  and the interpretation of Section 148 of the NI Act, the Supreme Court held that Section 148 of the NI Act as amended, shall be applicable in respect of appeals against the order of conviction and sentence for an offence under Section 138 of the NI Act, even in a case where the criminal complaints for the offence under Section 138 of the NI Act were filed prior to the amendment to the NI Act coming into force, i.e., September 01, 2018.
 
Brief facts:
Criminal complaints were filed against Surinder Singh and others (“Appellants”) for an offence under Section 138 of the NI Act. The said criminal complaints were filed prior to August 02, 2018. The trial court had convicted the Appellants for an offence under Section 138 of the NI Act and sentenced them to undergo imprisonment of 2 years and to pay cheque amount + 1% as interest and litigation expenses as fine.
 
Feeling aggrieved and dissatisfied with the order of conviction passed by the learned trial court, the Appellants preferred criminal appeals before the first appellate court - learned Additional Sessions Judge, Panchkula. Feeling aggrieved by the order passed by the first appellate court, learned Additional Sessions Judge, Panchkula directing the Appellants to deposit 25% of the amount of compensation/fine awarded by the trial court, the Appellants approached the High Court of Punjab and Haryana by way of revision application/s.
 
The case of the Appellants was that Section 148 of the NI Act as amended (the aforesaid Section had been amended on September 01, 2019) shall not be applicable with respect to criminal proceedings already initiated prior to the amendment of the NI Act. The High Court of Punjab and Haryana turned down the said contention and upheld the order passed by the appellate court, Panchkula. This led to the appeal in the Supreme Court.
 
The aforesaid amendment proposed to amend the NI Act with a view to address the issue of undue delay in final resolution of cheque dishonour cases to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money. The Supreme Court held that 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. New Section 148 in the NI Act seeks to provide the following: that in an appeal by the drawer against conviction under Section 138 of the NI Act, the appellate court may order the appellant to deposit such sum which a minimum of shall be twenty per cent of the fine or compensation awarded by the trial court.
 
Issue for consideration:
Whether Section 148 of the NI Act as amended shall be applicable with respect to criminal proceedings already initiated prior to the aforesaid amendment?
 
Held:
While considering the objects for the amendment to Section 148 of the NI Act and the interpretation of Section 148 of the NI Act, the Supreme Court held that Section 148 of the NI Act as amended, shall be applicable in respect of appeals against the order of conviction and sentence for an offence under Section 138 of the NI Act, even in a case where the criminal complaints for the offence under Section 138 of the NI Act were filed prior to the amendment coming into force, i.e. September 01, 2018.
 
The submission on behalf of the Appellants that amendment in Section 148 of the NI Act shall not be made applicable retrospectively and more particularly with respect to cases/complaints filed prior to September 01, 2018 shall not be applicable has no substance and cannot be accepted, as by amendment in Section 148 of the NI Act, no substantive right of appeal has been taken away and/or affected. The NI Act had 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. 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 proceedings to realise the value of the cheque and having observed that such delay has compromised the sanctity of cheque transactions, the Parliament has thought it fit to amend Section 148 of the NI Act. Accordingly, such a purposive interpretation would be in furtherance of the objects and reasons of the amendment in Section 148 of the NI Act and also Section 138 of the NI Act.

Accordingly, the Supreme Court dismissed the appeal and upheld the judgment of the Punjab & Haryana High Court.

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