Surinder Singh Deswal & Ors.
v. Virender Gandhi

Background — Section 148 and the 2018 Amendment

The Negotiable Instruments (Amendment) Act, 2018 (Act 20 of 2018), in force from 1 September 2018, inserted Section 143A (interim compensation during trial) and a new Section 148, under which, in an appeal by the drawer against conviction under Section 138, the appellate court may order the appellant to deposit a sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial court. The Statement of Objects and Reasons, quoted by the Court, refers to “delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings”.

The appellants had been convicted by the trial court on 30 October 2018 in complaints filed before the amendment. While suspending their sentence under Section 389 CrPC, the Additional Sessions Judge, Panchkula directed them to deposit 25% of the compensation awarded, and the Punjab and Haryana High Court dismissed their challenge.

Judgment & Ratio

The Supreme Court dismissed the appeals and held: (a) by the amendment of Section 148, no vested or substantive right of appeal of the accused has been taken away, so on a purposive interpretation Section 148 applies to appeals against conviction under Section 138 “even in a case where the criminal complaints ... were filed prior to amendment Act No. 20/2018 i.e., prior to 01.09.2018” (para 8.1); (b) though Section 148 uses “may”, it is “generally to be construed as a ‘rule’ or ‘shall’”, and not directing a deposit is an exception requiring special reasons; the deposit may be directed on the complainant's application or on the accused's own application under Section 389 CrPC (para 9); and (c) because Section 148 opens with “Notwithstanding anything contained in the Code of Criminal Procedure”, Section 357(2) CrPC does not prevent such a deposit pending appeal (para 10). The 25% deposit order was upheld, with four weeks' further time granted under Article 142.

The Court's judgment of 8 January 2020 in a further appeal by the same appellants [(2020) 2 SCC 514] records that in G.J. Raja v. Tejraj Surana (30 July 2019) the Court held Section 143A to be prospective, confined to offences committed after its introduction, and that G.J. Raja distinguished Deswal because Section 148 operates at a stage after conviction.

Significance for Section 138 Complainants

For banks, NBFCs and businesses that have secured a conviction under Section 138, the judgment supports an application to the appellate court for a deposit of not less than 20% of the fine or compensation awarded when the convicted drawer appeals. Under Section 148(3), the appellate court may release the deposit to the complainant during the appeal; if the appellant is acquitted, the complainant must repay it with interest at the bank rate published by the Reserve Bank of India.