Holding

An interlocutory order dismissing applications may be set aside in view of a settlement, and the appellate court may reassess the conviction, fine, or imprisonment under Section 138 accordingly.

Summary

The case involved a conviction under Section 138 of the Negotiable Instruments Act, where the appellants were sentenced to six months' rigorous imprisonment and a fine of Rs.10,000 each. While the criminal appeal was pending, the parties settled the monetary dispute and the appellants deposited Rs.5,96,688 with the magistrate. The appellants had earlier filed interlocutory applications in the appellate court, which were dismissed, and a revision of that dismissal was also rejected by the High Court. The Supreme Court set aside the High Court's order on the interlocutory applications, directing that the matter be remitted to the appellate court to consider the settlement and decide whether to uphold, modify, or set aside the conviction, fine, or imprisonment. It also ordered that the deposited amount be allowed to be withdrawn by the respondent, noting that such withdrawal could influence the appellate court's decision on the conviction.

Issues considered

Whether an interlocutory order dismissing applications can be set aside after a settlement of the money dispute.
Whether the appellate court may consider a settlement and alter the conviction, fine, or imprisonment under Section 138 of the Negotiable Instruments Act.
Whether the deposited amount can be withdrawn and how that affects the continuation of criminal proceedings.

Legislation cited

Negotiable Instruments Act, 1881s. 138

Subjects

Section 138Negotiable Instruments Actinterlocutory applicationsettlementconvictionfineimprisonmentappealremandcivil settlement in criminal case

Judgment

A MIS. CRANEX LTD. AND ANR.
v.
MIS. NAGARJUNA FINANCE LTD. AND ANR.

SEPTEMBER 14, 2000

[M. JAGANNADHA RAO AND M.B. SHAH. JJ.]

Negotiable Instruments Act, 1881

S.138-Appel/ant-2 representing Appellant-I firm convicted and
C sentenced to 6 months R.l-Both appellants directed to pay a fine of Rs.
I 0, 000 each-Appeal-Interlocutory applications filed before appellate court
dismissed-Revision also dismissed by High Court-Pending appeal before
Supreme Court arising out of interlocutory applications, parties entered into
settlement-Consequently, appellants deposited the amount before appellate
D court-Held, in the circumstances, order passed by High Court on
interlocutory applications set aside-Matter remitted to appellate court for
disposal-On merits it will be open to appellate court even to set aside the
conviction in accordance with law-Otherwise it has power to convict, or
direct sentence of imprisonment or fine-Appellate court will also consider
whether the conviction is to be maintained or an order of imposition offine
E is to be passed in the light of the statement by counsel for respondents that
if amount deposited is permitted to be withdrawn it will not press before
appellate court for conviction, imprisonment or fine.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
F 789 of 2000.
From the Judgment and Order dated 21.3.2000 of the Andhra Pradesh
High Court in Crl. R.C. No. 91 of2000.

R. Venugopal Reddy and Mrs. S. Usha Reddy for the Appellants.

G A. Subba Rao for· the Respondents.

The following Order of the Court was delivered :

Leave granted. The case involves a settlement of the money claim
during the pendency of a criminal appeal arising out of proceedings under
H 300
CRANEX LTD. v. NAGARJUNA FINANCE LTD. 301

- Section 138 of the Negotiable instruments Act. The main appeal, namely A
Criminal Appeal No. 59/99, against the conviction is pending before the Vlth
Additional Metropolitan Sessions Judge, Secunderabad in the matter arising
under Section 138 of the Negotiable Instruments: Act. That is an appeal.
against the order dated 8.2.99 of the XVth Metropolitan Magistrate, Hyderabad,
Sentencing the appellant No. 2, representing the firm, to undergo rigorous
imprisonment for 6 months and further to pay a fine of R~. 10,000 or in B
default, to udergo simple imprisonment for a further period of3 mpnths. There
is also a direction against the 2nd appellant representing _the 1st appellant
Company, to pay a fine of Rs. 10,000 or in default to undergo simple
imprisonment for 3 months. The appeal against the conviction and sentence
is pending as aforesaid, before the VI Additional Metropolitan Sessions c
Judge, Secunderabad.

At that stage, it appears that some interlocutory applications were filed
by the appellants in the appellate Court and the said applications were
dismissed. Against the said order a revision case No. 91/2000 was filed in the
High Court and it was also dismissed. This appeal has been preferred against D
the said order passed by the High Court in the interlocutory proceedings.

During the pendency of the case, there appears to be a settlement of
the money-dispute between the parties. On 24.8.2000 this Court passed an
order as follows :
E
"Learned eounsel for the petitioners states that the petitioners
would deposit the cheque amount (Rs. 5,96,688) which was dishonoured
,,
.....
within three weeks from today before the XV Metropolitan Magistrate,
Hyderabad. In this view of the matter, stand over for three weeks.
Application for substituting the name of Mr. S.C. Agrawal as Managing
Director of the petitioner No. l's firm in place of Mr. Piyus Agrawal, F
Managing Director is allowed".

It appears, subsequent to the said order, the appellant has deposited a
sum of Rs. 5,96,688 in the Court of the XV Metropolitan Magistrate, Hyderabad.
A Certificate to that effect issued by the said Court has been filed by the
counsel for the petitioners, in this Court.
G

-. In the light of the subsequent developments in the case, we are of the
· view that the order passed in the Interlocutory application be set aside and
the matter be remitted to the Appellate Court where the appeal is pending.
We order accordingly. H
302 SUPREME COURT REPORTS [2000)SUPP. 3 S.C.R.

A The appellate Court will consider the subsequent events, namely, of the
appellant having paid a sum of Rs. 5,96,688 under a settlement to the 1st
respondent and will dispose of the appeal in accordance with law. On merits,
it will be open even to set aside the conviction in accordance with law.
-
Otherwise, it has power to convict or direct sentence of imprisonment or fine.
The appellate Court can therefore take the subsequent events into account <
B and pass such order as it may deem fit in the appeal. Under Section 138 the
Court can, if it is inclined to convict, pass an order of imprisonment or even
fine.·

The impugned order passed by the High Court in the present
C interlocutory proceedings is set aside and the m-atter is remanded to the
Appellate Court, namely the Vlth Additional Metropolitan Sessions Judge,
Secunderabad, as stated above.

We also record the statement of the learned counsel for the respondent
that ifthe amount deposited is pennitted to be withdrawn by the first respondent,
D then the I st respondent will not press before the Appellate Court for a
conviction or for a sentence be it for imprisonment or fine. In such
'circumstances, the Appellate Court will consider whether the conviction is to
be maintained or an order of imposition of fine is to be passed, in the light
of the stand taken by the counsel for the I st respondent.

E We direct the Court in which the deposit has been made, to allow the
Ist respondent to withdraw the amount accordingly. With the above directions
the appeal is disposed of. ,
'
RP. Appeal disposed of.