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SUPREME COURT OF INDIA
UDAY UMESH LALIT, VINEET SARAN, JJ.
G.J. Raja - Appellant
Versus
Tejraj Surana - Respondent
Criminal Appeal No. 1160 of 2019 (Arising out of Special Leave Petition (Criminal)No.3342 of 2019)
Decided on : 30-07-2019
(B) Negotiable Instruments Act, 1881 – Section 143-A – Dishonour of cheque – Award of interim compensation pending trial – Applicability of Section 143A of Act must be held to be prospective in nature and confined to cases where offences were committed after introduction of Section 143A, in order to force an accused to pay such interim compensation – Provisions of Section 143A can be applied or invoked only in cases where offence under Section 138 of Act was committed after introduction of said Section 143A in statute book. (Paras 22 and 24)
Facts of the Case:
Complaint under Section 138 of Negotiable Instruments Act, 1881 is presently pending against the Appellant before the IInd Fast Track Court-Metropolitan Magistrate, Egmore, Chennai. Trial Court ordered that 20% of cheque amount be made over by the Appellant to the Respondent as interim compensation in accordance with provisions of Section 143A of Act. Appellant being aggrieved, filed Criminal O.P.No.3406 of 2019 in High Court. By its order dated 08.02.2019, High Court found no illegality or infirmity in the order awarding interim compensation under Section 143A of Act but reduced the percentage from 20% of cheque amount to 15% of cheque amount. Order of High Court is presently under challenge.
Findings of the Court:
Imposition and consequential recovery of fine or compensation either through modality of Section 421 of Code or Section 357 of code could also arise only after the person was found guilty of an offence. That was the status of law which was sought to be changed by the introduction of Section 143A in the Act. It now imposes a liability that even before the pronouncement of his guilt or order of conviction, the accused may, with the aid of State machinery for recovery of the money as arrears of land revenue, be forced to pay interim compensation. The person would, therefore, be subjected to a new disability or obligation.
Result : Appeal allowed.
The legal document discusses the applicability and implications of Section 143A of the Negotiable Instruments Act, 1881, in relation to offences under Section 138. The key points are as follows:
Prospective Application of Section 143A: The section must be understood to have prospective operation, meaning it applies only to offences committed after its enactment. It is not retrospective, and its provisions cannot be invoked for offences prior to its introduction.
Creation of New Obligations and Disabilities: Section 143A imposes a new liability on the drawer of a dishonoured cheque, allowing the court to order interim compensation before the conclusion of trial or conviction. This introduces a new disability, as the accused can be compelled to pay interim compensation using coercive recovery machinery, as if the amount were arrears of land revenue.
Recovery Machinery and Coercive Methods: The section authorizes recovery of interim compensation through the same mechanisms used for land revenue arrears, which may include coercive methods such as attachment, sale of property, or arrest in some jurisdictions. This signifies a departure from the traditional post-conviction recovery process, which only applies after guilt is established.
Legal Principles on Retrospective Legislation: The document emphasizes that legislation affecting substantive rights is presumed not to have retrospective effect unless explicitly stated or clearly implied. Procedural laws, unless affecting substantive rights or creating new liabilities, are generally presumed to operate prospectively.
Comparison with Other Provisions: The document distinguishes Section 143A from provisions that apply after conviction, such as those related to the levy of fines or recovery of amounts as land revenue. Since Section 143A allows for liability prior to guilt being established, it is classified as affecting substantive rights and is thus prospective.
Implication for Pending Cases: In cases where offences were committed before the enactment of Section 143A, the section cannot be invoked. Orders for interim compensation made under this section in such cases are invalid, and any deposits made should be refunded.
Conclusion: The court concludes that Section 143A is prospective and can only be applied to offences committed after its introduction. Orders based on its retrospective application are to be set aside, and deposits made under such orders should be returned to the accused.
These points collectively reaffirm the principle that new legal provisions creating substantive obligations or liabilities generally do not have retrospective effect unless expressly specified.
JUDGMENT :
Uday Umesh Lalit, J.
1. Leave granted.
2. This Appeal challenges the Final Order dated 08.02.2019 passed by the High Court of Judicature at Madras in Criminal O.P.No.3406 of 2019 preferred by the Appellant herein.
3. Complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the Act’) being C.C.No.7171 of 2018 is presently pending against the Appellant before the IInd Fast Track Court -Metropolitan Magistrate, Egmore, Chennai. According to the complaint, two cheques issued by the Appellant in the sums of Rs.20,00,000/-and Rs.15,00,000/-in favour of the Respondent-Complainant were dishonoured on account of insufficiency of funds. The Complaint was lodged on 04.11.2016.
4. With effect from 01.09.2018, Section 143A was inserted in the Act by Amendment Act 20 of 2018. Said Section is to the following effect:-
“143A. Power to direct interim compensation. -
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant -
(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and
(b) in any other case, upon framing of charge.
(2) The interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque.
(3) The interim compensation shall be paid within sixty days from the date of the order under subsection (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.
(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial years, 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.
(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974).
(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this section.”
5. Soon thereafter, the Trial Court ordered that 20% of the cheque amount be made over by the Appellant to the Respondent as interim compensation in accordance with the provisions of Section 143A of the Act. Thus, the Appellant was directed to pay to the Respondent a sum of Rs.7,00,000/-.
6. The Appellant being aggrieved, filed Criminal O.P.No.3406 of 2019 in the High Court. By its order dated 08.02.2019, the High Court found no illegality or infirmity in the order awarding interim compensation under Section 143A of the Act but reduced the percentage from 20% of the cheque amount to 15% of the cheque amount.
7. The order of the High Court is presently under challenge. While issuing notice the Appellant was directed to deposit the sum so ordered by the High Court in the Trial Court. It was further directed that upon deposit, the Trial Court should invest the money in Fixed Deposit and that the money would not be made over to the Respondent till further orders. Since the Respondent, despite having been served with the notice, had not entered appearance, this Court by its Order dated 01.07.2019 requested Mr. Vinay Navare, learned Senior Advocate to assist this Court as Amicus Curiae.
8. We heard Mr. G. Ananda Selvam, learned Advocate for the Appellant and the learned Amicus Curiae.
9. A reading of Section 143A shows (i) interim compensation must not exceed 20% of the amount of the cheque; (ii) it must be paid within the time stipulated under Sub-Sec
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