IN THE SUPREME COURT OF INDIA
Criminal Appeal No. 1160 of 2019
Date of Judgement
30th July, 2019
Justice Uday Umesh Lalit; Justice Vineet Saran
Two cheques issued by the Appellant in favor of the Respondent for the amounts Rs. 20,00,000 and Rs. 15,00,000 were dishonored. Due to insufficiency of funds. The complaint was lodged on 4/11/2016.
An amendment in 2018 to the Negotiable Instruments Act, 1881 added Section 143A which gave the courts power to order interim compensation during the pendency of the case. The bare reading of the provision provided the following points.
1. The interim compensation cannot exceed 20% of the amount of the cheque
2. The amount must be paid within the time frame as stipulated in sub-section 3 of the provision
3. If the accused is acquitted then then complainant shall be directed to pay to the accused the amount of interim compensation with the interest at bank rate
4. The interim compensation payable can be recovered as if it were a fine under Section 421 of the Criminal Procedure Code.
5. If the accused were to be convicted, the amount of fine to be imposed under Section 138 of the Act or the compensation to be awarded under Section 357 of the Criminal Procedure Code would stand reduced by the amount paid or recovered as interim compensation.
Soon after the amendment was passed the Trial Court ordered that 20% of the cheque amount, i.e. Rs. 7,00,000, is to be made over by the Appellant to the Respondent as Interim Compensation in accordance with Section 143A.
Aggrieved, the Appellant approached the High Court which gave the order that the interim compensation amount be reduced from 20% to 15%.
Whether Section 143A of the Negotiable Instruments Act, 1881 has a retrospective effect and can be invoked in cases where the offences punishable under Section 138 of the Act were committed much prior to the introduction of 143A?
1. The amicus curiae for the case opined that on the bare reading of Section 143A of the Act and Section 421 of the Code it is clear that in case an accused against whom an order to pay interim compensation under Section 143A is passed, fails or is unable to pay the amount of interim compensation, the process under Section 421 can be taken to resort to which may inter alia result in coercive action of recovery of the amount of interim compensation.
2. The court referred to the judgments – Commissioner of Income Tax v. Vatika Township Private Limited [(2015) 1 SCC 1] and Hitendra Vishnu Thakur and Ors. v. State of Maharashtra and Ors. [(1994) 4 SCC 602] to determine the ambit and scope of an Amending Act and its retrospective operations. It was established that legislation is presumed to not have a retrospective operation especially when the result would create new disabilities or obligations, impose new duties in respect of transactions already accomplished or create new rights and liabilities.
3. The bench analyzed that there are 2 dimensions to the provisions of Section 143A
a. Creation of a liability on the accused to pay up to 20% of the cheque amount to the complainant before the complaint is adjudicated upon
b. It makes available a machinery for recovery
This it not only creates new disability or obligation but also brings about a procedural change by providing a machinery of the State for the recovery of such interim compensation.
4. The court held Section 143A to be prospective in operation and that provisions can only be invoked in cases where the offences under Section 138 of the Act was committed after the introduction of Section 143A
5. Consequently, the orders of the High Court and the Trial court were set aside and the interim compensation was to be returned to the Appellant within 2 weeks.
Edited by Sree Ramya
Approved & Published – Sakshi Raje