Section 143A NI Act (Interim Compensation) Has No Retrospective Effect, Section 148 Has: Punjab & Haryana HC [Read Judgment]

Justice Rajbir Sehrawat observed that the Section 143-A of the Act has created a new 'obligation' against the accused, which was not contemplated by the existing law and which created a substantive liability upon him. But, the Section 148 of the Act only reiterated; and to some extent modified in favour of the accused, the procedure of recovery already existing in the statute book.

The 2018 amendment introduced two provisions to the Negotiable Instruments Act. One is Section 143-A of the Act which gives power to the Trial Court to direct the accused to 'pay' an interim compensation which cannot be more than 20% of the 'cheque amount'. Another is Section 148 of the Act which empowers the Appellate Court to direct the accused/appellant to 'deposit' minimum of 20% of 'fine' or 'compensation' awarded by the Trial Court.

Under challenge in the batch of appeals, were the orders of the Courts (Trial and Appellate Courts) which invoked powers conferred under Section 143-A of the Act during the trial, and under Section 148 of the Act pending appeal.

On Section 143A, the court observed that it casts a substantive obligation upon the accused and thereby affect the substantive right of the accused. It observed:

Since the amended provision provides for enforcement of recovery of interim compensation by way of coercive procedure, it is nothing but an obligation imposed upon the accused. Section 3 of the Specific Relief Act has clarified the meaning of term 'obligation' by defining that any duty enforceable under law is an obligation. As per General Clauses Act, this definition has to be read in all Central Acts unless defined otherwise in the relevant Act. Such an 'obligation' having consequences qua the property rights of the accused cannot; but be treated; as substantive provision effecting his substantive right by casting a substantive obligation upon him, to make the payment of money; and if not paid, making him subject to legal deprivement/disability qua his properties. Therefore, it has to be held that Section 143-A of the Act cast a substantive obligation upon the accused and thereby effect the substantive right of the accused. Since the Amendment Act has not made the provision applicable retrospectively, specifically, to pending cases, hence, it cannot be applied retrospectively, to pending cases; which arose from the default of the accused which has taken place before coming into force of this provision.

The bench also explained another reason for holding Section 143A prospective. It said:

By virtue of sheer amount of 'interim compensation', which may work out in a particular case in crores of rupees, for a person who is not having means of more than few lakhs of rupees, the consequence under this Section can be totally devastating, irrecoverable and irreparable. Therefore, this provision can at the best be applicable prospectively where prospective accused would be aware of such consequences in advance, and it cannot be applied to the cases where the trial has already commenced qua a default which was suffered; when this provision was not in-existence.

On Section 148, the court said that the procedure of recovery of fine or compensation from a convict of pending appeal already existed in CR.P.C; before advent of the provision as contained in Section 148 of the Act. It gives more breathing space to the convict/appellant; as compared to the other procedures of recovery, as contemplated under Sections 421 and 424 of Cr.P.C, which is for more onerous in terms of time limit and the consequences, the bench said. It added:

"Since the provisions for recovery of fine or compensation from the appellant/convict already existed in the existing procedure relating to the recovery, therefore, the provision introduced vide Section 148 of the Act; which relates only to recovery of amount partly, as interim measure, has to be treated purely procedural only, which is otherwise also beneficial for the appellant as compared to the pre-existing provisions. Hence it has to be held that provision of Section 148 of the Act shall govern all the appeals pending on date of enforcement of this provision or filed thereafter."

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