NI Act: Why Section 143A Is Prospective And Section 148 Is Retrospective ? [Read Judgment]

On Tuesday, the bench comprising Justice Uday Umesh Lalit and Justice Vineet Saran [in G.J.Raja vs. Tejraj Surana] categorically held that Section 143A is prospective in operation and that the provisions can be applied or invoked only in cases where the offence under Section 138 of the Act was committed after the introduction of said Section 143A in the statute book.

A bench of Justice MR Shah and Justice AS Bopanna, on 29^th May, 2019, [SurinderSingh Deswal @ Col. S.S. Deswal vs. Virender Gandhi] had held that Section 148 of the Negotiable Instruments Act as amended, shall be applicable in respect of the appeals against the order of conviction and sentence for the offence under Section 138 of the N.I. Act, even in a case where the criminal complaints for the offence under Section 138 of the N.I. Act were filed prior to 2018 amendment Act i.e., prior to 01.09.2018.

In GJ Raja, the Fast Track Court-II, Metropolitan Magistrate, Egmore, Chennai had directed the accused to pay the 20% of the cheques amount as interim compensation payable to the de-facto complainant. The issue of retrospectivity is not seen addressed in the High Court order that upheld the Magistrate's direction. However, the High Court partly upheld the order by modifying interim compensation to 15% of each cheque amounts to the complainant. The Supreme Court, allowing the appeal filed through Advocate G Anandaselvam, set aside this order. In Surinder Singh Deswal, the Apex Court upheld a First Appellate Court order that had directed the appellants-convicts to deposit 25% of the amount of fine/compensation ordered by the Trial Court. 

SC Upheld Punjab & Haryana HC View

In effect, the Supreme Court, by these two judgments, has upheld the view adopted by Justice Rajbir Sehrawat of the Punjab and Haryana High Court who had held that the Section 143A of the Negotiable Instruments Act has no retrospective effect whereas the Section 148 will apply to the pending appeals pending on date of enforcement of this provision. While holding thus, the judge had observed:

"At the stage of trial, the provision of 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, whereas the provision of Section 148 of the Act only reiterated; and to some extent modified in favour of the appellant, the procedure of recovery already existing in the statute book."

2018 Amendment of NI Act

Both these provisions were introduced last year by an amendment to the Negotiable Instruments Act. Section 143A 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'. The interim compensation has to be paid within a period of sixty days of the order. It can be recovered in the manner of recovery of fine as provided in Section 421 of the Code of Criminal Procedure. The provision further states that the interim compensation so received has to be returned by the complainant along with interest at bank rates as prescribed by the Reserve Bank of India, if the accused is acquitted after trial. Section 148 of the NI Act, empowers the Appellate Court to direct the accused/appellant to 'deposit' minimum of 20% of 'fine' or 'compensation' awarded by the Trial Court.

Why 143A is Prospective While 148 is Retrospective?

The question that might pop up in this context is, when these two provisions have been introduced by the same amendment, how one is retrospective and the other is not. The bench, addresses this question in GJ Raja. It said:

"We must, however, advert to a decision of this Court in Surinder Singh Deswal and Ors. vs. Virender Gandhi where Section 148 of the Act which was also introduced by the same Amendment Act 20 of 2018 from 01.09.2018 was held by this Court to be retrospective in operation. As against Section 143A of the Act which applies at the trial stage that is even before the pronouncement of guilt or order of conviction, Section 148 of the Act applies at the appellate stage where the accused is already found guilty of the offence under Section 138 of the Act. It may be stated that there is no provision in Section 148 of the Act which is similar to Sub-Section (5) of Section 143A of the Act. However, as a matter of fact, no such provision akin to sub-section (5) of Section 143A was required as Sections 421 and 357 of the Code, which apply post-conviction, are adequate to take care of such requirements. In that sense said Section 148 depends upon the existing machinery and principles already in existence and does not create any fresh disability of the nature similar to that created by Section 143A of the Act. Therefore, the decision of this Court in Surinder Singh Deswal stands on a different footing."

Section 143A imposes a liability even before conviction

The Court also observed that, prior to insertion of Section 143A in the Act, there was no provision on the statute book where-under even before the pronouncement of the guilt of an accused, or even before his conviction for the offence in question, he could be made to pay or deposit interim compensation.

"The imposition and consequential recovery of fine or compensation either through the modality of Section 421 of the Code or Section 357 of the 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."

Sec 143A Creates New Disability/Obligation And Exposes Accused To Coercive Methods Of Recovery

The bench also referred to the following principles enunciated in Hitendra Vishnu Thakur vs. State of Maharashtra

• A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.
• A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication.

Applying this to provisions of Section 143A, the bench said:

The provisions contained in Section 143A have two dimensions. First, the Section creates a liability in that an accused can be ordered to pay over upto 20% of the cheque amount to the complainant. Such an order can be passed while the complaint is not yet adjudicated upon and the guilt of the accused has not yet been determined. Secondly, it makes available the machinery for recovery, as if the interim compensation were arrears of land revenue. Thus, it not only creates a new disability or an obligation but also exposes the accused to coercive methods of recovery of such interim compensation through the machinery of the State as if the interim compensation represented arrears of land revenue.

Advocate G Anandaselvam argued for the petitioner.

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