2019 (8) TMI 91 - SC - Indian Laws

Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - grant of interim compensation but percentage reduced - Whether Section 143A of the Act is retrospective in operation or prospective - HELD THAT - In case an accused, against whom an order to pay interim compensation under Section 143A of the Act is passed, fails or is unable to pay the amount of interim compensation, the process under Section 421 can be taken resort to which may inter alia result in coercive action of recovery of the amount of interim compensation as if the amount represented the arrears of land revenue. The extent and rigor of the procedure prescribed for such recovery may vary from State to State but invariably, such procedure may visit the person concerned with coercive methods - In the present case, the Complaint was lodged in the year 2016 that is to say, the act constituting an offence had occurred by 2016 whereas, the concerned provision viz. Section 143A of the Act was inserted in the statute book with effect from 01.09.2018. Whether Section 143A of the Act is retrospective in operation and can be invoked in cases where the offences punishable under Section 138 of the Act were committed much prior to the introduction of Section 143A? - HELD THAT - 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. The coercive methods could also, as is evident from provision like Section 183 of the Maharashtra Land Revenue Code, in some cases result in arrest and detention of the accused. The applicability of Section 143A of the Act must, therefore, be held to be prospective in nature and confined to cases where offences were committed after the introduction of Section 143A, in order to force an accused to pay such interim compensation - Section 143A to be prospective in operation and that the provisions of said Section 143A 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. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Applicability of Section 143A of the Negotiable Instruments Act, 1881.
2. Retrospective operation of Section 143A.
3. Recovery process under Section 421 of the Code of Criminal Procedure, 1973.

Detailed Analysis:

1. Applicability of Section 143A of the Negotiable Instruments Act, 1881:
The case involves a complaint under Section 138 of the Negotiable Instruments Act, 1881, where two cheques issued by the Appellant were dishonored due to insufficient funds. The Trial Court ordered the Appellant to pay 20% of the cheque amount as interim compensation under Section 143A of the Act, which was later reduced to 15% by the High Court. The Supreme Court examined whether Section 143A, introduced on 01.09.2018, applies to offenses committed before its introduction.

2. Retrospective Operation of Section 143A:
The Supreme Court considered the general principles of retrospectivity, citing precedents like Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited and Hitendra Vishnu Thakur and others vs. State of Maharashtra and Others. The Court noted that Section 143A creates a liability for the accused to pay interim compensation before adjudication of guilt and exposes them to coercive recovery methods. This imposition of new obligations and potential coercive recovery methods, such as those under Section 183 of the Maharashtra Land Revenue Code, indicates that Section 143A affects substantive rights and should not be applied retrospectively. The Court distinguished this case from others, such as Employees’ State Insurance Corporation vs. Dwarka Nath Bhargwa, where the provisions were procedural and could be applied retrospectively.

3. Recovery Process under Section 421 of the Code of Criminal Procedure, 1973:
The Supreme Court discussed Section 421 of the Code, which deals with the recovery of fines and can be invoked to recover interim compensation as if it were a fine. The Court highlighted the coercive nature of this recovery process, which could include attachment and sale of property or realization of the amount as arrears of land revenue. The Court emphasized that such recovery methods could impose significant burdens on the accused, reinforcing the need for prospective application of Section 143A.

Conclusion:
The Supreme Court concluded that Section 143A of the Negotiable Instruments Act, 1881, is prospective in nature and can only be applied to offenses committed after its introduction on 01.09.2018. Consequently, the orders of the Trial Court and the High Court were set aside, and the money deposited by the Appellant was ordered to be returned with interest. The decision in Surinder Singh Deswal and Ors. vs. Virender Gandhi, which dealt with Section 148 of the Act, was distinguished as it applied at the appellate stage post-conviction and did not create new disabilities akin to Section 143A. The Appeal was allowed, and the Court expressed gratitude to the Amicus Curiae for their assistance.