2025 (1) TMI 1430 - HC - Indian Laws

Dishonour of Cheque - whether the amended provision contained under Section 143A of the Negotiable Instruments Act 1881 would apply on the complaint filed prior to enactment and enforcement of this provision? - HELD THAT - Bare perusal of Section 143A of the Act of 1881 indicates that the Court trying an offence under Section 138 of the Act of 1881 may direct the drawer of the cheque to pay interim compensation to the complainant i.e. amount not exceeding 20% of the cheque amount. The sub-section (4) of Section 143A of the Act of 1881 provides that in case the drawer of the cheque is acquitted the Court shall direct the complainant to repay the same amount to the drawer - This Court cannot lose sight of the fact that prior to insertion of the new provision i.e. Section 143A in the Act of 1881 there was no provision in the Act for issuing directions to the drawer of cheque to pay interim compensation of 20% of the cheque amount to the complainant prior to the commission of the offence under Section 138 of the Act of 1881. Hon ble Apex Court in the case of Surinder Singh Deswal 2019 (5) TMI 1626 - SUPREME COURT has held that the new provisions contained under Section 148 of the Act of 1881 as amended on 01.09.2018 shall be applicable to the appeals against the order of conviction and sentence for the offence under Section 138 of the Act of 1881 even in the cases where the criminal complaints for the offence under Section 138 of the Act of 1881 were filed prior to the amending Act No. 20/2018 i.e. prior to 01.09.2018. It is not worthy to mention here that the Hon ble Apex Court dealt with the applicability of Section 148 of the Act of 1881 even on the complaints filed prior to 01.09.2018 but the issue of applicability of Section 143A of the Act of 1881 was not under challenge in the case of Surinder Singh Deswal @ Col. S.S. Deswal 2019 (5) TMI 1626 - SUPREME COURT before the Hon ble Apex Court. The issue of applicability of the new provision of Section 143A of the Act of 1881 on the complaints filed prior to 01.09.2018 came up before the Hon ble Apex Court in the case of G.J. Raja vs. Tejraj Surana 2019 (8) TMI 91 - SUPREME COURT and it was held by the Hon ble Apex Court that prior to insertion of Section 143A of the Act of 1881 there was no provision under the Act of 1881 to direct the accused to pay interim compensation to the complainant prior to his conviction for the offence under Section 138 of the Act of 1881. It was held that provisions of Section 143A of the Act of 1881 would apply with its prospective effect and the provisions of Section 148 of the Act of 1881 would not apply with its prospective effect after conviction of the accused for the offence under Section 138 of the Act of 1881. Conclusion - Section 143A of the Act of 1881 has its prospective effect and the same is applicable upon the complaints filed under Section 138 of the Act of 1881 after introduction/insertion of Section 143A of the Act of 1881 i.e. after 01.09.2018. This provision cannot have its retrospective effect upon the complaints filed prior to 01.09.2018. Petition allowed.

Summary

The core legal issue considered in this judgment is whether the amended provision under Section 143A of the Negotiable Instruments Act, 1881, which allows for the payment of interim compensation to the complainant, applies to complaints filed before the enactment and enforcement of this provision on 01.09.2018.

The legal framework revolves around Section 143A of the Negotiable Instruments Act, 1881, which was introduced to allow courts to direct the drawer of a dishonored cheque to pay interim compensation to the complainant. The provision was enacted to prevent delay tactics by accused persons and ensure timely compensation to the aggrieved party. The Court examined whether this provision should be applied retrospectively to complaints filed before its enactment.

The Court's interpretation was guided by established principles of statutory interpretation, particularly concerning the retrospective application of legislation. The Court referred to the principle that a statute affecting substantive rights is presumed to be prospective unless expressly or by necessary implication made retrospective. This principle was supported by precedents such as the Supreme Court's rulings in Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited and Hitendra Vishnu Thakur vs. State of Maharashtra, which emphasize that substantive rights should not be altered retrospectively unless clearly intended by the legislature.

The Court found that Section 143A imposes a new obligation on the accused to pay interim compensation before conviction, which constitutes a substantive change in the law. Therefore, applying it retrospectively would impose new liabilities on actions completed under the previous legal framework. The Court distinguished this from procedural changes, which are generally presumed to be retrospective.

In contrast, the Court considered the Supreme Court's decision in Surinder Singh Deswal vs. Virender Gandhi, which dealt with Section 148 of the Negotiable Instruments Act, allowing appellate courts to order payment during appeals. The Supreme Court held that Section 148 could be applied retrospectively because it operates at the appellate stage, where the accused has already been found guilty, and does not create new substantive obligations.

In the case of G.J. Raja vs. Tejraj Surana, the Supreme Court specifically addressed the applicability of Section 143A and concluded that it should be applied prospectively. The Court emphasized that Section 143A introduces a new disability or obligation on the accused, which was not present before its enactment, and thus should not be applied to cases where the offence occurred before the provision's introduction.

The Court concluded that Section 143A of the Negotiable Instruments Act, 1881, applies prospectively and cannot be applied to complaints filed before its enactment on 01.09.2018. Consequently, the orders passed by the Trial Court directing the petitioner to pay interim compensation under Section 143A were quashed, and any amounts deposited by the petitioner pursuant to those orders were ordered to be refunded with interest.

Significant holdings include the reaffirmation of the principle that substantive legal changes should not be applied retrospectively unless expressly stated. The Court's decision aligns with the Supreme Court's interpretation in G.J. Raja vs. Tejraj Surana, emphasizing the prospective application of Section 143A. The ruling underscores the importance of legislative clarity when enacting provisions that affect substantive rights and obligations.