Section 143A of Negotiable Instruments Act on Interim Compensation is not retrospective, SC [Read Judgment]

The Supreme Court yesterday ruled that the Section 143A of the Negotiable Instruments Act, 1881, which provides for payment of interim compensation to the complainant during the pendency of a case, does not have retrospective application..The judgment was pronounced by a Bench of Justices UU Lalit and Vineet Saran in an appeal against a decision of the Madras High Court..As per the facts of the case, two cheques issued by the appellant for sums of Rs. 20 lakh and Rs. 15 lakh in favour of the respondent were dishonoured on account of insufficiency of funds. The complaint was lodged in November 2016..While the case was pending, amendments were made to the Negotiable Instruments Act. One of the changes was the introduction of Section 143A, which confers on trial courts the power to direct an accused to pay interim compensation to the complainant up to 20% of the amount involved..Soon after the amendment, the trial court ordered that 20% of the cheque amount be made over by the appellant to the respondent as interim compensation in accordance with Section 143A. The Madras High Court upheld this order, but reduced the percentage from 20% of the cheque amount to 15%. This decision of the Madras High Court was appealed before the Supreme Court..Whether Section 143A of the Act is retrospective in operation?.The primary question before the Bench of Justices Lalit and Saran was whether Section 143A of the Act is retrospective in operation and can be invoked in cases where offences punishable under Section 138 of the Act were committed much prior to the introduction of Section 143A. .After citing a number of judgments on the topic, the Court observed that Section 143A imposes a fresh liability on the appellant even before the pronouncement of his guilt or order of conviction..In this context, reference was made to the Apex Court’s decision in Surinder Singh Deswal and Ors. v. Virender Gandhi, where Section 148 of the Act, which was also introduced by the same 2018 amendment, was held to be retrospective in operation. The Bench distinguished Section 143A from Section 148 thus:.“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….…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.”.Thus, the Court held that Section 143A is prospective and cannot be applied to cases wherein the offence was committed before the provision was introduced in the statute book..“In our view, 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.”.The money deposited by the appellant to the respondent was therefore directed to be returned along with interest within two weeks..After the introduction of the new provision through the 2018 amendment, there was confusion on whether the same would apply prospectively or retrospectively..The Bombay High Court, in its judgment in Ajay Vinodchandra Shah v. The State of Maharashtra & Anr dated March 14, 2019, had held that the amendments to the Negotiable Instruments Act that came into effect from September 1, 2018, are applicable to those cases filed prior to the said date which are pending in the trial courts as well as the appellate courts..In these cases, if the plea is recorded or the charge is not framed, then the trial court can invoke its power under Section 143A and impose interim compensation which shall not exceed 20% of the amount of cheque. The appellate courts can pass similar orders, the Bombay High Court had held..The Allahabad High Court had also taken a similar view..However, the Punjab & Haryana High Court had taken a different view, holding that Section 143A will not apply retrospectively. However, it had also held that Section 148 of the Act, which empowers the appellate court to direct accused/appellant to deposit 20 per cent of the fine or compensation awarded by the trial court will apply to appeals pending on the date when the provision came into force..Most recently, the Madras High Court the Court held that Section 143A would be applicable to proceedings pending at the time of its introduction as well..It now seems that the Supreme Court has put the issue to rest..Read the judgment:.Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.