Prospective and Retrospective effect of Section 143A and Section 148 of the Negotiable Instrument Act, 1881

Prospective and Retrospective effect of Section 143A and Section 148 of the Negotiable Instrument Act, 1881

Index

  1. Aim of this Act
  2. Interim Compensation- Section 143A
  3. Compensation under Section 143A 
  4. On Acquittal under Section 143A
  5. Section 143A is Prospective
  6. An appeal under Section 148
  7. Section 148 Retrospective
  8. Why are Section 143A prospective and Section 148 retrospective?

This article is about two critical amendments: 

Section 143A of the Negotiable Instrument Act provides interim compensation during the pendency of the criminal complaint, and Section 148 talks about the criminal appeal. The amendment of the Negotiable Instrument Act came into force on 1st September 2018.

Aim of this Act:

  1. Reducing the undue delay in the cheque dishonor (Cheque Bounce) cases and,
  2. Provision for payment of interim compensation to the complainants.

Interim Compensation- Section 143A:

It provides the provisions related to the order to pay Interim Compensation to the complainant on two occasions:

  • In a summary trial or a summons case, where the drawer pleads not guilty to the allegations made in the complaint, and
  • upon framing of the charges.

Compensation under Section 143A - According to Section 143A (2), the compensation under sub-section (1) shall not be more than 20% of the amount of the Cheque. Clause 3 of Section 143A provides that shall pay the interim compensation within sixty days, and further, that period shall not exceed thirty days as may be prescribed by the Court.

On Acquittal under Section 143A- According to Section 143A (4), in the case of acquittal, the Court may direct to repay to the drawer the amount of interim compensation within sixty days from the date of the order by the Court along with interest at the rate as prescribed by the RBI bank. This period may be further extended by an additional 30 days if sufficient reason is shown.

Section 143A is Prospective

In the case: of GJ Raja VS Tejraj Surana (2019), the question arises that Section 143A is retrospective in operation and can be invoked in a case where the offence is punishable under Section 138 of the NI Act was committed much before the introduction of Section 143A. And this Section has two dimensions:

  • This Section can be directed a liability in as much as a Drawer of the Cheque to pay up to 20% of the Cheque amount to the complainant without being found guilty in the eyes of the law.
  • This Section makes the machinery for recovery as if the interim compensation were arrears of land revenue. 

Thus, it creates a new disability or an obligation and exposes the accused to coercive methods of recovery of interim compensation through the machinery of the State as if the interim compensation represented arrears of land revenue. Section 143A of the Negotiable Instrument Act must be prospective and confined to cases where offences were committed after introducing Section 143A to force an accused to pay such interim compensation.

An appeal under Section 148:

Section 148 provides the power of the Appellate Court. After conviction under Section 138 of the Negotiable Instrument Act, may file an appeal against the sentence.

Power of Appellate Court: Order to the appellant-

  • deposit a minimum of 20% of the fine or
  • deposit a compensation amount which the trial Court awarded.

Further, the same is in addition to the interim compensation under Section 143A of this Act. According to Section 138(3), in the case of acquittal, the Court shall direct the complainant to repay the amount within sixty days from the date of the order by the Court, along with interest at the rate as prescribed by the Reserve Bank of India. This period may be further extended by an additional 30 days if sufficient reason is shown. The procedure laid down under Section 143 A and Section 148, the process relating to interim compensation or repayment is similar.

Section 148 Retrospective:

The Supreme Court has clarified that Section 148 of the Amendment Act shall have a retrospective effect (applicable to the Complaints filed before 1st September 2018) regarding an appeal against the order of conviction under Section 138.

Case: Surinder Singh Deshwal @ Col. S.S. Deshwal & Ors. VS Virender Gandhi (2020)

In this case, appeals were filed against a common judgment of the Punjab and Haryana High Court (in 2019) by dismissing 28 petitions filed by the appellants under Section 482 of the Criminal Procedure Code; the Apex Court observed that the object and purpose of the enactment of Section 138 were for frustrated because of the delay of drawers of dishonored Cheques by filing appeals and obtaining a stay on proceedings, which led to amend Section 148 of this Act. And also observed that the amendment in Section 148 does not take away and affect any appeal right of the appellants. The Court held that if this purposive interpretation is not adopted, then the objective and purpose of Section 148 would be frustrated. Section 148 will apply to the cases where the criminal complaints under Section 138 were filed before the amendment.

The Hon’ble Supreme Court of India has clarified that Section 148 of the amendment Act shall have a retrospective effect and apply to the complaint filed before 1st September 2018 regarding an appeal against the order of conviction and sentence for an offence under Section 138 of the NI Act.

Why are Section 143A prospective and Section 148 retrospective?

While deciding the case of GJ Raja VS Tejraj Surana (2019), the Hon'ble Supreme Court has clarified why Section 143A as prospective and Section 148 is retrospective, even though both of the provisions were introduced by the Amendment Act 20 of 2018.

The Court noticed that:

  • Section 143A is applied at the trial stage, even before the pronouncement of guilt or order of conviction. 
  • Section 148 applies in the stage of appeal, where the accused is already found guilty under Section 138. 

The Court also pointed out no provision in Section 148 of the Negotiable Instrument Act is similar to Sub-Section 5 of Section 143A. No such provision was required as Sections 421 and 357 of the Criminal Procedure Code apply after conviction, adequate to such requirements. It does not create any new disability of nature similar to that produced by Section 143A of the Negotiable Instrument Act.

Conclusion:

After the amendment in the NI Act, the amendment made a great effort to strengthen efficacy and practicality, which will help in the speedy disposal of cases and discourage frivolous and unnecessary litigation, and also provides relief for the Payee of the Cheque, who has to spend a significant amount of time and energy in the Court for recovery of the money due to him in a Cheque bounce case. Further, it upholds the complainant's interests by providing interim compensation and ordering payment by the accused in case of an appeal against conviction. The Amendment Act was indeed a positive step in enhancing the credibility of cheques and would give impetus to trade and commerce.

To read this article in Hindi- Section 143A and Section 148 of the Negotiable Instrument Act, 1881

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