G. .J. RAJA versus TEJRAJ SURANA on 30 July 2019

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[2019] 10 S.C.R. 910

SUPREME COURT REPORTS

[2019] 10 S.C.R.

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TEJRAJ SURANA

(Criminal Appeal No.1160 of 2019)

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JULY 30, 2019

[UDAY UMESH LALIT AND VINEET SARAN, JJ.]

Negotiable Instruments Act, 1881– s.143A inserted byAmendment Act, 2018 w.e.f 01.09.2018 – Operation of –Retrospective or prospective – On 04.11.2016 Respondent filedCcomplaint stating that two cheques of Rs.20,00,000/- andRs.15,00,000/- were issued by the appellant in his favour, howeverthe cheques were dishonoured –s.143A was inserted in the Act byAmendment Act, 2018, w.e.f 01.09.2018 – In terms of s.143A, theTrial Court ordered that 20% of the cheque amount be made overDby the Appellant to the Respondent as interim compensation anddirected the appellant to pay to the Respondent a sum of Rs.7,00,000/- – High Court upheld the order but reduced the percentage from20% of the cheque amount to 15% of the cheque amount – Held:Sub-Sec.(5) of s.143A stipulates that the interim compensation couldbe recovered as if it were a fine u/s. 421, CrPC – s.421 appears inEChapter XXXII of the Code dealing with ‘Execution, Suspension,Remission and Commutation of Sentences’ – By very context andthe language of the provisions contained in the Chapter, they applyin cases where the guilt of an accused is determined and he isconvicted of an offence punishable with sentence and/or fine –FPart-C of the Chapter deals with ‘Levy of Fine’ and s.421 appearingin the said Part inter alia states that fine could be recovered eitherby warrant of attachment or sale of movable property belonging tothe offender – In case an accused, against whom an order to payinterim compensation u/s.143A is passed, fails or is unable to paythe same, the process u/s.421 can be taken resort to which may interGalia result in coercive action of recovery of the amount of interimcompensation as if the amount represented the arrears of landrevenue – In the present case, the complaint was lodged in 2016 –Thus, the act constituting an offence had occurred by 2016 whereas,the concerned provision viz. s.143A was inserted w.e.f 01.09.2018H– Prior to the insertion of s.143A there was no provision on the statute book whereunder even before the pronouncement of the guiltof an accused, or even before his conviction for the offence inquestion, he could be made to pay or deposit interim compensation– Person would, therefore, be subjected to a new disability orobligation – Applicability of s.143A prospective in nature andconfined to cases where offence u/s.138 was committed after itsintroduction – Orders passed by the Trial Court and the High Courtset aside – Money deposited by the appellant pursuant to the interimdirection passed by Supreme Court be returned to the appellantalong with interest accrued – Code of Criminal Procedure, 1973 –ss.357 and 421 – Negotiable Instruments (Amendment) Act, 2018 –Interpretation of Statutes.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD: 1.1 A reading of Section 143A, NegotiableInstruments Act, 1881shows (i) interim compensation must notexceed 20% of the amount of the cheque; (ii) it must be paidwithin the time stipulated under Sub-Section (3); (iii) if the accusedis acquitted, the complainant shall be directed to pay to theaccused the amount of interim compensation with interest at thebank rate; (iv) the interim compensation payable under saidSection can be recovered as if it were a fine under Section 421 ofthe Code of Criminal Procedure, 1973; and (v) if the accusedwere to be convicted, the amount of fine to be imposed underSection 138 of the Act or the amount of compensation to beawarded under Section 357 of the Code would stand reduced bythe amount paid or recovered as interim compensation. Sub-Section (5) of Section 143A stipulates that the interimcompensation could be recovered as if it were a fine under Section421 of the Code. Section 421 appears in Chapter XXXII of theCode which Chapter deals with ‘Execution, Suspension, Remissionand Commutation of Sentences’. By very context and the languageof the provisions contained in the Chapter, they apply in caseswhere the guilt of an accused is determined and he is convictedof an offence punishable with sentence and/or fine.According toSection 421 of the Code, fine could be recovered either by warrantof attachment or sale of movable property belonging to theoffender or by issuance of warrant to the Collector authorisinghim to realise the amount as arrears of land revenue from the A

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Amovable or immovable property or both of the defaulter.[Paras 9-11] [916-E-H; 917-A-B; 918-A-B]

1.2 In case an accused, against whom an order to pay interimcompensation under Section 143A of the Act is passed, fails or isunable to pay the amount of interim compensation, the processBunder Section 421 can be taken resort to which may inter aliaresult in coercive action of recovery of the amount of interimcompensation as if the amount represented the arrears of landrevenue. The extent and rigor of the procedure prescribed forsuch recovery may vary from State to State but invariably, suchprocedure may visit the person concerned with coercive methods.CIn the present case, the Complaint was lodged in the year 2016that is to say, the act constituting an offence had occurred by2016 whereas, the concerned provision viz. Section 143A of theAct was inserted in the statute book with effect from 01.09.2018.The provisions contained in Section 143A have two dimensions.

DFirst, the Section creates a liability in that an accused can beordered to pay over upto 20% of the cheque amount to thecomplainant. Such an order can be passed while the complaint isnot yet adjudicated upon and the guilt of the accused has not yetbeen determined. Secondly, it makes available the machinery for recovery, as if the interim compensation were arrears of landErevenue. Thus, it not only creates a new disability or an obligationbut also exposes the accused to coercive methods of recovery ofsuch interim compensation through the machinery of the State asif the interim compensation represented arrears of land revenue.The coercive methods could also, as is evident from provisionFlike Section 183 of the Maharashtra Land Revenue Code, in somecases result in arrest and detention of the accused. [Paras 12, 14& 18] [918-B-C, E-G; 920-F-G]

1.3 Prior to the insertion of Section 143A in the Act therewas no provision on the statute book whereunder even beforeGthe pronouncement of the guilt of an accused, or even before hisconviction for the offence in question, he could be made to pay ordeposit interim compensation. The imposition and consequentialrecovery of fine or compensation either through the modality ofSection 421 of the Code or Section 357 of the code could also H

arise only after the person was found guilty of an offence. Thatwas the status of law which was sought to be changed by theintroduction of Section 143A in the Act. It now imposes a liabilitythat even before the pronouncement of his guilt or order ofconviction, the accused may, with the aid of State machinery forrecovery of the money as arrears of land revenue, be forced topay interim compensation. The person would, therefore, besubjected to a new disability or obligation. The situation is thuscompletely different from the one which arose for considerationin Employees’ State Insurance Corporation case. The applicabilityof Section 143A of the Act must, therefore, be held to beprospective in nature and confined to cases where offences werecommitted after the introduction of Section 143A, in order toforce an accused to pay such interim compensation. Section 143Ato be prospective in operation and that the provisions of saidSection 143A can be applied or invoked only in cases where theoffence under Section 138 of the Act was committed after theintroduction of said Section 143A in the statute book.Consequently, the orders passed by the Trial Court as well asthe High Court are set aside. The money deposited by theAppellant, pursuant to the interim direction passed by SupremeCourt, shall be returned to the Appellant along with interestaccrued thereon within two weeks from the date of this order.[Paras 20, 22 & 24] [921-D-G; 922-C, G; 923-A-B]

Commissioner of Income Tax (Central)-I, New Delhi v.Vatika Township Private Limited(2015) 1 SCC 1 : [2014]12 SCR 1037;Hitendra Vishnu Thakur and others v.State of Maharashtra and Others (1994) 4 SCC 602 :[1994] 1 Suppl. SCR 360; Anil Kumar Goel v. KishanChand Kaura (2007) 13 SCC 492 : [2007] 13 SCR313; Surinder Singh Deswal and Ors. v. VirenderGandhi (2019) 8 SCALE 445 – relied on.

Employees’ State Insurance Corporation v. Dwarka NathBhargwa (1997) 7 SCC 131: [1997] 3 Suppl. SCR 513– distinguished.

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A Case Law Reference

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CRIMINAL APPELLATE JURISDICTION: Criminal AppealNo.1160 of 2019

From the Judgment and Order dated 08.02.2019 of the High Courtof Judicature at Madras in Criminal Original Petition No. 3406 of 2019

DVinay Navare, Sr. Adv. (AC), G. Ananda Selvam, Mayilsamy K.,PVK Deivendran, Manikandan A, Ms Kavita Bhardwaj, Nihangam R.Maurya, Ms. Lakshmi Ramamurthy, Dr. Ravindre S. Chingale, MahalingPandarge, Abhijit Sengupta, Advs. for the appearing parties..

The Judgment of the Court was delivered by EUDAY UMESH LALIT, J.

1. Leave granted.

2. This Appeal challenges the Final Order dated 08.02.2019 passedby the High Court of Judicature at Madras in Criminal O.P.No.3406 of2019 preferred by the Appellant herein.F

3. Complaint under Section 138 of the Negotiable InstrumentsAct, 1881 (hereinafter referred to as ‘the Act’) being C.C.No.7171 of2018 is presently pending against the Appellant before the IInd FastTrack Court-Metropolitan Magistrate, Egmore, Chennai. According tothe complaint, two cheques issued by the Appellant in the sums ofGRs.20,00,000/- and Rs.15,00,000/- in favour of the Respondent-Complainant were dishonoured on account of insufficiency of funds.The Complaint was lodged on 04.11.2016.

4. With effect from 01.09.2018, Section 143A was inserted in theAct by Amendment Act 20 of 2018. Said Section is to the followingeffect:-

“143A. Power to direct interim compensation. – (1)Notwithstanding anything contained in the Code of CriminalProcedure, 1973 (2 of 1974), the Court trying an offence undersection 138 may order the drawer of the cheque to pay interimcompensation to the complainant –

(a) in a summary trial or a summons case, where he pleads notguilty to the accusation made in the complaint; and (b) in any other case, upon framing of charge.

(2) The interim compensation under sub-section (1) shall notexceed twenty per cent of the amount of the cheque.

(3) The interim compensation shall be paid within sixty days fromthe date of the order under sub-section (1), or within such furtherperiod not exceeding thirty days as may be directed by the Courton sufficient cause being shown by the drawer of the cheque.

(4) If the drawer of the cheque is acquitted, the Court shall directthe complainant to repay to the drawer the amount of interimcompensation, with interest at the bank rate as published by theReserve Bank of India, prevalent at the beginning of the relevantfinancial years, within sixty days from the date of the order, orwithin such further period not exceeding thirty days as may bedirected by the Court on sufficient cause being shown by thecomplainant.

(5) The interim compensation payable under this section may berecovered as if it were a fine under section 421 of the Code ofCriminal Procedure, 1973 (2 of 1974).

(6) The amount of fine imposed under section 138 or the amountof compensation awarded under section 357 of the Code ofCriminal Procedure, 1973 (2 of 1974), shall be reduced by theamount paid or recovered as interim compensation under thissection.”

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5. Soon thereafter, the Trial Court ordered that 20% of the chequeamount be made over by the Appellant to the Respondent as interimcompensation in accordance with the provisions of Section 143A of theAct. Thus, the Appellant was directed to pay to the Respondent a sumof Rs.7,00,000/-.

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6. The Appellant being aggrieved, filed Criminal O.P.No.3406 of2019 in the High Court. By its order dated 08.02.2019, the High Courtfound no illegality or infirmity in the order awarding interim compensationunder Section 143A of the Act but reduced the percentage from 20% ofthe cheque amount to 15% of the cheque amount.

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C7. The order of the High Court is presently under challenge. Whileissuing notice the Appellant was directed to deposit the sum so orderedby the High Court in the Trial Court. It was further directed that upondeposit, the Trial Court should invest the money in Fixed Deposit andthat the money would not be made over to the Respondent till furtherorders. Since the Respondent, despite having been served with theDnotice, had not entered appearance, this Court by its Order dated01.07.2019 requested Mr. Vinay Navare, learned Senior Advocate toassist this Court as Amicus Curiae.

8. We heard Mr. G. Ananda Selvam, learned Advocate for theAppellant and the learned Amicus Curiae.

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9. A reading of Section 143A shows (i) interim compensation mustnot exceed 20% of the amount of the cheque; (ii) it must be paid withinthe time stipulated under Sub-Section (3); (iii) if the accused is acquitted,the complainant shall be directed to pay to the accused the amount ofinterim compensation with interest at the bank rate; (iv)the interimFcompensation payable under said Section can be recovered as if it werea fine under Section 421 of the Code of Criminal Procedure, 1973 (‘theCode’, for short); and (v) if the accused were to be convicted, the amountof fine to be imposed under Section 138 of the Act or the amount ofcompensation to be awarded under Section 357 of the Code would standGreduced by the amount paid or recovered as interim compensation.

10. Since Sub-Section (5) of Section 143A stipulates that the interimcompensation could be recovered as if it were a fine under Section 421of the Code, said Section 421 also needs to be considered at this stage.

Section 421 appears in Chapter XXXII of the Code which Chapter dealswith ‘Execution, Suspension, Remission and Commutation ofSentences’. By very context and the language of the provisionscontained in the Chapter, they apply in cases where the guilt of an accusedis determined and he is convicted of an offence punishable with sentenceand/or fine. Part-C of the Chapter deals with ‘Levy of Fine’ and Section421 appearing in said Part-C is to the following effect:- “421. Warrant for levy of fine.- (1) When an offender hasbeen sentenced to pay a fine, the Court passing the sentence maytake action for the recovery of the fine in either or both of thefollowing ways, that is to say, it may –

(a) issue a warrant for the levy of the amount by attachmentand sale of any movable property belonging to the offender; (b) issue a warrant to the Collector of the district, authorisinghim to realise the amount as arrears of land revenue fromthe movable or immovable property, or both, of the defaulter.

Provided that, if the sentence directs that in default of payment ofthe fine, the offender shall be imprisoned, and if such offenderhas undergone the whole of such imprisonment in default, no Courtshall issue such warrant unless, for special reasons to be recordedin writing, it considers it necessary so to do, or unless it has madean order for the payment of expenses or compensation out of thefine under section 357.

(2) The State Government may make rules regulating the mannerin which warrants under clause (a) of sub-section (1) are to beexecuted, and for the summary determination of any claims madeby any person other than the offender in respect of any propertyattached in execution of such warrant.

(3) Where the Court issues a warrant to the Collector under clause(b) of sub-section (1), the Collector shall realise the amount inaccordance with the law relating to recovery of arrears of landrevenue, as if such warrant were a certificate issued under suchlaw:

Provided that no such warrant shall be executed by the arrest ordetention in prison of the offender.”

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11. According to Section 421 of the Code, fine could be recoveredeither by warrant of attachment or sale of movable property belongingto the offender or by issuance of warrant to the Collector authorisinghim to realise the amount as arrears of land revenue from the movableor immovable property or both of the defaulter.

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B12. It is thus clear that in case an accused, against whom an orderto pay interim compensation under Section 143A of the Act is passed,fails or is unable to pay the amount of interim compensation, the processunder Section 421 can be taken resort to which may inter alia result incoercive action of recovery of the amount of interim compensation as ifthe amount represented the arrears of land revenue. The extent andCrigor of the procedure prescribed for such recovery may vary from Stateto State but invariably, such procedure may visit the person concernedwith coercive methods.

13. For instance, by virtue of Section 183 of the MaharashtraLand Revenue Code, 1966, in case there be a default in payment of landDrevenue, the person concerned could be arrested and detained in custodyfor 10 days in the office of the Collector or of a Tehsildar unless thearrears of revenue which were due, were paid along with the penalty orinterest and the cost of arrest and of the notice of demand as also thecost of his subsistence during detention.

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14. In the present case, the Complaint was lodged in the year2016 that is to say, the act constituting an offence had occurred by 2016whereas, the concerned provision viz. Section 143A of the Act wasinserted in the statute book with effect from 01.09.2018. The questionthat arises therefore is whether Section 143A of the Act is retrospectiveFin operation and can be invoked in cases where the offences punishableunder Section 138 of the Act were committed much prior to theintroduction of Section 143A. We are concerned in the present caseonly with the issue regarding applicability of said Section 143A to offencesunder Section 138 of the Act, committed before the insertion of saidSection 143A.G

15. While considering general principles concerning‘retrospectivity of legislation’ in the context of Section 158-BE insertedin the Income Tax Act, 1961,it was observed by this Court in

Commissioner of Income Tax (Central)-I, New Delhi vs. VatikaTownship Private Limited[1] as under:- “28. Of the various rules guiding how a legislation has to beinterpreted, one established rule is that unless a contrary intentionappears, a legislation is presumed not to be intended to have aretrospective operation. The idea behind the rule is that a currentlaw should govern current activities. Law passed today cannotapply to the events of the past. If we do something today, we doit keeping in view the law of today and in force and not tomorrow’sbackward adjustment of it. Our belief in the nature of the law isfounded on the bedrock that every human being is entitled toarrange his affairs by relying on the existing law and should notfind that his plans have been retrospectively upset. This principleof law is known as lex prospicit non respicit: law looks forwardnot backward. As was observed in Phillips v. Eyre[2], a retrospectivelegislation is contrary to the general principle that legislation bywhich the conduct of mankind is to be regulated when introducedfor the first time to deal with future acts ought not to change thecharacter of past transactions carried on upon the faith of thethen existing law.”

16. Similarly, while considering the effect of modified applicationof the provisions of the Code, as a result of Section 20(4)(bb) of theTerrorist and Disruptive Activities (Prevention) Act, 1987, whereunderthe period for filing challan or charge-sheet could get extended, thisCourt considered the issue about the retrospective operation of theconcerned provisions in Hitendra Vishnu Thakur and others vs. Stateof Maharashtra and others[3] as under:- “26. The Designated Court has held that the amendment wouldoperate retrospectively and would apply to the pending cases inwhich investigation was not complete on the date on which theAmendment Act came into force and the challan had not till thenbeen filed in the court. From the law settled by this Court in variouscases the illustrative though not exhaustive principles which emergewith regard to the ambit and scope of an Amending Act and itsretrospective operation may be culled out as follows:

1(2015) 1 SCC 1

2(1870) LR 6 QB 1

3(1994) 4 SCC 602

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1(2015) 1 SCC 1

2(1870) LR 6 QB 1

3(1994) 4 SCC 602

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A(i) A statute which affects substantive rights is presumed to beprospective in operation unless made retrospective, either expresslyor by necessary intendment, whereas a statute which merelyaffects procedure, unless such a construction is textually impossible,is presumed to be retrospective in its application, should not begiven an extended meaning and should be strictly confined to itsBclearly defined limits.

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(ii) Law relating to forum and limitation is procedural in nature,whereas law relating to right of action and right of appeal even thoughremedial is substantive in nature.

C(iii) Every litigant has a vested right in substantive law but nosuch right exists in procedural law.

(iv) A procedural statute should not generally speaking be appliedretrospectively where the result would be to create new disabilities orobligations or to impose new duties in respect of transactions alreadyDaccomplished.

(v) A statute which not only changes the procedure but also createsnew rights and liabilities shall be construed to be prospective in operation,unless otherwise provided, either expressly or by necessary implication.”

17. The fourth and the fifth principle as culled out by this Court inEHitendra Vishnu Thakur[3 ]are apposite to the present fact situation.

18. The provisions contained in Section 143A have two dimensions.First, the Section creates a liability in that an accused can be ordered topay over upto 20% of the cheque amount to the complainant. Such anorder can be passed while the complaint is not yet adjudicated upon andFthe guilt of the accused has not yet been determined. Secondly, it makesavailable the machinery for recovery, as if the interim compensationwere arrears of land revenue. Thus, itnot only creates a new disabilityor an obligation but also exposes the accused to coercive methods ofrecovery of such interim compensation through the machinery of theState as if the interim compensation represented arrears of land revenue.GThe coercive methods could also, as is evident from provision like Section183 of the Maharashtra Land Revenue Code, in some cases result inarrest and detention of the accused.

19. We must at this stage, refer to a decision of this Court inEmployees’ State Insurance Corporation vs. Dwarka Nath Bhargwa[4]where provisions of Section 45B, which was inserted in Employees StateInsurance Act, 1948 with effect from 28.01.1968 was held to beprocedural and that it could have retrospective application. Said Section45B is as under:- “45B. Recovery of contributions.- Any contribution payableunder this Act may be recovered as an arrear of land revenue.”

The issue was whether the modality of recovery so prescribed insaid Section 45B could be invoked in respect of amounts whichhad become payable on 27.01.1967 and 24.01.1968, i.e. beforesaid Section 45B was inserted in the statute book. While holdingthat the arrears could be recovered as arrears of land revenue, itwas observed, “It is not in dispute and cannot be disputed that thecontributions in question had remained payable all throughout andwere not paid by the respondent.”

20. It must be stated that prior to the insertion of Section 143A inthe Act there was no provision on the statute book whereunder evenbefore the pronouncement of the guilt of an accused, or even before hisconviction for the offence in question, he could be made to pay or depositinterim compensation. The imposition and consequential recovery offine or compensation either through the modality of Section 421 of theCode or Section 357 of the codecould also arise only after the personwas found guilty of an offence. That was the status of law which wassought to be changed by the introduction of Section 143A in the Act. Itnow imposes a liability that even before the pronouncement of his guiltor order of conviction, the accused may, with the aid of State machineryfor recovery of the money as arrears of land revenue, be forced to payinterim compensation. The person would, therefore, be subjected to anew disability or obligation. The situation is thus completely differentfrom the one which arose for consideration in Employees’ State InsuranceCorporation[4] case.

21. Though arising in somewhat different context, proviso to Section142(b) which was inserted in the Act by Amendment Act 55 of 2002,under which cognizance could now be taken even in respect of a 4(1997) 7 SCC 131

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Acomplaint filed beyond the period prescribed under Section 142(b) of theAct, was held to be prospective by this Court in Anil Kumar Goel v.Kishan Chand Kaura[5]. It was observed:- “10. There is nothing in the amendment made to Section 142(b)by Act 55 of 2002 that the same was intended to operateBretrospectively. In fact that was not even the stand of therespondent. Obviously, when the complaint was filed on 28-11-1998, the respondent could not have foreseen that in future anyamendment providing for extending the period of limitation onsufficient cause being shown would be enacted.”

C22. In our view, the applicability of Section 143A of the Act must,therefore, be held to be prospective in nature and confined to caseswhere offences were committed after the introduction of Section 143A,in order to force an accused to pay such interim compensation.

23. We must, however, advert to a decision of this Court inDSurinder Singh Deswal and Ors. vs. Virender Gandhi[6] where Section148 of the Act which was also introduced by the same Amendment Act20 of 2018 from 01.09.2018 was held by this Court to be retrospectivein operation. As against Section 143A of the Act which applies at thetrial stage that is even before the pronouncement of guilt or order ofconviction, Section 148 of the Act applies at the appellate stage whereEthe accused is already found guilty of the offence under Section 138 ofthe Act. It may be stated that there is no provision in Section 148 of theAct 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,Fwhich apply post-conviction, areadequate to take care of suchrequirements. In that sense said Section 148 depends upon the existingmachinery and principles already in existence and does not create anyfresh disability of the nature similar to that created by Section 143A ofthe Act. Therefore, the decision of this Court in Surinder Singh Deswal[5]stands on a different footing.G

24. In the ultimate analysis, we hold Section 143A to be prospectivein operation and that the provisions of said Section 143A can be appliedor invoked only in cases where the offence under Section 138 of the Act 5(2007) 13 SCC 492

6(2019) 8 SCALE 445

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was committed after the introduction of said Section 143A in the statutebook. Consequently, the orders passed by the Trial Court as well as theHigh Court are required to be set aside. The money deposited by theAppellant, pursuant to the interim direction passed by this Court, shall bereturned to the Appellant along with interest accrued thereon within twoweeks from the date of this order.

25. The Appeal is allowed in aforesaid terms.

26. In the end, we express our sincere gratitude for the assistancerendered by Mr. Vinay Navare, learned Amicus Curiae.

Divya Pandey

Appeal allowed.

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