SC: S.143A of Negotiable Instruments Act to be applied prospectively only

The Hon’ble Supreme Court, on 30thJuly 2019, in the matter of G.J. Raja v. Tejraj Surana observed that the provisions of Section 143A of the Negotiable Instruments Act, 1881 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.

The Hon’ble Supreme Court observed that:

In case an accused, against whom an order to pay interim compensation under Section 143A of the Negotiable Instruments Act, 1881 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. (Para 12)

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 in some cases result in arrest and detention of the accused. (Para 18)

Section 143A now imposes a liability that even before the pronouncement of his guilt or order of conviction, the accused may, with the aid of State machinery for recovery of the money as arrears of land revenue, be forced to pay interim compensation. The person would, therefore, be subjected to a new disability or obligation. (Para 20)

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. (Para 22)

The provisions of Section 143A of the Negotiable Instruments Act, 1881 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.  (Para 24)

Copy of judgement: Judgement_30-Jul-2019

-Tushar Kaushik

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