Do The NI Act Amendments Apply Retrospectively?

Two new sections under the Negotiable Instruments Act, 1881 (Act) have come into force with effect from 01.09.2018 by way of Amendment Act No. 20:

S.143-A gives the Magistrate trying an offence under the Act the discretion to award interim compensation to the complainant against the drawer up to a maximum of 20% of the cheque amount after notice/charge has been framed upon an accused and he pleads not guilty.

S.148 provides that in an appeal by the drawer/accused against a conviction under Section 138, the appellate court may direct the appellant to deposit a minimum of 20% of the compensation awarded by the trial court.

As per Section 5 of the General Clauses Act, 1897 no new act shall apply retrospectively unless the same is specifically expressed. Therefore, the amendments should not affect those cases where complaints have been instituted prior to 01.09.2018. Complainants have however tried to take advantage of the new amended sections and moved applications in complaints filed prior to 01.09.2018 seeking interim compensation. While appellate courts during the course appeals arising from complaints instituted prior to 01.09.2018 have been ordering a deposit of a minimum of 20% of the compensation awarded by the trial courts.

How have courts across India responded to the new amendments and do they apply to those cases where complaints instituted prior to 01.09.2018?

The Supreme Court in Surinder Singh Deswal v. Virender Gandhi

^[1] while dealing with S. 148 of the Act held that complaints filed prior to the amendment in which appeals have been preferred after the amendment there would be no legal impediment in an appellate court directing the accused to deposit a minimum of 20% of the fine/compensation imposed by the trial court. The Supreme Court further held that Section 148 would even apply to appeals filed prior to the amendment. This judgment is silent however on the retrospective application of the S. 143.

In Ajay Vinodchandra Shah v. State of Maharashtra

^[2], the Bombay High Court was dealing with a case where a challenge was laid to the order of an Additional Sessions Judge (ASJ) dated 03.08.2019 whereby the ASJ directed the appellants to deposit 25% of the compensation amount as a condition precedent to maintain bail during the appeal and entertain the appeal. The petitioner had also unsuccessfully challenged the constitutional validity of the new sections. The High Court held that the ASJ's direction to deposit a percentage of the amount of compensation to be legal. However, it further held that the same could not be a condition precedent to entertain the appeal or for the appellants to remain on bail during the pendency of the appeal. The High Court held in paragraph 27 that:

"in the present case, the impugned orders are passed on 03.08.2018 by the learned Magistrate and the amendment came into force on 01.09.2018. Obviously, in the order dated 03.08.2019, Section 148 is not mentioned by the learned Additional Sessions Judge. He did not intend to pass the order under Section 148 but it is to be understood that the learned sessions judge passed the order under the Code of Criminal Procedure by using the powers of the criminal court to impose putting condition at the time of granting bail."

Even though, the impugned order did not consider S. 148 of the Act, the High Court while hearing the challenge to the same thought it fit to refer to the same.

In V. Narsimha Murthy v. Santosh J.

^[3], the Karnataka High Court, held that S. 148 of Act can apply to cases where conviction was ordered prior to amendment. Here the High Court while hearing a revision against an appeal preferred by the accused directed the accused to deposit 70% of the cheque amount before the trial court. During the course of the revision before the High Court the complainant moved an application seeking release of the money deposited in his favor. The High Court held that:

"when the enactment has been made as a beneficial legislation, to protect the interest of the complainant and to provide a relief and to avoid and discourage frivolous appeals and litigation, then under such circumstances, a wider interpretation has to be made and not a restricted interpretation as held in the case of S. L. Srinivasa Jute Twine Mills (P) Ltd. v. Union of India and Another (cited supra). It is not express provision which has to be taken into consideration but it can take even the necessary implication and give retrospective operation. In that light, this court can give the retrospective effect to the said Section.".

The Punjab and Haryana High Court, in Ginni Garments and Anr. v. Sethi Garments

^[4], was dealing with 2 sets of cases – 1) where applications under S. 143-A of the Act were allowed in cases where complaints had been instituted prior to the amendment and 2) where applications under S. 148 were allowed in appeals arising out of complaints instituted prior to the amendment. This is the only case where both S. 143-A and 148 have been examined in great length with regard to their retrospective application. It is also pertinent to mention that there was no constitutional challenge to the vires of the sections. The High Court held that S.143-A does not apply retrospectively since it creates a new obligation upon the accused person which did not exist prior to the amendment whereas, S. 148 does apply retrospectively as no new obligation has been created upon the accused person. The High Court held that S. 148 was applicable retrospectively because prior to the amendment courts already had the power to recover fine/compensation imposed via S. 421 and S.424 of the Cr.P.C. –

"Since provisions for recovery of fine or compensation from the appellant/convict already existed in the existing procedure relating to the recovery, therefore the provision introduced vide Section 148 of the Act; which relates only to recovery of amount partly, as interim measure, has to be treated purely procedural only, which is otherwise also beneficial for the appellant as compared to the pre-existing provisions."

The Madras High Court, in G.J.Raja v. Tejraj Surana, upheld the order of a magistrate directing the accused to pay 20% of the cheque amount as interim compensation to the complainant. The High Court judgment does not disclose whether the complaint was filed prior to or post the amendment. The judgment of the High Court is now under challenge before the Supreme Court in SLP (Crl.) No. 3342/2019. The order where by notice was issued in the Supreme Court gives a clear indication of the factual position:

"Issue involved in this matter is whether Section 143-A introduced by the Amendment Act No.20 of 2018 in the Negotiable Instruments Act, 1881 has retrospective application or not?"

An examination of these judgments shows that the majority view is that S.148 does apply retrospectively whereas on S.143-A there is no such consensus. The Supreme Court will now surely clear the air over the retrospective application of Section 143-A of the Act.

Shiv Chopra is an advocate practicing in Delhi.

[The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of LiveLaw and LiveLaw does not assume any responsibility or liability for the same]

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[1] 2019 SCC OnLine SC 739

[2] 2019 SCC OnLine Bom 436

[3] I.A. No. 3/2018 in Criminal Revision Petition No. 425/2018

[4] 2019 SCC OnLine P&H 747