G. .J. Raja vs Tejraj Surana

Allowing the appeal, the Court

HELD: 1.1 A reading of Section 143A, Negotiable Instruments Act, 1881 shows (i) interim compensation must not exceed 20% of the amount of the cheque; (ii) it must be paid within the time stipulated under Sub-Section (3); (iii) if the accused is acquitted, the complainant shall be directed to pay to the accused the amount of interim compensation with interest at the bank rate; (iv) the interim compensation payable under said Section can be recovered as if it were a fine under Section 421 of the Code of Criminal Procedure, 1973; and (v) if the accused were to be convicted, the amount of fine to be imposed under Section 138 of the Act or the amount of compensation to be awarded under Section 357 of the Code would stand reduced by the amount paid or recovered as interim compensation. SubSection (5) of Section 143A stipulates that the interim compensation could be recovered as if it were a fine under Section

421 of the Code. Section 421 appears in Chapter XXXII of the Code which Chapter deals with ‘Execution, Suspension, Remission and Commutation of Sentences’. By very context and the language of the provisions contained in the Chapter, they apply in cases where the guilt of an accused is determined and he is convicted of an offence punishable with sentence and/or fine. According to Section 421 of the Code, fine could be recovered either by warrant of attachment or sale of movable property belonging to the offender or by issuance of warrant to the Collector authorising him to realise the amount as arrears of land revenue from the movable 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 interim compensation under Section 143A of the Act 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. In the present case, the Complaint was lodged in the year 2016 that is to say, the act constituting an offence had occurred by 2016 whereas, the concerned provision viz. Section 143A of the Act was inserted in the statute book with effect from 01.09.2018. 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, as is evident from provision like Section 183 of the Maharashtra Land Revenue Code, in some cases 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 there was no provision on the statute book whereunder even before the pronouncement of the guilt of an accused, or even before his conviction for the offence in question, he could be made to pay or deposit interim compensation. The imposition and consequential recovery of fine or compensation either through the modality of Section 421 of the Code or Section 357 of the code could also arise only after the person was found guilty of an offence. That was the status of law which was sought to be changed by the introduction of Section 143A in the Act. It 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. The situation is thus completely different from the one which arose for consideration in Employees’ State Insurance Corporation case. 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. Section 143A to be prospective in operation and that the provisions of said Section 143A 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. Consequently, the orders passed by the Trial Court as well as the High Court are set aside. The money deposited by the Appellant, pursuant to the interim direction passed by Supreme Court, shall be returned to the Appellant along with interest accrued 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. Kishan Chand Kaura (2007) 13 SCC 492 : [2007] 13 SCR 313; Surinder Singh Deswal and Ors. v. Virender Gandhi (2019) 8 SCALE 445 – relied on.

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