India: Bombay High Court: Cheque Dishonour Cases, Interim Compensation To Have Retrospective Effect

Last Updated: 10 April 2019
Article by Maneck Mulla, Anuja Jhunjhunwala and Khushboo Rupani

INTRODUCTION

The Bombay High Court in its judgement dated 14th March, 2019 in the matters of Ajay Vinodchandra Shah v. The State of Maharashtra & Anr. [Criminal Writ Petition No. 258 of 2019, Criminal Writ Petition No. 259 of 2019 and Criminal Writ Petition No.26 of 2019] whilst discussing the amendments to Section 143A and Section 148 of the Negotiable Instruments Act, 1881("NI Act") held that the amendments to the NI Act which came into effect from 1st September, 2018 are applicable to the cases filed prior to 1st September, 2018 but which are pending in the trial as well as the appellate court. In these cases, if the plea is recorded or the charge is not framed, then the trial Court can invoke its power under section 143A after 1st September, 2018 and can impose interim compensation which shall not exceed 20% of the amount of cheque. Similarly, in case in appeals, the Appellate Court can pass interim orders under section 148 of the NI Act.

FACTS

Cheques of different amounts issued by the Petitioner had bounced. On conviction, the Petitioner filled appeals challenging the conviction orders. The Appellate Court i.e. Sessions Court at the time of entertaining the appeal directed the Petitioner to deposit 25% of the total compensation, failing which the order of suspension of sentence would automatically get vacated.

Aggrieved, the Petitioner filed Writ Petitions challenging the legality and validity of the 3 Orders dated 3rd August 2018 in Criminal Appeal Nos. 491 of 2018, 492 of 2018 and 493 of 2018 passed by the Sessions Court directing the Petitioner to deposit 25% of the amount of the total compensation as a condition precedent to maintain the order of bail and to entertain the appeal preferred by the Petitioner in the Sessions Court. The Petitioner prayed that the said orders be quashed and set aside.

ISSUES

The High Court considered the following questions of law:

  1. Whether the provisions of Sections 143A and 148 of the NI Act can be applied only to those complaints which are filed after 1st September, 2018.
  2. Whether the provisions of section 143A and 148 which are enacted on 12th August, 2018 w.e.f. 1st September 2018 are ultra vires the Constitution of India.

SUBMISSIONS

The Learned Counsel appearing on behalf of the Petitioner submitted that every convict has a right to appeal. In the present matter, due to the imposition of condition of depositing 25% of the total compensation, the Petitioner's right to appeal and bail is taken away. The right to bail should be unconditional. He submitted that when the offence in the matter was committed and the complaint was filed, the two provisions were not in existence then. The amendments to Sections 143A and 148 being substantive in nature, the said provisions cannot be applied retrospectively. The Learned Counsel further submitted that if the convict has no capacity to pay, then, he is bound to lose his right to appeal because of such condition of payment of 20% of the amount of the compensation. It was submitted that the Petitioner had a good case on merits, accordingly, imposing the condition of deposit is unjust and against the principles of Criminal Jurisprudence and of Article 21 of the Constitution of India.

The Learned Counsels for the Respondents argued that the direction of depositing 20% can be given retrospectively since the NI Act is a beneficial legislation which is enacted with an intent to give relief to the complainant and the orders passed by the learned Sessions Judge are in consonance with the scheme of the new provisions under section 143A and 148 of the NI Act.

JUDGMENT

The Bombay High Court considered the object of the NI Act which is to enhance the acceptability of the cheques in settlement of liabilities by making the drawer liable for penalties in case of dishonour of cheques due to insufficiency of funds. The court further noted the Legislature's intent in amending the NI Act i.e. to curtail the delaying tactics of unscrupulous, dishonest drawers and mounting pendency of the criminal cases and the resulting injustice caused to the payee.

The court stated that the word "Retrospective" is to be understood or read with meaningful, purposive interpretation and held that it is incorrect to accept that the amendments to NI Act are to be made applicable only to cases which are filed after 1st September, 2018 and not applicable to the cases pending earlier in the trial as well as the appellate court. In cases where the plea is recorded or the charge is not framed, then the trial Court can invoke its power under section 143A after 1st September, 2018 and can impose interim compensation which shall not exceed 20% of the amount of cheque. Similarly, in case in appeals, the Appellate Court can pass interim orders under section 148 of the NI Act.

The High Court further compared the two provisions i.e. sections 143A and 148 of the NI Act and stated that the one difference between the two provisions is that under section 143A, the accused is yet to face a trial. Under subsection (2) thereof, the interim compensation under sub-section (1) shall not exceed twenty percent of the amount of the cheque. However, under section 148, it is stated that the Court may order the appellant to deposit such sum which shall be a minimum of twenty percent of the fine. These two clauses in the sections reflect the intention of the Legislature that a person at the stage of trial is always considered innocent till he is found guilty and, therefore, the ceiling of 20% compensation is mentioned. However, in the appeal, after the first Court holds the accused guilty, then the appellate Court is given the power to pass order directing the accused to deposit the amount which shall be a minimum of 20% of the fine or compensation awarded by the trial Court. It is further stated in section 148 of NI Act that the amount payable under this subsection shall be in addition to any interim compensation paid by the appellant under section 143A of the NI Act.

In matters where the accused is not held guilty and acquitted either at trial or in the appeal, the subsection (4) of section 143A and the proviso to the section 148 of the NI Act state that the amount shall be repaid by the complainant to the accused. In the event of acquittal, the said amount shall be paid within 60 days from the date of the order. Accordingly, the High Court held that the issue of the amendments to be made applicable prospectively to the cases only which are filed after 1st September, 2018 is not sustainable.

The High Court observed that the power to give compensation is already in existence with the criminal court even before the amendment to the NI Act and stated that under section 357 of Code of Criminal Procedure, 1973, the criminal trial Court has power to grant compensation to the complainant. However, the amendment has clarified the stage at which the compensation can be granted. Both the sections have an overriding effect to the Code of Criminal Procedure.

On the second issue, whilst the High court observed that the right to be on bail and enjoy liberty should not be taken away in case of bailable offences unless some special ground is made out, it held that sections 143A and 148 of the NI Act are not ultra vires the Constitution of India.

The High Court stated that the criminal courts have been given powers to impose various conditions at the time of granting bail be it at trial or appellate stage. In appeal the accused is not innocent as he is already held guilty by the first court. The appellate Court hence to strike balance by giving justice to both the parties and to protect the interest of the parties adopts a reasonable view by using its power granted under section 148 of the NI Act by imposing some conditions at the time of granting bail or at the time of admission of appeal. The appellate court cannot take away the right to appeal but the same can be protected by applying the principle of reasonability while imposing conditions.

Consequently, while partly allowing the Writ Petitions, the impugned orders were modified and the Petitioner/Accused was directed to deposit 20% of the total amount of compensation. The stipulated time of 60 days to deposit the said amount was extended till 90 days. The condition of cancellation of bail or suspension of sentence in the event of non-payment was set aside.

CONCLUDING REMARKS

The judgment furthers the object of the amendments in NI Act to strengthen the credibility of cheques and further trade and commerce by allowing the lending institutions including banks to continue to extend financing to the productive sectors of economy. Sections 143A and 148 of the NI Act have maintained balance between safeguarding the interest of the lenders and the rights and liberty of the accused.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions