Retrospective Application of Section 143A in Cheque Bounce Cases: Supreme Court Clarifies Legal Position

The case of G.J. Raja vs. Tejraj Surana revolved around the interpretation of Section 143A of the Negotiable Instruments Act, 1881, and its applicability to cases where the alleged offence occurred before the provision was introduced. The Supreme Court had to decide whether the provision, which allows courts to award interim compensation in cheque bounce cases, could be applied retrospectively.

G.J. Raja, the appellant, was accused under Section 138 of the Negotiable Instruments Act due to the dishonor of two cheques totaling Rs.35,00,000 issued to the respondent, Tejraj Surana. The complaint was lodged in 2016, and while the case was pending, Section 143A was inserted in the Act by the 2018 Amendment, allowing trial courts to direct the accused to pay interim compensation of up to 20% of the cheque amount. Based on this provision, the trial court directed the appellant to pay Rs.7,00,000 as interim compensation. The Madras High Court upheld this order but reduced the compensation to 15%. The appellant challenged this decision before the Supreme Court.

Arguments of the Petitioner

The appellant, represented by his legal counsel, contended:

“Section 143A imposes a liability that did not exist at the time of the alleged offence. Applying it retrospectively violates the principle of non-retroactivity and affects substantive rights.”

The petitioners further argued:

The offence occurred in 2016, whereas Section 143A was introduced in 2018. Laws imposing additional liabilities cannot be applied retrospectively.
Section 143A mandates payment before determining guilt, which alters the fundamental principles of criminal law.
Provisions imposing financial obligations must be treated as substantive law and cannot be given retrospective effect.

Arguments of the Respondent

The respondent, contesting the appeal, argued:

“Section 143A is procedural in nature and is meant to enhance the efficiency of cheque bounce cases. The provision applies to all pending cases, irrespective of when the offence occurred.”

The respondent further contended:

The amendment was introduced to protect the rights of complainants who face undue delays in cheque bounce cases.
Courts routinely apply procedural amendments to ongoing cases, and Section 143A should be treated similarly.

Supreme Court’s Verdict

The Supreme Court, with Justices Uday Umesh Lalit and Vineet Saran presiding, ruled in favor of the appellant, holding that Section 143A could not be applied retrospectively. The Court observed:

“The imposition of interim compensation before determining guilt creates a new financial liability. Laws affecting substantive rights cannot be applied retrospectively unless explicitly stated by the legislature.”

The Court ruled:

Section 143A imposes a new obligation and, therefore, should be considered substantive law.
Substantive provisions cannot be applied to offences that occurred before their enactment.
The trial court and High Court erred in applying Section 143A retrospectively.
The order directing the appellant to pay interim compensation was set aside.

Key Takeaways from the Judgment

Section 143A cannot be applied to cheque bounce cases where the offence occurred before its enactment in 2018.
Laws that impose new financial obligations are considered substantive and cannot be applied retrospectively.
Courts must differentiate between substantive and procedural laws when interpreting amendments.
Accused individuals in cheque bounce cases cannot be compelled to pay interim compensation unless the offence occurred after the introduction of Section 143A.

This ruling ensures that financial liabilities imposed by legislative amendments do not unfairly burden individuals for past actions, reinforcing the principle of non-retroactivity in criminal law.

Petitioner Name: G.J. Raja.
Respondent Name: Tejraj Surana.
Judgment By: Justice Uday Umesh Lalit, Justice Vineet Saran.
Place Of Incident: Chennai, Tamil Nadu.
Judgment Date: 30-07-2019.

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