Saturday, 13 April 2019

Whether Negotiable instruments (amendment) Act 2018 has retrospective effect?

See Negotiable Instrument amendment Act 2018: Click here

Therefore, it has to be held that Section 143-A of the Act cast a substantive
obligation upon the accused and thereby effect the substantive right of the
accused. Since the Amendment Act has not made the provision applicable
retrospectively, specifically, to pending cases, hence, it cannot be applied
retrospectively, to pending cases; which arose from the default of the
accused which has taken place before coming into force of this provision.
It permits the Appellate Court to
order the convict to deposit only 20% of the fine or compensation, leaving
the remaining amount to be paid beyond a period of 90 days; or not to be
paid even till conclusion of the appeal.
In view of the above discussion, it is quite clear that the
procedure of recovery of fine or compensation from a convict-appellant of
pending appeal already existed in CR.P.C; before advent of the provision as
contained in Section 148 of the Act. Hence, no new aspect of coercive
recovery of fine or compensation from the appellant is being created
through this amended provision. On the contrary, this provision provides

more breathing space to the convict/appellant; as compared to the other
procedures of recovery, as contemplated under Sections 421 and 424 of
Cr.P.C, which is for more onerous in terms of time limit and the
consequences. Since the 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. Hence it has to
be held that provision of Section 148 of the Act shall govern all the appeals

pending on date of enforcement of this provision or filed thereafter.
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
CRR No.9872-2018(O&M)
Date of decision:04.04.2019

M/s Ginni Garments Vs M/s Sethi Garments 

Coram: Hon’ble Mr. Justice Rajbir Sehrawat



This Order shall dispose of a bunch of 14 petitions, challenging
the Orders passed by the Trial Courts in the trials under Section 138 of the
Negotiable Instruments Act 1881(hereinafter referred to as‘the Act’),

whereby the Trial Courts have ordered the accused/petitioners to pay 20%
or less of the cheque amount to the complainant under Section 143-A of the
Act, as well as the petitions challenging the Orders passed by the Appellate
Courts directing the convicts/appellants/petitioners herein to deposit 20% or
more of amount of fine or compensation awarded by the Trial Court, during
the pendency of the appeal, by exercising powers under Section 148 of the
Act.
CRM-M-13039-2019,CRM-M-13892-2019,CRM-M-14462-
2019 CRR-9872-2018 are the petitions wherein the Orders passed by the
Trial Court under Section 143-A of the Act are under challenge and the
CRM-M-49024-2018, CRM-M-49216-2018, CRM-M-49054-2018, CRMM-
49055-2018, CRM-M-49182-2018, CRM-M-12625-2019, CRM-M-
15297-2019, CRM-M-61716-2018, CRR-721-2019, CRR-746-2019 are the
petitions where in the Orders passed by the Appellate Court under Section
148 of the Act are under challenge.
It deserves to be noted that there is no dispute on facts of the
case in either of the petitions. The Orders have been impugned in all these
petitions only on purely legal ground that under Section 143-A and Section
148 of the Act, the Courts below cannot be deemed to have any authority,
retrospectively, to pass the Order imposing the liability of payment of the
amounts, mentioned in the impugned orders, in the pending trial or in the
pending appeals.
Another aspect which deserves to be clarified at the outset is
that the Orders impugned in these petitions have been passed by the Courts
below by virtue of the powers conferred under Section 143-A of the
Act during the trial, and under Section 148 of the Act during the pendency

of appeal. Both these sections were not in existence in the Act earlier.
Both these sections were added vide Amendment No.20 of 2018. In none of
the petitions, the vires of these provisions are under challenge. Hence, this
Court is proceeding on the presumption that the sections introduced by the
Amendment Act, are validly operating law.
The only challenge raised by the respective petitioners, in all
these petitions, is that since the Amendment Act has been enforced with
effect from 02.08.2018, therefore, these provisions cannot be made
applicable to the cases, where the trials for offence under Section 138 of the
Act were already pending or where the appeals have arisen from such trials,
which were pending on the date of the enforcement of these provisions.
Hence, in essence, the grounds for challenge, in all the petitions, is that
applying these provisions to the cases already pending before the Courts
would tantamount to giving these provisions retrospective operation,
although, the Amendment Act does not prescribe for retrospectivity in
application of these provisions. Hence these provisions have to be taken as
applicable only prospectively, to the cases which arise after introduction of
these provisions.
Before proceeding further, it is apposite to take note of the
provisions, which have been introduced by Section 143-A and Section 148
of the Act, which are as reproduced herein below:-
“143-A. Power to direct interim
compensation---(1) Notwithstanding
anything contained in the Code of
Criminal Procedure, 1973(2 of 1974), the
Court trying an offence under section 138
may order the drawer of the cheque to pay
interim compensation to the

complainant---
• (a) in a summary trial or a summons
case, where he pleads not guilty to the
accusation made in the complaint; and
• (b) in any other case, upon framing of
charge.
(2) The interim compensation under
sub-section(1) shall not exceed twenty per
cent of the amount of the cheque.
(3) The interim compensation shall be
paid within sixty days from the date of
the order under sub-section (1), or within
such further period not exceeding thirty
days as may be directed by the Court on
sufficient cause being shown by the
drawer of the cheque.
(4) If the drawer of the cheque is
acquitted, the Court shall direct the
complainant to repay to the drawer the
amount of interim compensation, with
interest at the bank rate as published by
the Reserve Bank of India, prevalent at
the beginning of the relevant financial
years, within sixty days from the date of
the order, or within such further period
not exceeding thirty days as may be
directed by the Court on sufficient cause
being shown by the complainant.
(5) The interim compensation payable
under this section may be recovered as if it
were a fine under section 421 of the Code
of Criminal Procedure, 1973(2 of 1974).
(6) The amount of fine imposed under
section 138 or the amount of
compensation awarded under section 357

of the Code of Criminal Procedure, 1973
(2 of 1974), shall be reduced by the
amount paid or recovered as interim
compensation under this section.
148.Power of Appellate Court to order
payment pending appeal against
conviction-----(1) Notwithstanding
anything contained in the Code of
Criminal Procedure, 1973(2 of 1974), in
an appeal by the drawer against
conviction under section 138, the
Appellate Court may order the appellant
to deposit such sum which shall be a
minimum of twenty per cent of the fine or
compensation awarded by the trial Court:
Provided that the amount payable
under this sub-section shall be in addition
to any interim compensation paid by the
appellant under section 143A.
(2) The amount referred to in subsection(
1) shall be deposited within sixty
days from the date of the order, or within
such further period not exceeding thirty
days as may be directed by the Court on
sufficient cause being shown by the
appellant.
(3) The Appellate Court may direct the
release of the amount deposited by the
appellant to the complainant at any time
during the pendency of the appeal.
Provided that if the appellant is
acquitted, the Court shall direct the
complainant to repay to the appellant the
amount so released, with interest at the
bank rate as published by the Reserve

Bank of India, prevalent at the beginning
of the relevant financial year, within sixty
days from the date of the order, or within
such further period not exceeding thirty
days as may be directed by the Court on
sufficient cause being shown by the
complainant.”
As stated above, the above said provisions were added to the
Negotiable Instruments Act by Amendment Act No.20 of 2018. Section 1
(2) of the above said Amendment Act read as under:-
(2) It shall come into force on such date as
the Central Government may, by the
notification in the Official Gazette, appoint.
The Central Government had published this amendment in the
notification dated 02.08.2018; after the same having received assent of the
President of India on the same date.
The Statement of Objects and Reasons of the above said
amendment reads as under:-
“The Negotiable Instruments Act, 1881
(the Act) was enacted to define and
amend the law relating to Promissory
Notes, Bill of Exchange and Cheques.
The said Act has been amended from time
to time so as to provide, inter alia, speedy
disposal of cases relating to the offence of
dishonor of cheques. However, the
Central Government has been receiving
several representations from the public
including trading community relating to
pendency of cheque dishonor cases. This
is because of delay tactics of

unscrupulous drawers of dishonoured
cheques due to easy filing of appeals and
obtaining stay on proceedings. As a
result of this, injustice is caused to the
payee of a dishonoured cheque who has
to spend considerable time and resources
in court proceedings to realize the value
of the cheque. Such delays compromise
the sanctity of cheque transactions.
2. It is proposed to amend the said
Act with a view to address the issue of
undue delay in final resolution of cheque
dishonour cases so as to provide relief to
payees of dishonoured cheques and to
discourage frivolous and unnecessary
litigation which would save time and
money. The proposed amendments will
strengthen the credibility of cheques and
help trade and commerce in general by
allowing lending institutions, including
banks, to continue to extend financing to
the productive sectors of the economy.
3. It is, therefore, proposed to introduce
the Negotiable Instruments(Amendement)
Bill, 2017 to provide, inter alia, for the
following, namely:-
(i) to insert a new section 143A in
the said Act to provide that the
Court trying an offence under
Section 138, may order that drawer
of the cheque to pay interim
compensation to the complainant, in
a summary trial or a summons case,
where he plead not guilty to the
accusation made in the complaint;

and in any other case, upon framing
of charge. The interim
compensation so payable shall be
such sum not exceeding twenty per
cent of the amount of the cheque;
and
(ii) to insert a new section 148 in
the said Act so as to provide that in
an appeal by the drawer against
conviction under Section 138, the
Appellate Court may order the
appellant to deposit such sum which
shall be a minimum of twenty per
cent of the fine or compensation
awarded by the trial court.
4. The Bill seeks to achieve the above
objectives.”
A bare perusal of the newly added Sections 143-A and 148 of
the Act would show that these sections have been added with 'Non-
Obstante' clause qua the provisions of Code of Criminal Procedure
(hereinafter referred to as ‘Cr.P.C.’). The provisions of both these Sections
have common elements of; giving power to the Trial Court and the
Appellate Court to order compensation in favour of the complainant/holder
of the cheque in due course. Further, common element in both these
sections is that; in case the accused is acquitted then the complainant would
be required to return the amount so obtained through the court orders, with
Bank rate interest. However, there are certain striking differences between
the provisions as contained in these two sections. Whereas Section 143-A
of the Act gives power to the Trial Court to direct the accused to 'pay' an
interim compensation which cannot be more than 20% of the 'cheque

amount', at the same time Section 148 of the Act empowers the Appellate
Court to direct the accused/appellant to 'deposit' minimum of 20% of 'fine'
or 'compensation' awarded by the Trial Court. Hence, whereas the Trial
Court cannot award more than 20% of the cheque amount, the Appellate
Court is ordained to award not less than 20% of the fine or compensation.
Furthermore, under Section 143-A of the Act, the Trial Court is required to
order the accused to pay the said amount as interim compensation directly to
the complainant. Under Section 148 of the Act, the Appellate Court is
required to direct the accused/appellant to ‘deposit’ the said amount with the
Court, which the court may subsequently order disbursal to the
complainant/holder of the cheque in due course. As per the provision of
Section 148 of the Act, the amount ordered by the Appellate Court shall be
in addition to any interim compensation already paid by the accused under
the order of the Trial Court. Still further, difference between these two
provisions is that under Section 143-A of the Act, the amount of interim
compensation awarded by the Trial Court is prescribed to be recovered
under Section 421 of Cr.P.C, if not paid within specified time, whereas there
is no such corresponding provision in Section 148 of the Act. Section 148
of the Act does not prescribe any mode of recovery of amount of interim
compensation awarded by Appellate Court.
Further, a perusal of the statement of object and reasons for
introducing these provisions also shows that the provisions are being added
with a view to address the issue of undue delay in final resolution of the
cheque dishonor cases and to provide interim relief to the holder of the
cheque in due course, as well as, to discourage the frivolous and
unnecessary litigation; besides strengthening the credibility of the cheques

as mode of payment; so as to help the trade and commerce in general and
the lending institutions and the banks in particular in extending financial
facilities to productive sectors of economy. It is in this gamut of statutory
provisions; that the present petitions have arisen.
While arguing the case, Mr. Ferry Sofat, learned counsel for the
petitioners have submitted that since the newly added provision of Section
143-A of the Act is not specifically made retrospective in operation by the
Amendment Act and it casts a new 'obligation' upon the accused and this
obligation is substantive in nature, therefore, the provision cannot be made
applicable to the trials in pending cases. Learned counsel has relied upon
the judgment rendered in RE; School Board Election For the Parish of
Pulborouogh;1894 Queen’s Bench Division(725), to support his
contention that any law; which seeks to impose any new obligation or
liability upon a party; cannot be made applicable to the proceedings already
pending before the Court before introduction of such a provision. To
support his arguments he has also relied upon the judgment of the Hon’ble
Supreme Court rendered in Hitendra Vishnu Thakur and others etc versus
State of Maharashtra and other; AIR 1994 Supreme Court 2623,
Maharaja Chintamani Saran Nath Chahdeo versus State of Bihar; 1994
(4)R.C.R.(Civil) 715 and another judgment of Hon’ble Supreme Court
rendered in Nani Gopal Mitra versus State of Bihar; AIR 1970 Supreme
Court 1636. Explaining his argument further, learned counsel has further
submitted that since the liability imposed upon the petitioner, by the newly
introduced provision, is in the nature of legally enforceable liability,
therefore, it is a new and substantive obligation as per the law and not
merely a part of the procedure. Learned counsel has submitted that had the

present provision been procedural in nature then the same may have been
applied to the pending cases, however, since it affects the substantive rights
of the accused/petitioners, therefore, it cannot be applied to the pending
cases; by giving retrospectivity to this provision.
Mr. Dinesh Arora, learned counsel who is appearing for the
petitioners in the cases arising out of the appeals, has submitted that any law
which creates a new responsibility upon the appellant during the appeal can
also not be applied retrospectively. Hence the provision contained in newly
added Section 148 of the Act cannot be applied to the appeals which were
pending on the date of enforcement of the amendment, or to the appeals
filed in those cases where the trials were pending on the date of enforcement
of the amended provision. To substantiate that this provision casts a new
substantive obligation upon appellant, the counsel has submitted that
although at the conclusion of trial, the Trial Court can award a
compensation in favour of the holder of the cheque in due course, however,
since appeal is in continuation of the trial, therefore, fine or the
compensation awarded by the Trial Court cannot be taken as final.
However, under the new provision the fine or compensation awarded by the
Trial Court have been given attributes of finality. Under the amended
provisions, it has been provided that the compensation ordered by the Trial
Court or the Appellate Court under provision of Section 143-A of the Act or
Section 148 of the Act, would be recoverable as per the procedure
prescribed for recovery of fine. Hence, the 'interim compensation' has been
raised to the level of 'finality of the fine' which can be recovered under
Section 421 of Cr.P.C. This tantamounts to treating the petitioners as guilty
even before finalization of their trials and the appeals and thus subjects the

appellant to the rigour of Section 421 Cr.P.C; for the purpose of recovery of
the interim compensation. However, section 421 Cr.P.C itself invites drastic
and substantive measures qua the person against whom fine has been
imposed, including attachment and sale of his properties. Therefore, since;
even property right of the petitioners have been subjected to final
consequences; even during pendency of the appeal against their conviction,
therefore the provision has the effect of infringing upon the substantive
rights of the petitioners. Therefore, the consequence of application of this
section are in the nature of 'punishment'. Hence, such a provision cannot be
made applicable to the appeals arising from conviction for a transaction of
cheque default, which had taken place before enforcement of the
Amendment Act. Learned counsel has relied upon the judgment of the
Hon’ble Supreme Court rendered in T.Barai versus Henry Ah Hoe and
another;1983 AIR (SC) 150, Dayal Singh versus State of Rajasthan;
2004 AIR SCC 2608, Basheer @ N.P.Basheer versus State of
Kerala;2004(1) R.C.R (Criminal)1008. Learned counsel has further argued
that the object and reasons of the Act as well as the parliamentary debates,
which had taken place at the time of enacting these provisions, also shows
that the provision is not procedural in nature. The debates and the objects
and reasons; would show that the idea behind this amendment was not to
streamline any procedure. Rather the idea is to grant relief to the
complainant/holder of the cheque in due course; during the trial itself, at
the cost of the accused, even before the latter is held guilty of the offence.
Hence, application of this provision to pending appeals is introducing a
kind of presumpting punishment in retrospectivity, which is prohibited by
Article 20 of the Constitution of India.

Mr. Manoj Pundir, learned counsel for another petitioner has
relied upon the judgment of the Hon’ble Supreme Court rendered in Anil
Kumar Goel versus Kishan Chand Kaura;2008(1)R.C.R(Criminal)290 to
submit that in case of another provision of the same Act, whereby the power
was sought to be given to the Magistrate to extend the time period for filing
of the complaint, Hon’ble Supreme Court has held such a provision to be
substantive in nature and the same was held inapplicable to the cases where
time of 30 days for filing complaint had already expired before that
amendment. The same is the situation qua the present amendment also since
this also; affects the substantive right of the petitioners. Hence, being a
substantive provision, the provision of Section 143-A and Section 148 of
the Act cannot be made applicable restrospectively; to the cases which were
already pending on the date of enforcement of these provisions.
The other learned counsels appearing for the petitioners have
also argued on the similar lines; by emphasizing that any provision which
has the potential of effecting the substantive right of a litigant cannot be
applied to the pending cases so as to give retrospectivity to the same unless
the same is made retrospective by the Act itself. It is further pointed out by
the learned counsels that the Courts below have passed the conditional
orders of granting bail during pendency of the appeal; subject to deposit of
the amounts ordered by the Appellate Court. This kind of condition is
violative of the right of the appellant to seek suspension of sentence. Hence,
the petitioners could not be subjected to this kind of onerous condition by
introducing a new provision during pendency of the trial or the appeal
arising therefrom. It is submitted by them that the Hon’ble Supreme Court
has already held in some of the cases that even though the Appellate Court

may impose condition of deposit of some amount for suspending of the
sentence, however, such an amount has to be reasonable and not excessive.
By virtue of the present amendments the petitioners have been subjected to
payment of compensation upto 40-50% of the cheque amount or of the
compensation, only for suspension of their sentence. Therefore, the
provision creating this kind of unreasonable condition could not have been
applied retrospectively. It is further argued by the counsels that even at the
stage of trial, the amount ordered by the Trial Court to be paid as interim
compensation, in a given case, can be such an excessive and prohibitive
amount that the accused may not be able to arrange for the same. In such a
situation, the accused would not be left with any alternative but to suffer in
silence the consequences of coercive procedure of recovery of the amount
as fine, as prescribed under Section 421 Cr.P.C. Hence, the provision being
extremely substantive in nature, could not have been applied by the Courts
below to the pending cases; so as to confer retrospectivity upon it.
On the other hand, Mr. Rajesh Sethi, learned counsel, appearing
for the complainant/respondent in revision petitions arising from the Orders
passed in appeals, have submitted that, in the first instance, the provision
introduced by Section 143-A and 148 of the Act are not substantive in
nature. These provisions have been created only as steps in procedure to
streamline the same, so as to cut the unnecessary delays in conclusion of the
trials. This is so specifically stated as well, in the objects and reasons of the
amendment. While interpreting such a provision, the Court should adopt a
purposive interpretation, to give effect to the intention of the legislator,
which in the present case is to curb the delay in trial and to discourage
default in Negotiable Instruments. Learned counsel has further submitted

that to arrive at a correct purposive interpretation, the Court can very well
take help of the internal aids of interpretation, such as language, title and
positional sequence of the provision and the external aid of interpretation
like the objects and reasons and the parliamentary debates. If all these
things are commulatively seen in the present case; then the only
predominant intention of the legislator is to curb the delay in procedures.
Hence, the amendment is only procedural in nature. It is further submitted
that the fact that the provisions are procedural in nature is also clear from
the fact that these sections have been added in the statute at a place after the
sections defining the penal provisions, and has been put alongwith the
provisions dealing with the procedure. Learned counsel has further
submitted that even if the provision is taken to be affecting some aspect of
right of party to the lis; still the same can be applied to the pending
proceedings. Every provision effecting some part of right of party to the lis
cannot be taken to be a provision effecting the substantive right of the
party. Referring to the judgment of the Hon’ble Supreme Court rendered in
Shyam Sunder and another versus Ram Kumar and another; 2001 AIR
(SC)2472; learned counsel has submitted that in that case the right of the
co-sharer under Punjab Pre-emption Act was abolished by way of
Amendment Act. The same was upheld and made applicable even to the
pending cases, except to those where the right of such a co-sharer had
already crystalised by way of decree of the Court. Hence, unless a right is a
vested right; by way of decree of the Court or made so by the provision of
the Act, the applicability of the amendment qua such right cannot be
questioned only on the ground that some aspect of such right of the party is
taken away by the amendment. To buttress his argument further, learned

counsel for the respondent has proceeded further that if after filing of the
suit the Court fees is enhanced by amending an Act, the applicability of
such a provision to the appeal arising from the suit cannot be excluded
merely on the ground that the amendment to the Court Fee Act was made
during pendency of the suit. Still further it is submitted by learned counsel
that if a provision essentially relates to the procedure then merely because it
can, collaterally, has some effect on substantivity, cannot be precluded from
application to the appeals; which are already pending. Citing an another
example, learned counsel for the respondent has submitted that Section 100
of Civil Procedure Code was amended to provide that second appeal would
lie only in those cases which involves substantial questions of law. This
provision was held applicable even to the pending cases by the Hon’ble
Supreme Court, despite the fact that it had the effect of summary dismissal
of the appeal in those cases where no such substantial question of law was
involved. In such a situation, the appellant cannot claim that his right to file
appeal has been adversely affected, therefore, such a provision should not
be applied to the pending cases.
Extending his argument further, learned counsel for the
respondent has submitted that in case of a trial; a right can be said to be a
substantive right only if it affects right to prosecute or to defend the charge.
However, in the present case, the provision no where affects the right of the
accused to defend himself. The provision, per se, does not prescribe for any
disqualifying consequences; in case of non-deposit of the amount as ordered
by the Appellate Court, qua the right of the accused/appellant to prosecute
his appeal or to defend himself. Hence, the provision has been enacted only
by way of streamlining the procedure and practice of the Court, and if

provision relates to the procedure and practice of the Court, the same can be
applied to the pending cases. In the end, it is submitted by learned counsel
for the respondent that right to appeal is only a statutory right. A person
cannot claim a right to file or to prosecute the appeal in any particular
manner or according to particular procedure or provision. The appeal has
to be filed and carried on only subject to the provisions governing such an
appeal at the relevant stages. Hence, any provision which is created during
the pendency of the appeal, qua filing or prosecuting the appeal has to be
made applicable to all the cases pending at the time or to be filed after the
date of enforcement of the provision.
Having heard the learned counsel for the parties and perusing
the documents on record, it is clear that the dispute between the parties is
relating to the applicability of Section 143-A and Section 148 of the Act,
introduced vide Amendment dated 02.08.2018, to the cases which were
already pending at the stage of the trial; or to the appeals arising from such
trials, whether filed before or after the enforcement of the above-said
provisions. Another significant aspect to be noted is that the Amendment
Act has not specifically made the amendment to be applicable
retrospectively. The notification of the amendment also does not specify
any other date for the amendment to come in operation. In such a situation,
Section 5 of the General Clauses Act would be of some help, which is
reproduced below:-
5 Coming into operation of enactments.
(1) Where any Central Act is not
expressed to come into operation on a
particular day, then it shall come into
operation on the day on which it receives
the assent,

(a) in the case of a Central Act
made before the commencement of
the Constitution , of the Governor-
General, and
(b) in the case of an Act of
Parliament, of the President.
(3)Unless the contrary is expressed,
a [Central Act] or Regulation shall be
construed as coming into operation
immediately on the expiration of the day
preceding its commencement.
A bare perusal of this provision would make it clear that any
Act of Parliament shall come into operation on the day on which it receives
the assent of the President. Unless it is expressed to become operational on
any other date and unless a contrary intention is expressed, the Act shall
come into effect qua all cases on the day of its commencement. In the
present case, the Act of Parliament has specified that it shall come into
operation on the date specified in the notification. The notification has been
issued by the Parliament on 02.08.2018. It is stated to have received the
assent of the President on 02.08.2018 only. Hence, the same can be safely
taken to be operational with effect from 02.08.2018. As stated above, the
vires of the provision are not under challenge in these petitions, therefore,
for the purpose of the present petitions, this Court has to assume that the
Amendment Act, and the provisions contained therein, have validly come
into operation on 02.08.2018.
Having said so, the real dispute starts. Learned counsel for the
petitioners have stated that they have no cavail qua the applicability of the
amended provisions with effect from 02.08.2018. However, these have to be

applied only to the cases arising from transactions of default of cheques;
which take place after the introduction of these provisions. If the cheques
already stood defaulted, the complaints already stood filed and the trial or
appeal arisen from such transactions are pending, then these provisions
cannot be applied to such cases; them because this would tantamount to
give the retrospective effect to the amendment, despite the fact that the
legislature has not provided for restrospective application of these
provisons. As stated above, learned counsels have argued that the
amendments create a new liability/obligation upon the accused, although his
act; liable to be punished; already stood committed on a prior date, when
such an obligation was not contemplated by law. Hence this would
tantamount to affecting the substantive right of the accused. Therefore, by
no means, such an amendment can be treated to be procedural in nature.
Hence, the same does not deserve to be applied to the pending cases.
This Court finds that the Supreme Court has amply clarified the
legal proposition that all substantive laws have to be prospective in nature
and applicability; unless prescribed to be retrospective, whereas all
procedural laws have to be applicable to all cases immediately on their
coming into operation, including the pending cases. It is appropriate to
have reference to the law pronounced by the Hon’ble Supreme Court in the
judgment rendered in Anil Kumar Goel versus Kishan Chand Kaura;
2008(1)R.C.R.(Criminal)290, which reads as under:-
“8. All laws that affect substantive
rights generally operate prospectively
and there is a presumption against
their retrospectivity if they affect
vested rights and obligations, unless
the legislative intent is clear and

compulsive. Such retrospective effect
may be given where there are express
words giving retrospective effect or
where the language used necessarily
implies that such retrospective
operation is intended. Hence the
question whether a statutory
provision has retrospective effect or
not depends primarily on the
language in which it is couched. If
the language is clear and
unambiguous, effect will have to be
given to the provision in question in
accordance with its tenor. If the
language is not clear then the court
has to decide whether, in the light of
the surrounding circumstances,
retrospective effect should be given to
it or not.(See:M/s Punjab Tin Supply
Co., Chandigarh etc. etc. v. Central
Government and Ors.,1984(1)RCR
(Rent) 168).”
Clarifying further, the Supreme Court has held that all those
laws which affect the substantive and vested rights of the parties have to be
taken as substantive law, whereas any provision of law dealing with the
form of the trial, mechanism of the trial or procedure thereof, has to be
treated as procedural in nature. The relevant part of the judgment of the
Hon’ble Supreme Court in case of Thirumalai Chemicals Ltd. vs. Union of
India and others; 2011(6) SCC 739 is as follows:-
“14. Substantive law refers to body of
rules that creates, defines and
regulates rights and liabilities. Right

conferred on a party to prefer an
appeal against an order is a
substantive right conferred by a
statute which remains unaffected by
subsequent changes in law, unless
modified expressly or by necessary
implication. Procedural law
establishes a mechanism for
determining those rights and liabilities
and a machinery for enforcing them.
Right of appeal being a substantive
right always acts prospectively. It is
trite law that every statue is
prospective unless it is expressly or by
necessary implication made to have
retrospective operation. Right of
appeal may be a substantive right but
the procedure for filing the appeal
including the period of limitation
cannot be called a substantive right;
and aggrieved person cannot claim
any vested right claiming that he
should be governed by the old
provision pertaining to period of
limitation. Procedural law is
retrospective, meaning thereby that it
will apply even to acts or transactions
under the repealed Act.”
Therefore, the next question to be considered by this Court, in
the present case is whether the provisions contained in Section 143-A and
Section 148 of the Act are substantive in nature or the procedural one. If
the provisions are substantive in nature then the same cannot be applied
retrospectively to the pending cases. However, if the same are procedural in

nature then the same has to be applied to all the cases, including the one
pending before the Court on the date, the amendment was enforced.
The substantive right of a person is the entitlement which is
available to him by virtue of his very existence or which relates to his being,
belongings or the estates. Such rights can be human rights, constitutional
rights or statutory rights. Such substantive rights can have variety of facets;
depending upon the factual situation in which such right is to be considered.
The substantive rights can be governed by the constitutional or statutory
provisions. The statutory provisions created by the competent legislature
can prescribed certain conditions for crystallizing the substantive right of
the person. In such a situation, once the conditions prescribed for
crystallizing such right are fulfilled, such substantive right of a person
becomes vested right as well. So all substantive rights are not vested rights
but all vested rights are substantive rights.
On the other hand, statute can prescribe the procedure for
protection, determination or regulation of the substantive rights as well. The
procedure would, essentially, be relating to providing remedy, form of
adjudication of such a remedy, procedure to be followed by adjudicatory a
forum or the mechanism prescribed for enforcement of decision of such
forum. Hence, a law which essentially deals with forums of adjudication,
procedure of adjudication and the mechanism for enforcement of result of
such an adjudication, would essentially be procedural in nature. All rights
granted by procedural law would be only procedural rights. As a corollary
to this, no procedural right can be either substantive or vested right.
Coming to the facts of the present case, the provisions of
Section 143-A and Section 148 of the Act reveals that these Sections of the

Act start with a non-obstante clause against Code of Criminal Procedure.
However, the Hon’ble Supreme Court has already clarified in judgment
rendered in Central Bank of India vs. State of Kerala and others;2010(8)
RCR(Civil)3195 that non-obstante clause, used in provision of a law has to
be given only a contextual interpretation and not to be taken as an absolute
exclusion or over-riding of the law contained in provisions qua which the
non-obstante clause has been used. In this regard, it is relevant to have a
reference to the observation made by Hon’ble Supreme Court in paragraph
Nos. 28 and 29 of above-said judgment, which are reproduced herein
below:-
28. A non obstante clause is generally
incorporated in a statute to give overriding
effect to a particular section or the statute as a
whole. While interpreting non obstante clause,
the Court is required to find out the extent to
which the legislature intended to do so and the
context in which the non obstante clause is
used. This rule of interpretation has been
applied in several decisions. In State of West
Bengal v. Union of India [(1964) 1 SCR 371],
it was observed that the Court must ascertain
the intention of the legislature by directing its
attention not merely to the clauses to be
construed but to the entire statute; it must
compare the clause with the other parts of the
law and the setting in which the clause to be
interpreted occurs.
29. In Madhav Rao Jivaji Rao Scindia v. Union
of India and another [(1971) 1 SCC 85]
Hidayatullah, C.J. observed that the non
obstante clause is no doubt a very potent

clause intended to exclude every consideration
arising from other provisions of the same
statute or other statute but for that reason
alone we must determine the scope of that
provision strictly. When the section containing
the said clause does not refer to any particular
provisions which it intends to override but
refers to the provisions of the statute generally,
it is not permissible to hold that it excludes the
whole Act and stands all alone by itself. A
search has, therefore, to be made with a view
to determining which provision answers the
description and which does not.
Hence Section 143-A of the Act, for that matter Section 148 of
the Act have to be read along-with the relevant and applicable provisions of
Cr.P.C, as modified/supplemented by provisions of these two sections.
Otherwise also, Section 5 of Cr.P.C provides that nothing in the Code shall
effect the provisions contained in any other special law. Therefore, these
two sections shall be taken to have effected the provisions of Cr.P.C only to
the limited extent, to which the specific provision has been made in these
sections, qua the aspect mentioned herein. Otherwise, even the aspect
mentioned in these provisions, beyond what is specifically prescribed for in
these two sections, have to be followed only as provided in the Cr.P.C.
Hence, all the provisions relating to punishment, execution thereof, fine and
compensation and recovery thereof, as contained in the Cr.P.C, has to be
read in conjunction and in harmony with Section 143-A and Section 148 of
the Act.
A bare perusal of Section 143-A of the Act shows that this

section has given power to the Trial Court to order the drawer of the
cheque/accused in the trial, to pay interim compensation to the complainant,
where the accused has not pleaded guilty of the acquisition made against
him. Still further, although a limit of '20% of cheque amount' has been
imposed upon power of the Court for ordering interim compensation,
however, it has also been provided that if it is not paid within 60 days from
the order or within the time, extended by the Court, if any, then the interim
compensation shall be recovered under Section 421 Cr.P.C, as if it were a
'fine' imposed upon the accused. Although this Section also provide return
of the said amount, in case the accused is acquitted, and for adjustment of
the said amount of interim compensation towards final compensation or
fine; in case of his conviction, however, till any final order is passed, the
accused remains liable for recovery of this amount under Section 421 of
Cr.P.C. It would be beneficial to have reference to Section 421 Cr.P.C
which is reproduced as under:-
421 Warrant for levy of fine
1. When an offender has been sentenced to
pay a fine the Court passing the sentence may
take action for the recovery of the fine in either
or both of the following ways, that is to say, it
may
(a) issue a warrant for the levy of the
amount by attachment and sale of any
moveable property belonging to the
offender;
(b) issue a warrant to the collector of the
district, authorising him to realise the
amount as arrears of land revenue from
the movable or immovable property, or
both of the defaulter:

Provided that, if the sentence directs that in
default of payment of the fine, the offender
shall be imprisoned, and if such offender has
undergone the whole of such imprisonment in
default, no Court shall issue such warrant
unless, for special reasons to be recorded in
writing, it considers it necessary so to do, or
unless it has made an order for the payment of
expenses or compensation out of the fine under
section 357.
(2) The State Government may make rules
regulating the manner in which warrants
under clause (a) of Sub-Section (1) are to be
executed, and for the summary determination
of any claims made by any person other than
the offender in respect of any property
attached in execution of such warrant.
(3) Where the Court issues a warrant to the
Collector under clause (b) of Sub-Section (1),
the Collector shall realise the amount in
accordance with the law relating to recovery
of arrears of land revenue, as if such warrant
were a certificate issued under such law:
Provided that no such warrant shall be
executed by the arrest or detention in prison of
the offender.”
A perusal of Section 421 Cr.P.C shows that this provision is
meant for those persons, who have already been sentenced to pay fine. Still
further the amount of interim compensation, deemed as fine under Section
143-A of the Act, can be recovered under Section 421 Cr.P.C by attachment
and sale of movable and immovable properties of the accused. The same
can also be recovered as amounts of arrears of land revenue from movable
or immovable property or both, of the accused. Hence, application of this

provision has a drastic effect upon the property rights of the accused, and
makes him liable for sale of his properties for recovery of amounts, despite
the fact that it is yet to be finally determined whether he is guilty of the
offence, and as such liable to pay any compensation to the complainant or
not. Accordingly, since the amended provision provides for enforcement of
recovery of interim compensation by way of coercive procedure, it is
nothing but an obligation imposed upon the accused. Section 3 of the
Specific Relief Act has clarified the meaning of term ‘obligation’ by
defining that any duty enforceable under law is an obligation. As per
General Clauses Act, this definition has to be read in all Central Acts unless
defined otherwise in the relevant Act. Such an 'obligation' having
consequences qua the property rights of the accused cannot; but be treated;
as substantive provision effecting his substantive right by casting a
substantive obligation upon him, to make the payment of money; and if not
paid, making him subject to legal deprivement/disability qua his properties.
Therefore, it has to be held that Section 143-A of the Act cast a substantive
obligation upon the accused and thereby effect the substantive right of the
accused. Since the Amendment Act has not made the provision applicable
retrospectively, specifically, to pending cases, hence, it cannot be applied
retrospectively, to pending cases; which arose from the default of the
accused which has taken place before coming into force of this provision.
Another aspect which is clear from Section 143-A of the Act,
and which shows that the provision is not procedural, is that this provision
is not shown to be as a step toward furtherance of the procedure of trial. The
provision is not contemplated as one more step governing, simplifying, or
modifying the steps in the trial of the accused by the Court. Accordingly,

this section does not authorize the Trial Court to pass any order, having
consequences against the accused qua the steps of the trial; in case of nonpayment
of interim compensation. This section does not authorize the Court
to close the defense or to take any other step for speeding up the trial as
such. On the contrary, this provision is intended to create a 'stand alone
liability' which has to be discharged independent of the trial and which shall
have consequences outside the trial only. Hence, by no means, this
provision can be taken as procedural in nature. Needless to say that
everything prescribed as part of procedural provision or every order of Trial
Court, passed during the trial cannot, necessarily, be termed as procedural in
nature. The test for determining the substantive or procedural nature of the
provision or order of the Court would be the consequences; which the
affected party invites under such a procedure or order. If the consequences
are in furtherance or in commensurance with the proceedings and steps of
the trial, the provision/order can be taken as a procedural. On the other
hand, if the consequences of provision or the order passed by the Court has
nothing to do with the proceedings or steps of the trial, rather, have
independent consequences; outside the scope of the trial, and at the same
time affects the existential or property rights of the accused, then it has to be
taken as a substantive provision only.
There is still another reason why the provision of Section 143-
A of the Act cannot be applied to the pending cases. Section 53 of the
Indian Penal Code(hereinafter referred to as ‘IPC’) prescribes only six kinds
of punishments, though for the purpose of offences under IPC, which are
punishment of death, punishment for imprisonment for life, imprisonment
for a term, which can be simple or rigorous, punishment of forfeiture of

property and the punishment of fine. Therefore, under the provisions of IPC
forfeiture of property is one of the punishment. Furthermore, there is no
provision of imposing sentence of awarding of compensation against an
accused and in favour of the complainant. Even if the compensation is
awarded that is not the part of the sentence. Even under the Negotiable
Instruments Act, Section 138 does not prescribe any sentence other than the
imprisonment and the sentence of fine. Hence compensation is not to be
awarded as a part of sentence. Although, the fine, provided to be imposed
as sentence, ranges upto twice the amount of the cheque, which can be
appropriated as compensation in favour of the complainant, however, there
is no provision for independently awarding compensation by the Trial Court
under the Negotiable Instruments Act. Hence, it is clear that by Section 143-
A of the Act, the Trial Court has been permitted to inflict a liability upon
accused, as an interim measure, although as a final order, it cannot pass the
order of award of compensation as part of sentence. But this interim
measure, if enforced through Section 421 Cr.P.C leads to loss of properties
by accused, which is a kin to forfeiture of his properties. Hence, essentially
the provision enhances the scope and degree of punishment to be awarded
to an accused; by awarding compensation and then making the same liable
to be recovered as a fine. After all the punishment is nothing but an eclipse
or clog upon right to life and liberty of a person or upon right to belongings
and estates of such a person, imposed as per the mandate of law. However,
under the provisions of Constitution of India, the person cannot be
subjected to sentence more than what he was liable to on the date when he
conducted himself in a manner which has made him liable for such a
sentence. It would be no consolation to the rights of accused to say that the

compensation awarded by the Trial Court is only interim measure and that
the accused would get the same back with interest if he is acquitted. By
virtue of sheer amount of 'interim compensation', which may work out in a
particular case in crores of rupees, for a person who is not having means of
more than few lakhs of rupees, the consequence under this Section can be
totally devastating, irrecoverable and irreparable. Therefore, this provision
can at the best be applicable prospectively where prospective accused would
be aware of such consequences in advance, and it cannot be applied to the
cases where the trial has already commenced qua a default which was
suffered; when this provision was not in-existence.
Although the provision of Section 143-A of the Act cannot be
applied to the pending trials, however, this Court finds that the situation
regarding Section 148 of the Act is drastically different. As observed
above, this provision also has to be read in conjunction with the relevant
provisions of the Cr.P.C. Further, this Court also finds substance in the
argument of learned counsel for the respondent that although ‘Right to
Appeal’, per se, is a substantive right, however, no person have a
substantive or vested right to claim that he would file and prosecute appeal
only in accordance with any particular provision. The Right to Appeal,
being a statutory right, has to be availed only within the parameters
provided by the said provision. Therefore, if any provision relating to
dealing with the appeal by the Appellate Court is altered, the said provision
has to be treated as a procedural provision only. Considering the provision
of Section 148 of the Act, this Court finds substance in the argument of
learned counsel for the petitioners that the said provision does not, in any
way, affects the substantive right of the accused, to defend himself or to

prosecute his appeal. The provision categorically provides that in case the
accused/appellant is acquitted by the Appellate Court; then the amount
awarded by the Appellate Court as interim compensation shall be returned
to him; by the complainant, along-with interest. No other disqualification is
to be inflicted upon the accused/applicant qua defense or prosecution of
appeal by him.
However, still the essential question to be considered is
whether the provision authorizing the Appellate Court to Order the
appellant to deposit a minimum of 20% of the fine or compensation
awarded by the Trial Court; is a procedural step or a provision affecting
the substantive right of the appellant. In this regard, it deserves to be noted
that when the case reaches before the Appellate Court, the appellant/accused
has already acquired a status of 'convict', who has already been found guilty
of his conduct and sentenced by the Trial Court. In case the Trial Court
imposes a fine then making him to pay that amount does not effect his
substantive right. Rather it is a matter of procedure only. In case of
conviction of an accused, the Trial Court may not impose any fine upon the
convict/appellant at all. In such a situation, the Appellate Court would not
be able to order the appellant to deposit any amount; because under the
provision, Appellate Court is authorized to order deposit of 20% of 'fine' or
'compensation' awarded by the Trial Court. If there is no order of fine or
compensation then there cannot be any order of deposit of any amount at the
appellate stage. In case the Trial Court imposes a fine, which can be up to
twice the amount of the cheque and which can be treated as compensation to
be paid to the complainant, in that situation, liability of the
accused/appellant has already been determined by the Trial Court. The

liability to pay the amount to the complainant already exists at the time
when the appellant comes before the Appellate Court. It is discretion of the
Appellate Court whether to suspend the order of imposition of fine or
compensation or not. In case the fine is not stayed by the Appellate Court
then the entire amount of fine or compensation, otherwise also, becomes
recoverable from the accused/appellant as per the procedure prescribed
under Section 421 of Cr.P.C. Hence, if the lower Appellate Court has passed
the order of deposit of 20% of amount, then although Section 148 of the Act
does not specifically mention that amount ordered to be deposited by the
Appellate Court would be recoverable under Section 421 Cr.P.C, however,
otherwise being part of fine; the same is liable to be recovered only under
Section 421 Cr.P.C. Hence, if the Appellate Court passes the order of
deposit of 20% or more of amount of fine or compensation that in fact, is a
beneficial order for the accused/appellant; because that would mean that the
amount of fine or compensation imposed by Trial Court, beyond that 20%,
as ordered by the Appellate Court, is ipso facto, being stayed during the
pendency of the appeal. Hence instead of prejudicing any substantial right
of the appellant this provision is beneficial provision in favour of the
accused. Still further there can be a situation where a Trial Court passes
sentence of only fine or compensation up to twice the amount of the cheque,
without any sentence of imprisonment. In that situation, the fine becomes
recoverable immediately. However, Section 424 of Cr.P.C provides that the
amount shall be payable in full within 30 days from the date of order of the
Trial Court, or at the best in three installments, starting from within 30 days
from the order of the Trial Court, and the remaining two installments being
paid at the interval of 30 days each. Hence the payment of entire amount of

fine or compensation has to be completed within 90 days. The provision of
Section 424 Cr.P.C is reproduced below:-
424. Suspension of execution of sentence
of imprisonment.
(1) When an offender has been sentenced to
fine only and to imprisonment in default of
payment of the fine, and the fine is not paid
forthwith, the Court may-
• (a) order that the fine shall be payable
either in full on or before a date not
more than thirty days from the date of the
order, or in two or three instalments, of
which the first shall be payable on or
before a date not more than thirty days
from the date of the order and the other
or others at an interval or at intervals, as
the case may be, of not more than thirty
days;
• (b) suspend the execution of the sentence
of imprisonment and release the
offender, on the execution by the offender
of a bond, with or without sureties, as the
Court thinks fit, conditioned for his
appearance before the Court on the date
or dates on or before which payment of
the fine or the instalments thereof, as the
case may be, is to be made; and if the
amount of the fine or of any instalment,
as the case may be, is not realised on or
before the latest date on which it is
payable under the order, the Court may
direct the sentence of imprisonment to be
carried into execution at once.
(2) The provisions of sub- section (1) shall
be applicable also in any case in which an

order for the payment of money has been
made on non- recovery of which
imprisonment may be awarded and the
money is not paid forthwith; and, if the
person against whom the order has been
made, on being required to enter into a
bond such as is referred to in that subsection,
fails to do so, the Court may at
once pass sentence of imprisonment.”
The above-said provision does authorize the Court to suspend
the execution of the sentence of 'default imprisonment', if the convict
submits bond for payment of the amount on the dates, as ordered by the
Court. However, this section also provides the consequences for nonpayment
of the amount of fine or compensation as well, which can be
cancellation of bond of the accused/convict and sending him to custody,
which can be by withdrawal of the order of suspension of sentence, leading
the appellants/convict to be landed in jail. From this point also the provision
of Section 148 of the Act is far-far beneficial for the
accused/convict/appellant in the sense that it permits the Appellate Court to
order the convict to deposit only 20% of the fine or compensation, leaving
the remaining amount to be paid beyond a period of 90 days; or not to be
paid even till conclusion of the appeal.
In view of the above discussion, it is quite clear that the
procedure of recovery of fine or compensation from a convict-appellant of
pending appeal already existed in CR.P.C; before advent of the provision as
contained in Section 148 of the Act. Hence, no new aspect of coercive
recovery of fine or compensation from the appellant is being created
through this amended provision. On the contrary, this provision provides

more breathing space to the convict/appellant; as compared to the other
procedures of recovery, as contemplated under Sections 421 and 424 of
Cr.P.C, which is for more onerous in terms of time limit and the
consequences. Since the 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. Hence it has to
be held that provision of Section 148 of the Act shall govern all the appeals
pending on date of enforcement of this provision or filed thereafter.
This Court does not find any substance in argument of learned
counsel for the petitioners that since the object and reasons for introducing
the amendment relate to giving benefit to the complainant and do not relate
to the procedure of the appeal, therefore, it cannot be treated to be a
procedural step. As is noted above irrespective of the object and reasons of
the act, the bare language of the provision only authorizes the Court to pass
an interim order, which is only in modification of the procedure of recovery
which already existed in the general provision of law relating to recovery of
fine or compensation. Hence, for obvious reasons, the rationale qua objects
and reasons of the Act, which is applicable at the stage of trial; cannot be
imported to the stage of appeal. As mentioned above, at the stage of trial,
the provision of Section 143-A of the Act has created a new 'obligation'
against the accused, which was not contemplated by the existing law and
which created a substantive liability upon him, whereas the provision of
Section 148 of the Act only reiterated; and to some extent modified in

favour of the appellant, the procedure of recovery already existing in the
statute book. Still further, this Court does not find any force in the
argument of the learned counsels for the appellants that Appellate Court
could not have made the suspension of sentence of the petitioners
conditional upon deposit of amount of interim compensation as ordered by
Appellate Court. It deserves to be noted here that even suspension of
sentence is in the judicial discretion of the Appellate Court. If the Appellate
Court makes such judicial discretion subject to a statutory provision relating
to deposit of interim compensation, then no fault could be found with such
exercise of discretion. Moreover such a course of action even forms part of
procedure prescribed under Section 424 Cr.P.C, though relating to a
different type of suspension of sentence. But it shows that if the Appellate
Court makes suspension of sentence subject to payment of statutory interim
compensation or fine then such an order is in commensurance with the
statutory provisions contained in Cr.P.C and the intention of legislatures as
contained in Section 148 of the Act.
Accordingly all the petitions, wherein the order of the Trial
Courts, directing the accused to deposit up to 20% of the cheque amount as
interim compensation; are challenged, are allowed. Consequently, the
Orders challenged in those petitions are set-aside.
The petitions where the challenge is to the order of the
Appellate Court, directing the appellant to deposit 20% or more of the
amount of fine or compensation as awarded by the Trial Court, are
dismissed. Consequently, the Orders impugned in these petitions are
upheld.
Lest anymore unnecessary litigation should arise under above-

said provisions of Section 143-A and Section 148 of the Negotiable
Instruments Act, it would be appropriate that the Trial Courts/Appellate
Courts are made aware of the above-said interpretation of these two
provisions. Accordingly, the Registrar General of this Court is directed to
ensure that a copy of this judgment is sent through e-mail, forthwith, to all
the judicial officers in the States of Punjab and Haryana and in U.T.
Chandigarh, dealing with cases under the Negotiable Instruments Act, 1881.
4th April, 2019 [RAJBIR SEHRAWAT]

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