Provision for interim compensation in cheque dishonour case to be prospective, says SC

The Supreme Court has held that a provision of the Negotiable Instruments (NI) Act, which took effect from September last year and provides for interim compensation to complainant in cheque dishonour case, will be enforced prospectively.

The apex court delivered the judgement while dealing with a question whether section 143-A of the Act can be invoked retrospectively.

The section deals with power of courts to order the drawer of the cheque to pay interim compensation to the complainant in cheque dishonour cases.

"In our view, the applicability of section 143-A 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 143-A, in order to force an accused to pay such interim compensation," said a bench of Justices U U Lalit and Vineet Saran.

The top court set aside the February 2019 order of the Madras High Court which had found no illegality in the trial court's order awarding interim compensation under section 143-A of the Act in a complaint lodged in November 2016.

"In the ultimate analysis, we hold section 143-A to be prospective in operation and that the provisions of said section 143-A 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 143-A in the statute book," the bench said, while also setting aside the trial court's order.

The top court said that money deposited by the petitioner be returned to him along with the interest.

The bench noted that prior to insertion of section 143-A of the Act, there was no provision under which even before the pronouncement of the guilt of an accused or even before his conviction, he could be made to pay or deposit interim compensation.