Cheque Bounce cases: no interim compensation in cases already pending on the date of amendment, read the judgment

April 12, 2019:

Pujnab & Haryana High Court has held that interim compensation for cheque bounce cases cannot be grated by trial courts in cases which were already pending on the date of enforcement of Section-143-A NI Act.

Justice Rajbir Sehrawat has passed the judgment titled M/s Ginni Garments and another vs M/s Sethi Garments on 04.04.2019.

Different Trial Courts had ordered the accused/petitioners to pay 20% or less of the cheque amount to the complainant under Section 143-A of the Act. The accused persons challenged the said orders.

The High Court opined that the Section-143-A creates an obligation on the part of accused and therefore the same has to be treated as substantive provision and since a substantive provision cannot apply with retrospective effect unless so provided, the trial courts could not have used the said provision for directing interim compensation. It talked about the concept of obligation available in general clauses act and stated that the definition shall apply to all central laws.

In the process of discussion, the High Court observed “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”.

While emphasizing the substantive nature of the provision, the Court observed “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”.

Ultimately, the High Court held “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”.

Read the judgment here:

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