Case Analysis Of G.J. Raja V. Tejraj Surana AIR 2019 SC 3817
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Category: General Law
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CASE
ANALYSIS
OF G.J. RAJA V. TEJRAJ SURANA AIR
2019 SC 3817
Aditi Kumari, GNLU Gandhinagar Year - 2019 Name of the Case - G.J. Raja v. Tejraj Surana Citation – AIR 2019 SC 3817; (2019) 19 SCC 469 Name of the Appellant – G.J. Raja Name of the Respondent – Tejraj Surana Facts of the case There is a case consisting of two cheques issued by the appellant – accused, G.J. Raja, to the respondent – Complainant, Tejraj Surana, for amounts of ₹20,00,000 and ₹15,00,000. These cheques were issued and returned for lack of sufficient funds. The complaint was lodged on 4th Nov, 2016 u/s 138 of Negotiable Instruments Act, 1881 which deals with the dishonour of cheques. An amendment to the Negotiable Instruments Act, 1881 in 2018 added Sec 143A where courts can provide interim compensation during pendency of the case. It was inserted by Act 20 of
2018 with effect from 1-9-2018.
While proceedings u/s 138 of Negotiable Instruments Act, 1881 was still pending, the Trial Court directed the appellant – accused to pay interim compensation at 20% as per Sec 143A. In appeal, the High Court reduced it to 15% but upheld the order passed by the Trial Court. Hence the appeal was made before the Supreme Court to challenge the final order passed by the High Court of Judicature at Madras, dated 8-2-2019, in G. J. Raja v. Tejraj Surana1.
1 [2019] SCC OnLine SC 1064.
The contention of the Appellant The appellant who is accused, contended that Sec 143A should not have retrospective effect as it imposes new obligations and liabilities, thereby the said provision should not apply. The contention of the Respondent The complainant, who is respondent here in the present case of appeal, contended that the interim compensation should be upheld as per the Negotiable Instruments (Amendment) Act,
1881. Here it was argued that the provision should be applied to ensure justice and to provide
relief till the pendency of the proceeding. Reference to which Act/Circular/Guideline etc § Negotiable Instruments Act, 1881 (with the 2018 amendment adding Sec 143A) § Criminal Procedure Code, 1973 Issues: Issue 1 – Whether Section 143A of the Negotiable Instruments Act, 1881 has a retrospective effect and can be invoked in cases where the offences punishable under Section 138 of the Act were committed prior to the introduction of Section 143A? Issue 2 – Whether the interim compensation ordered by the trial court was justified? Issue 3 – Whether the amendment to the Negotiable Instruments Act, 1881, applies to ongoing cases? The Reasoning of Court Prospective Application of Sec 143A The court held that Sec 143A of the Negotiable Instruments Act, 1881, does not have retrospective effect and applies only to the offences committed after the insertion of Section 143A on 1st Sep, 2018.
It relied on Hitendra Vishnu Thakur v. State of Maharashtra,2 to determine the scope of an amending act and its retrospective operation in the following manner: (i) “A statute affecting substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment; while a statute affecting procedural rights is presumed to be retrospective in its application, unless such a construction is textually impossible. It should not be given an extended meaning and should be strictly confined to its clearly defined limits. (ii) Law relating to right of action and appeal even though remedial is substantive in nature; while the law relating to forum and limitation is procedural in nature. (iii) Vested right exists in substantive law, unlike in procedural law.
(iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication. ” [Para 15] “In the present case scenario, the fourth and fifth principles suits appropriately to the current circumstances. As per the application of these principles, the provision of Sec 143A can be considered to be prospective in nature and confined to cases where the offences were committed after the introduction of Sec 143A in order to enforce the payment of such interim compensation.
”[Para 21] The provisions contained u/s 143A has two dimensions – [Para 17] I.
Creates a liability upon the accused who can be ordered to pay over up to 20% of the cheque amount to the complainant, that too while the complaint is not yet adjudicated upon and the guilt of the accused has not yet been determined.
2 Hitendra Vishnu Thakur v State of Maharashtra [1994] 4 SCC 602 (SC).
II.
It makes available the machinery for recovery, as if the interim compensation were arrears of land revenue. Thus the said provision not only creates a new disability or an obligation but also exposes the accused to such coercive methods of recovery of the interim compensation. It also relied upon CIT v. Vatika Township (P) Ltd3 where the Court while examining the retrospectivity of Sec 158 BE of the Income Tax Act 1961 stated the principle of lex prospicit non respicit, meaning thereby ‘law looks forward not backward’. It stated that the legislation is presumed to have prospective application unless the contrary intention can be construed out of it. The simple idea behind this is that the current activities should be governed by the current laws.
This is based on the enshrined belief that the human beings are presumed to arrange their affairs based on the existing laws and these cannot be reasonably presumed to have retrospective application. [Para 14] The character of the transactions that are carried out based upon the existing laws should not be changed if a new future law came into being. 4 [Para 14] The Court also examined the status of compensation before the insertion of Sec 143A of Negotiable Instruments Act 1881. Earlier there was no provision that made the accused to pay or deposit interim compensation before the pronouncement of his guilt or offence in question. The imposition or consequential recovery of fine or compensation through Sec 421 and Sec
357 of CrPC also arose only after the person is found guilty of the offence. Thereby Sec 143A
was introduced to change such a status of law. It imposes prior penalty where the accused is forced to pay the interim compensation, thereby creating a new disability or obligation. [Para 19] Therefore, in the present case scenario, the Court while deciding the nature of the provision between being substantive and procedural pondered upon the question that whether the said law would have prospective or retrospective application. It applied the rulings of various cases to decide upon the matter and concluded that the said law is prospective in nature as it creates new liabilities and obligations.
3 CIT v. Vatika Township (P) Ltd [2015] 1 SCC 1.
4 Phillips v. Eyre [1870] LR 6 QB 1.
The next two issues are the ancillary issues attached to the previously discussed primary issue that arose in the present case. Justification of Interim Compensation This court further considered whether the interim compensation awarded by the trial court was reasonable in the light of the new provision. It noted that the compensation based on new provision could not be applied to offences committed before the amendment. The Court discussed the case of Surinder Singh Deswal v. Virender Gandhi,5 and distinguished it from the present case scenario in a way that in this case the provisions of Sec 148, which was introduced through same Amendment Act 20 of 2018, were not considered similar to Sec 143A(5) of the Negotiable Instruments Act 1881.
Sec 148 was held to be retrospective in operation, as it applies at the appellate stage where the accused is already found guilty of the offence u/s 138 of the Act. On the other hand, Sec 143A applies at the trial stage even before the pronouncement of the guilt or order of conviction. Considering this, Sec 148 depends upon the existing machinery and principles and does not create any fresh disability like the provisions of Sec 143A. [Para 22] Discussing this, the Court came to the conclusion that the interim compensation can be justified only in the cases that occurred after the law came into being otherwise that would cause an unnecessary burden on the accused even before the guilt is proven. The interim compensation could have been justified if the law was already there in existence when the offence was committed.
This would have provided an additional relief to the plaintiff who has suffered loss due to the non-payment. Application of Amendment on the ongoing cases It does not apply to the cases that were pending before the enactment of the said provision, as discussed above it has retrospective operation. It creates new disabilities and obligations and additionally new duties in respect of the tasks already accomplished. It creates new rights and liabilities and thus in that manner it is supposed to have prospective operation. The said amendment came into force from 1-9-2018, thus as the statue itself clearly mentions the date 5 Surinder Singh Deswal v. Virender Gandhi, [2019] 11 SCC 341 : [2019] 3 SCC (Cri) 461 : [2019] 3 SCC (Civ) 765. of enforcement, so it cannot be applied for the acts already committed, as that would go against the general principles of law.
It can be construed to apply retrospectively only when it merely affects the procedure without giving any extended meaning to it. 6 However, in the present case the statute not only gave the extended meaning but also expressly created new rights and liabilities, thus it shall to be construed prospective and shall apply only to the acts committed after its enforcement that is 1-9-2018. Ratio The court ultimately concluded that Section 143A of the Negotiable Instruments Act 1881 applies only to offences committed after its insertion on 1st Sep 2018. It made the operation of the law prospective in nature. Hence the impugned orders passed by the Trial Court as well as the High Court were set aside.
The money deposited by the appellant, pursuant to the interim direction passed7 by the Court, shall be returned to the appellant along with the interest accrued thereon within two weeks from the date of this order. ”[Para 23] Which section/s of the concerned Act was referred to? “The Negotiable Instruments Act, 1881 • Section 138: Dishonour of cheques for insufficiency, etc. , of funds in the account. • Section 143A: Power to direct interim compensation. • Section 148: Power of Appellate Court to order payment pending appeal against the conviction. ” The Criminal Procedure Code, 1973 • Section 421: Warrant for levy of fine. • Section 357: Order to pay compensation.
6 Hitendra Vishnu Thakur v State of Maharashtra [1994] 4 SCC 602 (SC).
7 G.J. Raja v. Tejraj Surana [2019] SCC OnLine SC 1064.
Which clause/s of Regulation/Guideline/Circular etc was referred to? Not specifically mentioned. Was this decision appealed further? No, this decision was not appealed further, making the Supreme Court’s interpretation final in this context. Relevance of the Case This is a landmark case which needs to be read for giving meaning to the retrospective application of amendments to the Negotiable Instruments Act, 1881. It also explains the scope and application of Section 143A with regard to the interim compensation. It clearly interpreted it as non-retrospective in order to safeguard protection of individual's rights from retroactive legal obligation. This interpretation ensures that individuals are not subjected to new legal obligations for actions done prior to the law was amended.
The judgment serves as a precedent for the future cases in not only deciding about the retrospective application of law but also understanding that whether the said provision in question is substantive or procedural or whether it creates new rights or liabilities or obligations or not. Applying the current law prospectively would also prevent any chaos and confusion in the justice administrative system. It would prevent the arbitrariness and the miscarriage of the justice in a way that the accused whose guilt is not yet proven should not be forced to pay unnecessarily. In such a situation in order to bring justice to both the parties, we need to consider the proper facts and circumstances of the case in hand and provide relief to the plaintiff by exercising other machineries like by the way of Court itself and then if the guilt is proved then that amount to be repaid to the Court.
Is it still a good law? Explain Why? It is still a good law as it brings much-needed clarity to the application of amendments to the Negotiable Instruments Act, making sure new provisions do not operate with retrospective effect and therefore protect rights of persons against whom complaints were lodged before the amendment, thereby safeguarding the legal certainty and individuals' rights.
In today’s era, economic transactions are no longer just carried out by way of money, but also other ways are used like cheque, promissory notes, bills of exchanges and other digital modes of payment. Thus in this era, it also becomes more important to protect the rights of these individuals, and also it is to be noted that here individuals not only include plaintiffs but also persons who are wrongly accused and now are forced to give compensation without any fault of their own. Thus in that manner the judgement can be said to be more of accused-friendly. It is still a valid law and can be appropriately cited as a precedent. It provides the clarity regarding the current position of cases under Sec 138 of Negotiable Instruments Act 1881 and how to be dealt with that if the question arose regarding the interim compensation.
Closing Analysis Here though the Court has appropriately acknowledged the distinction between the substantive and procedural law in order to identify its retrospective or prospective application. However, it is to be noticed that the Court here failed to recognize the difference between being a civil remedy or a criminal remedy. Here Sec 143A provides for the civil remedy. It is the civil obligation to pay the amount. It is the undoubted principle that the criminal liability arose for the offence of dishonouring the cheque, however when it comes to recovery of the cheque amount, then that amounts to civil liability. 8 So here we need to understand that why we need to study this distinction. This is because under Art 20(2) of the Constitution retrospective imposition of only criminal liability is prohibited and not that of civil.
So, bearing in mind this principle, interim compensation is also a civil remedy as it is neither an offence nor it is imposing any penalty. 9 It is just an additional remedy of civil nature, thus if this principle is applied it is ought to have been considered as of having retrospective application. Also if instead of applying the textual interpretation, we look into the intent of the statute, which could be inferred by reading the statute as a whole, it can be easily concluded that the statute provides more for the welfare of the complainants, as the payment done through cheque may involve huge transactions and failure of that may incur huge losses to the business of the plaintiff and ultimately also to the general public. Thereby if this principle is applied, the Court is then supposed to have a broader interpretation of the statute and then apply it retrospectively
8 R. Vijayan v. Baby and anr. [2012] 1 SCC 260.
9 Jawala Ram v. State of Pepsu [AIR 1962 SC 1246]; Sova Ray v. Gostha Gopal Dey [1988] 2 SCC 134.
as per the respective facts to provide remedy for the losses incurred. Thus in order to provide a more comprehensive judgement and to bring more clarity to the point of retrospectivity and considering various other theories of law that facilitates effective justice, the Court would have done the better justice to the parties in hand and also for the future matters if such question arose. The primary aim should be to protect the creditors and other such lending institutions along with considering the interests of the debtors.