The Supreme Court in India, in the judgement given by Justice Ashok Bhushan, in the case of Surinder Singh Deswal Vs. Virendra Gandhi & Another. stated that section 148 of the Negotiable Instrument Act has a retrospective effect and Section 143A has prospective effect.

The present case is an appeal from the judgement given by the Punjab and Haryana High Court. The Appellants are the partners in GLM Infratech Pvt. Ltd. The Respondent was also a partner, who has retired by signing of a MOU between them. A cheque was issued on 31/3/2014 for an amount of Rs. 45,85,915. Consequently, 63 more cheques were issued by the appellants in the favour of the Respondent. On 6/04/2015, the Respondent has deposited a cheque in his bank account but it was dishonoured by the bank by giving the remark “fund insufficient” on 7/04/2015. Further, all the other 63 cheques were also dishonoured. The Respondent has issued a statutory notice u/s 138 of Negotiable Instrument Act and getting a negative response from the notice, has filed a complaint u/s 138 of the Negotiable Instrument Act. The court passed an order that the Appellants has to deposit 25% of the amount of the compensation with the court.

The Counsel for the Appellants raised the contention that the direction to deposit 25% of the compensation amount could have not been made u/s 148 of the NI Act as it came into force on 01/09/2018 and the complaint was filed in the year 2015 which was much before the enforcement of Section 148 of the NI Act. Also, the counsel placed also placed his reliance on the case of G.J. Raja vs. Tejraj Surana that stated that Section 143A has prospective effect and as section 143A and section 148 both were inserted by the same amendment, Section 148 should have a prospective effect.

The Supreme Court rejecting the contention of the Appellants stated that, “…considering the Statement of Objects and Reasons of the amendment in Section 148 of the N.I. Act stated hereinabove, on purposive interpretation of Section 148 of the N.I. Act as amended, we are of the opinion that Section 148 of the N.I. Act as amended, shall be applicable in respect of the appeals against the order of conviction and sentence for the offence Under Section 138 of the N.I. Act, even in a case where the criminal complaints for the offence Under Section 138 of the N.I. Act were filed prior to amendment Act No. 20/2018 i.e. prior to 01.09.2018. If such a purposive interpretation is not adopted, in that case, the object and purpose of amendment in Section 148 of the N.I. Act would be frustrated.”

Also, in respect to Section 143A the Supreme Court reiterated the position that was taken in G.J. Raja vs. Tejraj Surana which states that, “In our view, the applicability of Section 143A 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 143A, in order to force an accused to pay such interim compensation.”  As Supreme Court did not find any merits to the appeal made by the Appellants, therefore the appeal was dismissed.

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Link to the judgment: Surinder Singh Deswal v. Virender Gandhi & Anr.