This article has been written by Aastha Verma, from Kalinga University, Raipur, Chhattisgarh. The article has a deep analysis of the case Surinder Singh Deswal v. Virendra Gandhi with respect to the retrospective aspect of the Negotiable Instrument Act. 


A negotiable instrument is a piece of paper that entitles a person to pay a sum of money that is transferable from one person to another by endorsement and delivery. The main objective before introducing the Negotiable Instrument Act, 1881 is to legalize the system under which these instruments can deliver from one person to another the same as that of ordinary goods. These instruments help in avoiding the carriage of hefty amounts and reduce the risk of theft or robbery. The  Negotiable Instrument Act was amended and introduced two new provisions, Section 143A and Section 148 to deal with the delay tactics of drawers of dishonored cheque due to easy filing of the appeal and obtaining stay on the proceedings which leads to the enforcement of Section 138 of the Act. The amendment came into force on 1st September 2018. Section 143A and Section 148 are discussed in detail. 

Overview of the Act

The Negotiable Instrument Act, 1881 came into existence to define and amend the laws related to the promissory notes, bills of exchange, and cheques. In India, there is always a problem of pending cases in the court and almost 20% of cases are related to the cheque dishonor dispute under Section 138 of the Negotiable Instrument Act, 1881. The Central government through the Negotiable Instrument (Amendment) Act of 2018 has inserted several new provisions. The amendment of the Act helps in addressing the issues of undue delay, efficacy, and efficiency in the case related to the dishonor of cheques. From Section 143A and 148 of the Act, the court has the power to direct the drawer to provide interim compensation during the pendency of criminal complaints and civil appeals. The recovery of fine shall be the same as under Section 421 of the Code of Criminal Procedure, 1973, and in case of acquittal court is empowered to direct the complainant to repay the amount as per the interest rate prescribed by the Reserve Bank of India (RBI)   

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Section 143A of Act

This Section provides the power to direct interim compensation at the trial stage. The insertion of this Section empowers the court while trying an offence under Section 138 of the Act, to direct the drawer of the cheque to pay interim compensation to the complaint when –

  1. A summary trial or summons case where the drawer pleads not guilty to the accusation made in the complaint. or,
  2. Upon the framing of the case. 

This measure ensures that the interest of the complaint is protected in the interim period before the charges are proved against the drawer. The provision provides aid to the complainant during the pendency of the proceedings of the case under Section 138 of the NI Act. The interim compensation is up to 20% of the total amount of the cheque. If the drawer is found guilty under this Section then the amount of interim compensation is deductible from the final compensation payable to the complainant. The Section does not prejudice the drawer in case of his acquittal by the court and the complainant has to return the interim compensation within the period of 60 – 90 days and it should be with interest.

Section 148 of Act

This Section talks about the interim compensation at the appellant stage. As per Section 148, the appellate court may direct the drawer in an appeal against conviction under Section 138 to deposit before the appellate court a part of fine or compensation as an award by the trial court which shall be a minimum of 20% of the fine or compensation within 60 days from the date of order passed by the appellant court or further within the period of not exceeding 30 days directed by the appellant on showing sufficient cause by the drawer. It provides the deposit of sum which shall be a minimum of 20% of fine or compensation awarded by the trial court has retrospective effect.   

Are Sections 143 A and 148 retrospective or prospective 

The first case to discuss this issue is Ginni Garments & another v. Sethi Garments (2019), the Punjab and Haryana High Court held that Section 143A of the Negotiable Instrument Act has prospective effect whereas Section 148 has retrospective effect and will apply to the pending appeals on the date of enforcement of the provision.  

The reason was given by the Court to hold Section 143A as prospective were-

  • The amended provision provides for enforcement of recovery of interim compensation by way of the coercive procedure and creates the obligation of the accused. 
  • By virtue of interim compensation if a person is not having the means to pay such a hefty amount the consequences under this Section will be devastating, irrevocable, and irreparable.

That’s why this Section should be prospective as it aware the accused of such consequences in advance and it cannot be applied to the cases where the trial is going on when this provision is not existing.  

Section 148 is retrospective and the reason given by the Court is –

  • The provision of recovery of fine or compensation from the appellant already exists in the existing procedure relating to recovery therefore the Section 148 of the Act has to be treated purely as a procedural which is also beneficial for the appellant. 

Therefore the provision of this Section shall govern all the appeals pending on the date of enforcement of Section 148 of the Act.   

Surinder Singh Desawal v. Virender Gandhi

After the judgment given in the above case, it was challenged in the Supreme Court with respect to the effect of Section 148 of the Act. In the case of  Surinder Singh Desawal v. Virender Gandhi (2020), the Honourable Supreme Court clarified the retrospective applicability of the amended Section and confirmed that Section 148 will be applicable to the cases where the criminal complaints under Section 138 of the NI Act were filed before the amendment.   

Brief facts about the case 

Criminal complaints under Section 138 of the Act were filed by the respondent against the appellant. The trial court convicted the appellant for the offence under Section 138 of the Act and sentenced them to imprisonment of two years and to pay the cheque amount with 1% of interest. Dissatisfied by the conviction order the appellants submitted the appeal to the Additional Session Judge of Panchkula under Section 389 of the Code of Criminal Procedure (CrPC), 1973 for the suspension of sentence and for releasing them on bail. The Court suspended the sentence and allowed the application under Section 389 of CrPC, 1973. Also, directed the appellant to deposit 25% of the total compensation awarded by the Court in accordance with the amended provision of Section 148 of NI Act. 

Again dissatisfied with the Court’s order the appellant filed a revision application before the High Court of Punjab and Haryana that the amended Act should not be applied to the criminal proceedings initiated before the amendment. The High Court dismissed the revision application and confirmed the judgment given by the trial court.   

The Appellant dissatisfied with the decision of the High Court approached the Supreme Court through appeal.   


The contentions were put forward by the appellant before the Supreme Court by way of appeal were –

  1. The appellant said that both the High Court and the first appellate court have directed to deposit 25% of the amount of compensation as per Section 148 of the Act and complaints were filed by the appellant under Section 138 of NI Act prior to the amended Section 148 of the Act.
  2. The appellant said that the first appellate court interpreted the word may as shall under Section 148 of the Act and direct for the deposit of a minimum of 25% of the fine awarded by the trial court for the suspension of sentence. 

Findings and Judgment of the court 

While adjudicating the appeal the Supreme Court referred to the Statement and Object of the amendment Act of Negotiable Instrument and observed that the amended Section 148 is brought by the parliament due to delay tactics of the unscrupulous drawer of dishonored cheque due to easy filing of the appeal and obtains stay on the proceedings because of which the object and purpose of Section 138 are breached. It was further added that the amendment in Section 148 is not violative of the right of appeal and therefore the contention made by the appellant cannot be applicable to complaints filed prior to the amendment of the Act. 

In response to the second contention, the Supreme Court held that the word “may” is generally used as a rule or shall and not as an exception but the appellant court has to give the special reason for directing the payment of deposit under Section 148 of the Act. The amended Section directs the court to pass an order pending appeal to direct the appellant to pay the sum which shall not be less than 20% of compensation either the application is filled by the complainant or by the appellant under Section 368 of CrPC, 1973 to suspend the sentence. The Supreme Court has highlighted the reason for the amendment of Section 148 of the Act which is to eliminate the injustice caused to the payee. A payee is a person who spent considerable time and resources in court proceedings because of delay tactics in dishonoring the cheque which defeated the purpose of the Act.

Therefore, considering the Statement of Object and Reason for the amendment in Section 148 is applicable in respect of appeals against the order of conviction under Section 138 of the Act. Also, in the cases where the criminal complaints were filed under Section 138 of the Act prior to the Negotiable Instrument Amendment Act.

Section 143A is Prospective and Section 148 is Retrospective 

In the case of G.J.Raja v. Tejraj Surana (2019), the Supreme Court has clarified the reason behind Section 143A as prospective and Section 148 to be retrospective in nature despite both of the provisions being introduced by the same amendment Act. The Court noticed that Section 143A is applied before the pronouncement of guilt or order of conviction at the trial stage. Whereas  Section 148 of the Act is applicable after the accused is already found guilty under Section 138 of the Act and comes to the appellate court by way of appeal. Further, added that there is no provision under Section 148 that is similar to Section 143A (5) of the Act as required as Section 421 and 357 of CrPC, 1973 applies post-conviction and is adequate to take care of such requirements. Section 148 depends upon the existing principles and does not create any fresh disability of nature which is similar to Section 143A of the Act.      


Negotiable Instrument used as a model in the commercial world and considered the convenient mode for transferring money. This instrument helps in reducing the risk of theft and robbery but a civil liability has occurred as dishonor of cheque. To protect the drawee from the loss the dishonor of the cheque is made a punishable offence. Now the drawer is liable for the penalties in case of cheque bounce due to insufficiency of funds with adequate safeguards to prevent the difficulties for the drawee. Because of this, there are a number of pending cases before the court related to cheque bounce so an amendment is initiated in the Act. In the case of Surinder Singh deswal v. Virendra Gandhi, the Supreme Court held that the reason behind the amendment in the act is to eliminate an injustice to the payee.     

The amendment to the Negotiable Instrument Act is a great effort to strengthen the speedy disposal of cases and discourage unnecessary litigation. It helps the complainant by providing interim compensation and ordering payment by the accused in case of an appeal against the conviction. It is a positive step towards enhancing the credibility of cheques. 


  1. Cheque Bouncing – Amendments To The Negotiable Instruments Act, 1881 – Finance and Banking – India (

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