2019 (7) TMI 1840 - HC - Indian Laws

Dishonor of Cheque - scope and purport of Section 143A of the Negotiable Instruments Act - power to direct interim compensation - HELD THAT - It is clear from Section 143A(1) of the Negotiable Instruments Act makes it clear that the Court trying an offence under Section 138 of the Negotiable Instruments Act may (emphasis supplied) order the drawer of the cheque to pay interim compensation to the complainant. The provision itself shows that the discretion is vested with the Trial Court to direct interim compensation to be paid by the complainant. It is not necessary that in all cases, the trial Court must necessarily direct the complainant to pay interim compensation and such a direction should be given only on a case to case basis, by taking into consideration the facts of each case - The legislature has intentionally not used the word shall , since it would have prevented the accused persons, even in genuine cases, from defending themselves without paying 20% as interim compensation amount to the complainant. This would have directly affected the fundamental right of an accused person to defend himself in a criminal case. This is the reason why the legislature had thoughfully used the word may under Section 143A(1) of the Negotiable Instruments Act. Therefore, it is not possible to read the word shall into the word may which is used in the provision. A careful reading of the order passed by the Court below, in the present case, shows that the Court below has focussed more on the issue of the prospective / retrospective operation of the amendment. The Court has not given any reason as to why it is directing the accused persons to pay an interim compensation of 20% to the complainant - As held by this Court, the discretionary power that is vested with the trial Court in ordering for interim compensation must be supported by reasons and unfortunately in this case, it is not supported by reasons. The attempt made by the learned counsel for the respondent to read certain reasons into the order, cannot be done by this Court, since this Court is testing the application of mind of the Court below while passing the impugned order by exercising its discretion and this Court cannot attempt to supplement it with the reasons argued by the learned counsel for the respondent. This Court took the effort of discussing the effect and purport of Section 143A of the Negotiable Instruments Act, only to ensure that some guidelines are given to the Subordinate Courts, which deals with complaints under Section 138 of the Negotiable Instruments Act, on a regular basis to deal with such petitions effectively and in accordance with law. The Criminal Original Petitions are allowed.

Issues Involved:
1. Scope and purport of Section 143A of the Negotiable Instruments Act.
2. Applicability of Section 143A to pending cases.
3. Manner of operation of Section 143A in pending proceedings.
4. Discretionary power of the Trial Court under Section 143A(1).

Detailed Analysis:

1. Scope and Purport of Section 143A of the Negotiable Instruments Act:
The primary issue revolves around the interpretation of Section 143A, which was inserted by Act 20 of 2018 and brought into effect from 01.09.2018. Section 143A empowers the Court to direct the drawer of a cheque to pay interim compensation to the complainant, not exceeding twenty percent of the cheque amount, within specified timelines. This provision was introduced to address delays in the resolution of cheque dishonour cases and to provide relief to the complainant.

2. Applicability of Section 143A to Pending Cases:
The judgment clarifies that Section 143A applies to pending cases. The reasoning aligns with the Supreme Court's decision in Surinder Singh Deswal @ Col.S.S.Deswal and others Vs. Virender Gandhi, where it was held that the amendment applies retrospectively to pending appeals. The Court emphasized that a purposive interpretation is necessary to avoid defeating the purpose of the amendment, which aims to expedite the resolution of cheque dishonour cases and prevent undue delays caused by the accused.

3. Manner of Operation of Section 143A in Pending Proceedings:
The Court highlighted that the discretion to order interim compensation under Section 143A(1) is vested with the Trial Court. This discretion must be exercised on a case-by-case basis, considering the specific facts of each case. The Court should not automatically direct the payment of interim compensation in all cases. Instead, it should evaluate various factors, such as the accused's conduct, the enforceability of the debt, and any attempts to evade service or protract proceedings.

4. Discretionary Power of the Trial Court under Section 143A(1):
The judgment underscores that the Trial Court's discretion under Section 143A(1) must be supported by reasons. The Court should record reasons for directing the accused to pay interim compensation, ensuring that the exercise of discretion is not arbitrary. The reasons may include the accused's attempts to delay proceedings, overwhelming evidence of debt, or other relevant factors. An order lacking reasons is deemed illegal and subject to being set aside.

Case-Specific Analysis:
In the present case, the petitioners (husband and wife) were accused of issuing dishonoured cheques towards a legally enforceable debt. The respondent filed a petition under Section 143A(1) for interim compensation, which the Trial Court granted without providing reasons. The High Court found that the Trial Court focused solely on the retrospective application of the amendment and failed to justify the interim compensation order with reasons. Consequently, the High Court set aside the Trial Court's order and directed the lower court to complete the proceedings within three months, emphasizing the need for reasoned orders in exercising discretion under Section 143A(1).

Conclusion:
The judgment provides clarity on the scope and application of Section 143A of the Negotiable Instruments Act, emphasizing the need for a purposive interpretation and reasoned exercise of discretion by the Trial Courts. The decision aims to guide subordinate courts in effectively handling petitions for interim compensation under Section 143A, ensuring that orders are supported by justifiable reasons.

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