2019 (7) TMI 2012 - HC - Indian Laws

Dishonour of Cheque - scope and purport of Section 143A of the Negotiable Instruments Act - direction to pay interim compensation to the respondent within a stipulated time - petitioners submitted that the Court below has not given any reason as to why it has directed to accused persons to pay 20% of the cheque amount to the respondent as interim compensation - HELD THAT - A careful reading of the order passed by the Court below 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 order passed by the Court is hereby set aside. In the result, the Criminal Original Petitions are allowed.

Summary

Issues Involved:
1. Scope and applicability of Section 143A of the Negotiable Instruments Act.
2. Discretionary power of the trial court under Section 143A(1).
3. Requirement of reasons for exercising discretion under Section 143A(1).

Detailed Analysis:

1. Scope and Applicability of Section 143A of the Negotiable Instruments Act:
The primary issue addressed is the scope and applicability of Section 143A of the Negotiable Instruments Act, which empowers the court to direct the drawer of a cheque to pay interim compensation to the complainant. Section 143A was inserted by Act 20 of 2018, effective from 01.09.2018. The court referenced the legislative intent behind this amendment, highlighting the need to address the delay in resolving cheque dishonour cases and to provide relief to payees of dishonoured cheques.

The court adopted the reasoning of the Supreme Court in the case of Surinder Singh Deswal @ Col. S.S. Deswal and others Vs. Virender Gandhi, which held that the amendment applies retrospectively to pending proceedings. The court emphasized that a purposive interpretation is necessary to fulfill the legislative intent, which aims to benefit complainants in cheque dishonour cases.

2. Discretionary Power of the Trial Court under Section 143A(1):
The court analyzed the discretionary power vested in the trial court under Section 143A(1), which states that the court "may" order the drawer to pay interim compensation. The use of the word "may" indicates that the trial court has discretion and is not mandated to order interim compensation in every case. This discretion must be exercised judiciously, considering the specific facts of each case.

The court clarified that the legislature intentionally used "may" instead of "shall" to prevent the imposition of an undue burden on accused individuals, which could infringe upon their fundamental right to defend themselves in criminal proceedings. The discretionary power should be exercised based on the circumstances, such as the accused absconding or evading service, overwhelming evidence of debt, or the accused's conduct in delaying proceedings.

3. Requirement of Reasons for Exercising Discretion under Section 143A(1):
The court stressed the importance of providing reasons when exercising discretion under Section 143A(1). Orders directing interim compensation must be supported by reasons to avoid arbitrariness and to ensure that such orders can withstand appellate or revisional scrutiny. The court listed various illustrative circumstances that could justify the exercise of discretion, such as the accused absconding, evading service, or not cross-examining witnesses.

In the present case, the trial court's order directing the petitioners to pay 20% of the cheque amount as interim compensation was set aside because it lacked the necessary reasons. The court emphasized that the trial court's focus on the retrospective application of the amendment without providing reasons for the interim compensation order was insufficient.

Conclusion:
The court concluded by setting aside the trial court's order and directing the trial court to complete the proceedings within three months. The judgment serves as a guideline for subordinate courts to effectively handle petitions under Section 143A, ensuring that discretionary orders are well-reasoned and in accordance with the law. The registry was directed to circulate the judgment to all subordinate courts through the Judicial Academy.