2020 (5) TMI 561 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - applicability of Section 143A of the Act - HELD THAT - Section 143A was inserted in the Act with effect from 01.09.2018 by Amendment Act 20 of 2018. Section 143A(1) of the Act provides that, notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Court trying an offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant (a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint and (b) in any other case, upon framing of charge. Section 143A(2) of the Act states that the interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque. In the instant case, the offence under Section 138 of the Act was allegedly committed by the petitioner and the complaint against him was filed by the first respondent much before the date 01.09.2018. Therefore, the learned Magistrate could not have invoked the provisions under Section 143A of the Act in the instant case and directed the petitioner to deposit 20% of the amount of the cheques. The impugned order cannot be sustained in law. Petition allowed - decided in favor of petitioner.

Summary

Issues:
- Interpretation of Section 143A of the Negotiable Instruments Act, 1881
- Applicability of Section 143A in cases where the offence was committed before its introduction

Analysis:

The judgment by the High Court of Kerala dealt with the interpretation of Section 143A of the Negotiable Instruments Act, 1881, in a case where the accused was directed to deposit 20% of the amount of the cheques by the Magistrate. The case involved a complaint filed against the accused for an offence under Section 138 of the Act, relating to dishonor of cheques. The accused challenged the order of depositing 20% of the cheque amount, citing the insertion of Section 143A in the Act with effect from 01.09.2018 by Amendment Act 20 of 2018.

The Court referred to the provisions of Section 143A of the Act, which allow for interim compensation to be ordered in certain circumstances. It was noted that as per Section 143A(1), the court may order the drawer of the cheque to pay interim compensation in specific situations, including when the accused pleads not guilty. Section 143A(2) sets a limit of twenty percent of the cheque amount for such interim compensation. The Court also highlighted the Supreme Court's decision in Raja v. Tejraj Surana (AIR 2019 SC 3817), emphasizing that the applicability of Section 143A is prospective and confined to cases where the offence under Section 138 was committed after the provision's introduction.

In this case, the Court concluded that since the offence under Section 138 was allegedly committed before 01.09.2018, the Magistrate erred in invoking Section 143A and directing the accused to deposit 20% of the cheque amount. Therefore, the impugned order was deemed unsustainable in law. Consequently, the petition was allowed, setting aside the order for deposit. The Court directed the trial court to expedite the case's disposal, ensuring justice is served promptly.

In summary, the judgment clarified the applicability of Section 143A of the Negotiable Instruments Act, emphasizing its prospective nature and limited scope to cases where the offence occurred post the provision's introduction. The ruling provided a crucial interpretation of the law to safeguard the accused's rights and ensure correct application of legal provisions in dishonor of cheque cases.