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2021 (8) TMI 249 - HC - Indian LawsDishonor of Cheque - drawer of the cheque - liability to pay interim compensation - Section 143A of the N.I. Act - HELD THAT - It is pertinent to note that the petitioners have not taken the contention before the trial Court at the time of hearing of the application Exh.13 filed by respondent No. 2 complainant that the petitioners are not the drawer of the cheques in question and, therefore, they are not liable to pay interim compensation under Section 143A of the N.I. Act. On the contrary, the petitioners have requested before the trial Court that as per the provisions contained in Section 143A of the N.I. Act, the interim compensation shall not exceed 20% of the cheque amount and, therefore, minimum amount may be ordered to be deposited. Thus, it appears that the petitioners have accepted their liability of making payment of interim compensation. It is therefore clear from the record that the contention taken by the petitioners that the petitioners are not the drawer of the cheques in question is nothing but an afterthought and the said contention is taken for the first time before this Court. The petitioner No. 1 has signed the cheques in question as an authorised signatory of accused No. 1 Company. The petitioners are Directors of accused No. 1 Company. The contention taken before this Court was not taken before the trial Court by the petitioners. On the contrary, it was requested before the trial Court that minimum amount may be ordered to be deposited and not 20% of the cheque amount. Further, though the trial Court directed the accused to pay 20% of the cheque amount by way of interim compensation within 60 days from the date of order i.e. from 19.09.2019, till date, the said direction has not been complied with. This Court is not inclined to exercise powers under Article 226 of the Constitution of India in favour of the present petitioners - Petition dismissed.
Issues Involved:
1. Validity of the order directing the accused to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instruments Act, 1881. 2. Delay in filing the petition challenging the Magistrate's order. 3. Liability of the petitioners as authorized signatories and directors of the company issuing the cheque. Issue-Wise Detailed Analysis: 1. Validity of the Order Directing Interim Compensation: The petitioners challenged the order dated 19.09.2019 by the Additional Chief Judicial Magistrate, Surat, which directed them to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instruments Act, 1881 (N.I. Act). The petitioners argued that they are not the drawers of the cheque, and hence, the liability to pay interim compensation should not fall upon them. They relied on the Supreme Court's decision in *N. Harihara Krishnan Vs. J. Thomas* (2018) and an interim order by the Bombay High Court in *Venugopal N. Dhoot Vs. State of Maharashtra and Anr.* However, the Court noted that Section 143A allows the court to order the drawer of the cheque to pay interim compensation, and the petitioners, as authorized signatories, fall within this scope. The Court also observed that the petitioners did not raise this contention before the trial court and had instead requested a reduction in the compensation amount, indicating acceptance of their liability. 2. Delay in Filing the Petition: The Court highlighted that the impugned order was passed in September 2019, but the petition challenging it was filed only in July 2021, with no explanation provided for this delay. The Court emphasized that the petitioners had not complied with the Magistrate's order to pay the interim compensation within 60 days, further questioning their conduct. Given the significant delay and non-compliance, the Court was disinclined to exercise its discretion in favor of the petitioners. 3. Liability of the Petitioners as Authorized Signatories and Directors: The Court examined the petitioners' argument that they were not the drawers of the cheques and thus not liable under Section 143A. It referred to the Supreme Court's observations in *N. Harihara Krishnan Vs. J. Thomas*, which clarified that a person signing a cheque on behalf of a company does not become the drawer but is still liable due to their legal status. The Court noted that the petitioners, as directors and authorized signatories of the company, were correctly held liable by the Magistrate. The Court also pointed out that the petitioners had not contested their liability before the trial court and had only requested a reduction in the compensation amount, which undermined their current contention. Conclusion: The Court dismissed the petition, upholding the Magistrate's order directing the petitioners to pay 20% of the cheque amount as interim compensation. The Court found no merit in the petitioners' arguments and emphasized their delay in filing the petition and non-compliance with the interim compensation order. The decision reaffirmed the applicability of Section 143A of the N.I. Act to authorized signatories and directors of a company issuing a dishonored cheque.
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