2025 (2) TMI 794 - HC - Indian Laws

Dishonour of Cheque - Challenge to order directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act 1881 - HELD THAT - A perusal of the reasoning given by the learned Metropolitan Magistrate if tested on the touchstone of the law laid down in Rakesh Ranjan Srivastava 2024 (4) TMI 719 - SUPREME COURT shows that the learned Metropolitan Magistrate has not prima facie evaluated the merits of the case of the complainant nor the defence of the petitioner/accused has been considered. Further there is neither any application of mind to the quantum of interim compensation to be granted nor the factors like nature of the transaction the relationship if any between the accused and the complainant financial distress etc. have been considered. Somewhat similar is the position in case of the impugned order passed by the learned Principal District Sessions Judge South-East District Court Saket New Delhi. The revisional court has not even prima facie evaluated the merits of the case set up in the complaint as well as defence of the petitioner/accused. The factors to be borne in mind for deciding the quantum of interim compensation have also not been adverted to. Conclusion - The matter is remanded back to the learned Metropolitan Magistrate for deciding the application of the complainant/respondent under Section 143A of the Act afresh keeping in mind the law down in Rakesh Ranjan Srivastava. Petition disposed off by way of remand.

Summary

The present case involves a petition filed by the petitioner against an order directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act, 1881. The key issues considered in this judgment are whether the lower courts adequately evaluated the merits of the case and the defense presented by the accused, and whether they properly considered the factors for determining the quantum of interim compensation.The petitioner argued that the lower courts failed to prima facie evaluate the merits of the case and the defense presented by the accused, as required by the law. The petitioner cited the decision in Rakesh Ranjan Srivastava v. The State of Jharkhand & Anr., which emphasized the need for courts to consider both the complainant's case and the accused's defense before directing the payment of interim compensation. The Supreme Court in that case outlined the factors that must be considered, such as the nature of the transaction, the relationship between the parties, and the financial distress of the accused.The reasoning provided by the learned Metropolitan Magistrate in the impugned order did not align with the principles outlined in the Rakesh Ranjan Srivastava case. The Magistrate's decision was based on the view that Section 143A is an enabling provision with only two prerequisites, and that the defense of the accused should not be considered at that stage. However, the judgment highlighted that the Magistrate failed to evaluate the merits of the case and the defense, nor did they consider the factors for determining the quantum of interim compensation.Similarly, the revisional court's order also did not adequately evaluate the merits of the case or the defense presented by the accused, nor did it consider the relevant factors for determining the quantum of interim compensation.The High Court, therefore, set aside the orders of the lower courts and remanded the matter back to the Metropolitan Magistrate for a fresh decision. The court directed the parties to appear before the trial court on a specified date for further proceedings.In conclusion, the High Court found that the lower courts had not properly applied the legal principles outlined in the Rakesh Ranjan Srivastava case when directing the payment of interim compensation under Section 143A of the Negotiable Instruments Act. The judgment emphasizes the importance of evaluating both the complainant's case and the accused's defense, as well as considering relevant factors when determining the quantum of interim compensation.