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TMI Blog2024 (4) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... , the question that arises is, what are factors to be considered while exercising powers under sub-section (1) of Section 143A of the N.I. Act. FACTUAL ASPECTS The case of the 2nd respondent in the Complaint 2. The 2nd respondent (hereinafter referred as 'the respondent') is the complainant in a complaint under Section 138 of the N.I. Act. The complaint was filed in the Court of the Chief Judicial Magistrate at Bokaro. The case in the complaint is that the appellant and the respondent formed various companies on different terms and conditions regarding profit sharing. On 23rd September 2011, an appointment letter was issued by the appellant in his capacity as the Managing Director of the company M/s Thermotech Synergy Pvt. Ltd. and on behalf of a proprietary concern, M/s Tech Synergy, by which the post of Executive Director was offered by the appellant to the respondent on consolidated salary of Rs. 1,00,000/- per month. 3. On 1st June 2012, the appellant formed a partnership with one Rahul Kumar Basu, in which the respondent was shown as an indirect partner. According to the respondent's case, M/s Tech Synergy was merged with another company - M/s Megatech Synergy Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discretionary. He submitted that the Trial Court cannot pass an order to pay interim compensation mechanically. He submitted that the Court must apply its mind to the facts of the case before passing the drastic order of deposit. He submitted that the existence of a prima facie case is essential for exercising the power under Section 143A. Only after prima facie consideration of the merits of the complainant's case and defence of the accused, the Court must conclude whether a case is made out for the grant of interim compensation. After the Court comes to the conclusion that a case for grant of interim compensation has been made out, the Court has to apply its mind to the quantum of interim compensation. In every case, the Court cannot grant 20 per cent of the cheque amount as interim compensation. 6. The learned counsel appearing for the respondent submitted that considering the very object of Section 138 of the N.I. Act, sub-section (1) of Section 143A will have to be held as mandatory. He submitted that there is a presumption under Section 139 of the N.I. Act that unless a contrary is proved, the holder of a cheque received the cheque for the discharge, in whole or in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " (emphasis added) 7.1. In the statement of objects and reasons, it was stated that unscrupulous drawers of the cheques prolong the proceedings of a complaint under Section 138 by filing appeals and obtaining a stay. Therefore, injustice is caused to the payee of a dishonoured cheque, who has to spend considerable time and resources in Court proceedings to realise the value of the cheque. It was further observed that such delays compromise the sanctity of the cheque transactions. Therefore, it was proposed to amend the N.I. Act to address the issue of undue delay in the final resolution of the cheque dishonour cases. It was also stated that the proposed amendments would strengthen the credibility of cheques and help trade and commerce. 8. We may note here that by the same Act No.20 of 2018, Section 148 was brought on the statute book, which provides that in an appeal preferred by the drawer against conviction under Section 138, the Appellate Court may order the appellant to deposit such a sum which shall be a minimum 20 per cent of the fine or compensation awarded by the Trial Court. The proviso to sub-section (1) of Section 148 clarifies that the amount payable under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power under sub-section (1) of Section 143A can be exercised after the plea of the accused is recorded. 11. Under sub-section (5) of Section 143A, it is provided that the amount of interim compensation can be recovered as if it were a fine under Section 421 of the Cr.PC. Therefore, by a legal fiction, the interim compensation is treated as a fine for the purposes of its recovery. Section 421 of the Cr.PC deals with the recovery of the fine imposed by a criminal court while passing the sentence. Thus, recourse can be taken to Section 421 of the Cr.PC. for recovery of interim compensation, which reads thus: "421. Warrant for levy of fine.- (1) When an offender has been sentenced to pay a fine, the Court passing the sentence may take action for the recovery of the fine in either or both of the following ways, that is to say, it may- (a) issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender; (b) issue a warrant to the Collector of the district, authorising him to realise the amount as arrears of land revenue from the movable or immovable property, or both, of the defaulter: Provided that, if the sentence dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (4) of Section 143A, as subsection (4) provides for refund of interim compensation by the complainant to the accused and as sub-section (5) provides for mode of recovery of the interim compensation, obviously for recovery of interim compensation from the complainant, the mode of recovery will be as provided in Section 421 of the CrPC. It may be a long-drawn process involved for the recovery of the amount from the complainant. If the complainant has no assets, the recovery will be impossible. 13. At this stage, we may note sub-section (1) of Section 148. Section 148 reads thus:- "148. Power of Appellate Court to order payment pending appeal against conviction.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court: Provided that the amount payable under this sub-section shall be in addition to any interim compensation paid by the appellant under section 143A. (2) The amount referred to in subsection (1) sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not mandatory. Hence, we have no manner of doubt that the word "may" used in Section 143A, cannot be construed or interpreted as "shall". Therefore, the power under sub-section (1) of Section 143A is discretionary. 15. Even sub-section (1) of Section 148 uses the word "may". In the case of Surinder Singh Deswal v. Virender Gandhi (2019) 11 SCC 341, this Court, after considering the provisions of Section 148, held that the word "may" used therein will have to be generally construed as "rule" or "shall". It was further observed that when the Appellate Court decides not to direct the deposit by the accused, it must record the reasons. After considering the said decision in the case of Surinder Singh Deswal (2019) 11 SCC 341, this Court, in the case of Jamboo Bhandari v. Madhya Pradesh State Industrial Development Corporation Limited & Ors. (2023) 10 SCC 446, in paragraph 6, held thus: "6. What is held by this Court is that a purposive interpretation should be made of Section 148 NI Act. Hence, normally, the appellate court will be justified in imposing the condition of deposit as provided in Section 148. However, in a case where the appellate court is satisfied that the condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue of prima facie case and other relevant factors. It is true that the sum of Rs.10,00,000/- represents less than 5 per cent of the cheque amount, but the direction has been issued to pay the amount without application of mind. Even the High Court has not applied its mind. We, therefore, propose to direct the Trial Court to consider the application for grant of interim compensation afresh. In the meanwhile, the amount of Rs. 10,00,000/- deposited by the appellant will continue to remain deposited with the Trial Court. 18. Hence, impugned orders are set aside, and the application made by the complainant in Complaint Petition No. 1103/2018 under Section 143A (1) of the N.I. Act is restored to the file of Judicial Magistrate First Class, Bokaro. The learned Judge will hear and decide the application for the grant of interim compensation afresh in the light of what is held in this judgment. The amount deposited by the appellant of Rs. 10,00,000/- shall be invested in a fixed deposit till the disposal of the said application. At the time of disposing of the application, the Trial Court will pass an appropriate order regarding refund and/or withdrawal and/or investment of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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