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TMI Blog2024 (6) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... said fact was evidenced by the vouchers. In addition, a sum of Rs. 19,09,750/- was paid through the banking channels. The copies of the invoices were annexed to the reply. Likewise, copies of the extracts of the bank accounts were tendered to bolster up the case that a substantial part of the amount covered by the cheques was paid to the complainant. The aspect of dilatory approach of the accused cannot be said to be wholly irrelevant. It is true the mere fact that the accused regularly appeared before the Court and did not attempt to prolong the trial cannot be the sole consideration for declining to exercise discretion to award compensation under Section 143A. However, the measure of interim compensation was introduced as the unscrupulous drawers of dishonored cheques resorted to dilatory tactics to prevent expeditious disposal of the complaint under Section 138 of the NI Act, 1881. Quantum of compensation - HELD THAT:- The second ground of challenge to the impugned order on the premise that the learned Additional Sessions Judge did not advert to the question of quantum of compensation while awarding interim compensation under Section 143A of the NI Act, 1881 appears to be well- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ventually, on 7th September, 2021, accused No. 2 affirmed an affidavit acknowledging the liability to pay the said amount of Rs. 1,70,00,000/- and had drawn four cheques on City Union Bank, Khar (W), payable on 20th October, 2021 for an amount of Rs. 42,50,000/- each, aggregating to Rs. 1,70,00,000/-, towards discharge of the said liability. (d) Upon presentment, those cheques were returned unencashed on 27th October, 2021. At the instance of accused No. 2, the cheques were again presented on 23rd December, 2021 and they were again returned unencashed on 23rd December, 2021. A demand notice was issued on 7th January, 2023. Despite service of the demand notice, the accused committed default in payment of the amount covered by the cheques. Hence, the complaint for the offence punishable under Section 138 of the NI Act, 1881. (e) Upon being served with the summons, the accused petitioner appeared. The complainant filed an application for a direction to the accused to pay interim compensation (Exhibit-11). The accused resisted the application by filing a reply (Exhibit-16) contending, inter alia, that a substantial portion of the amount covered by the subject cheques was, in fact, paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgi, the learned Counsel for the petitioner, submitted that the learned Additional Sessions Judge approached the matter as if the provisions contained in Section 143A of the NI Act, 1881 are mandatory in nature. In the process, the learned Additional Sessions Judge lost sight of the fact that the learned Magistrate had declined to exercise the discretion for justifiable reasons. There was no reason to interfere with a discretionary order passed by the learned Magistrate. Secondly, the learned Additional Sessions Judge did not consider the question of the quantum of interim compensation to be awarded in a correct perspective and mechanically directed the accused to pay by way of interim compensation 20% of the amount covered by the cheques; the maximum which can be awarded under Section 143A of the NI Act, 1881. To bolster up the submissions that the provisions contained in Section 143A of the NI Act, 1881 are directory in nature and even when the Court comes to a conclusion that interim compensation is required to be awarded, the Court is enjoined to record reasons for determining the quantum of compensation to be so awarded, Mr. Mundargi placed reliance on the decision of a learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant. (5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973. (6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973, shall be reduced by the amount paid or recovered as interim compensation under this section. 9. The statement of the objects and reasons for inserting Section 143A of the NI Act, 1881 reads as under: The Negotiable Instrument Act, 1881 (the Act) was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The said Act has been amended from time to time so as to provide, inter alia, speedy disposal of cases relating to the offence of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1881 and thereby cause prejudice to the payee, who was deprived of the amount covered by the cheque. The sanctity of the transaction through cheque was thus eroded. Therefore, as a measure to compensate the payee, the Parliament considered it appropriate to vest power in the Court to award interim compensation awaiting the adjudication of the guilt. 11. Evidently, the text of Section 143A (1) makes it clear that the power to award interim compensation is discretionary as the Parliament as used the word, may . The factors which would weigh with the Court in awarding the interim compensation, though not spelled out by the text of the provisions contained in Section 143A yet are not difficult to discern. Prima facie compliance of statutory requirement to invoke Section 138 of the NI Act, 1881, prima facie merit of the case of the complainant; the nature of the underlying transaction; the nature of the defence, if any, put-forth by the drawer; probability of dispelling the presumptions under Section 118 and 139 of the NI Act, 1881; the circumstances of the case; conduct of the parties and the capacity of the drawer to pay the interim compensation, if awarded, are few of the factors whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised even before the accused is held guilty. Sub-section (1) of Section 143A provides for passing a drastic order for payment of interim compensation against the accused in a complaint under Section 138, even before any adjudication is made on the guilt of the accused. The power can be exercised at the threshold even before the evidence is recorded. If the word may is interpreted as shall , it will have drastic consequences as in every complaint under Section 138, the accused will have to pay interim compensation up to 20 per cent of the cheque amount. Such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice. If such an interpretation is made, the provision may expose itself to the vice of manifest arbitrariness. The provision can be held to be violative of Article 14 of the Constitution. In a sense, sub-section (1) of Section 143A provides for penalising an accused even before his guilt is established. Considering the drastic consequences of exercising the power under Section 143A and that also before the finding of the guilt is recorded in the trial, the word may used in the provision cannot be construed as shall . The provision wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall. b. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors. c. The broad parameters for exercising the discretion under Section 143A are as follows: i. The Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the accused in the reply to the application. The financial distress of the accused can also be a consideration. ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case. iii. If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation. iv. If the Court concludes that a case is made out to grant interim compensation, it will also have to apply its mind to the quantum of interim compensation to be granted. While doing so, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc. v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bolster up the case that a substantial part of the amount covered by the cheques was paid to the complainant. 20. At this stage, the Court has to be on guard as any expression of opinion on the probability of defence may bear upon the trial. However, the learned Magistrate, had on the basis of the material on record opined that the accused had given a plausible explanation to show that the amount, as claimed by the complainant, was not due and thus there was a probability of rebuttal of the presumptions under the NI Act, 1881. In view of the above, the pivotal question would be, whether the said inference can be said to be perverse or so legally infirm as to warrant interference in exercise of revisional jurisdiction? 21. Prima facie, the finding of the learned Metropolitan Magistrate does not appear to be based on no material. Copies of the vouchers and the extracts of the bank accounts, allegedly evidencing the payment by the accused to the complainant, were tendered alongwith reply filed by the accused. Prima facie, an inference could not have been drawn that defence raised by the accused appeared to be bald and unsubstantiated. Indeed, whether the defence raised by the accus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not advert to the question of quantum of compensation while awarding interim compensation under Section 143A of the NI Act, 1881 appears to be well-merited. The impugned order singularly lacks any consideration as regards the determination of quantum of compensation. 27. As noted above, in the case of Rakesh Shrivastava (supra) the Supreme Court has enunciated in clear and explicit terms that even if the Court concludes that a case is made out for grant of interim compensation, the Court will have to apply its mind to the quantum of interim compensation, to be awarded. Impugned order is conspicuously silent on the said aspect of quantum of interim compensation. I am, therefore, inclined to hold that the impugned order deserves to be interfered with on the said count as well. 28. The conspectus of aforesaid consideration is that the petition deserves to be allowed. 29. Hence, the following order: ORDER (i) Writ petition stands allowed. (ii) The judgment and order passed by the learned Additional Sessions Judge stands quashed and set aside. (iii) Order passed by the learned Metropolitan Magistrate dated 10th April, 2023 stands restored. (iv) Application for interim compensation (E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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