Dishonour of Cheque - Scope of interim compensation - Liability ...

High Court Clarifies Discretionary Power in Interim Compensation for Cheque Dishonor Cases; Limits Liability to Drawers Only.

April 20, 2024

Case Laws     Indian Laws     HC

Dishonour of Cheque - Scope of interim compensation - Liability of the Director the Company - The High Court found that Section 143A does not mandate the imposition of interim compensation but vests a discretionary power in the court. This discretion should consider the specific circumstances of each case, including existing securities and the financial status of the parties. - The Court highlighted that Section 143A explicitly targets the "drawer of the cheque" for interim compensation. Applying this to other associated persons without explicit legislative directive is incorrect. The judgment differentiated the role of a company's directors or signatories from the company itself, the latter being the actual drawer of the cheques. - The High Court set aside the Metropolitan Magistrate’s orders mandating the payment of interim compensation.

View Source