2021 (12) TMI 898 - HC - Indian Laws

Court sets aside interim compensation order under NI Act, stresses fair assessment of evidence

M/s. JSB Cargo And Freight Forwarder Pvt. Ltd. & Ors. Versus State & Anr.

The judgment set aside the trial court's order directing interim compensation under Section 143A of the NI Act, 1881. It emphasized the discretionary ... Dishonor of Cheque - grant of interim compensation - proof of a document or admissibility of a document in evidence which is tendered along with a list of documents or along with an affidavit in lieu of examination-in-chief - HELD THAT:- The verdict of the Hon’ble High Court of Punjab & Haryana in JOGINDER SINGH VERSUS ANURAG MALIK [2015 (2) TMI 1366 - PUNJAB AND HARYANA HIGH COURT], in relation to proceedings under Section 138 of the NI Act, 1881 observes categorically to the effect that in case the petitioner who was facing proceedings under Section 138 of the NI Act, 1881 in case of a dishonoured cheque seeks to establish some documents, it would be open to the petitioner to avail the benefit of the provisions of Section 294(3) of the Cr.P.C., 1973. It becomes apparent that the provision of Section 143A of the NI Act, 1881 has essentially to be held to be “directory’ and cannot be termed to be “mandatory’ to the effect that the Trial Court has mandatorily to award the interim compensation under Section 143A of the NI Act, 1881 in all proceedings tried under Section 138 of the NI Act, 1881 on the mere invocation thereof by a complainant and thereby order in terms of Section 143A(2) thereof, the interim compensation to the tune of 20% of the amount of the cheque invoked. 52. The applicability of Section 294 of the Cr.P.C., 1973 has been made essential in all proceedings in criminal trials and undoubtedly, the proceedings under Section 138 of the NI Act, 1881 are termed to be quasi criminal in nature. The observations of the learned Trial Court to the effect that even if it be assumed that the provisions of Section 143A of the NI Act, 1881 is discretionary in nature, the Court is still clothed with the powers to grant interim compensation to the complainant after providing sufficient reasons, it is essential to observe that the award of interim compensation in terms of Section 143A of the NI Act, 1881 has to be after providing sufficient reasons and whilst taking the same into account, the determination of interim compensation directed to be paid by the petitioners herein to the extent of the maximum of 20% of the cheque amount to the complainants without even considering the submissions that have been sought to be raised by the petitioners in relation to bank statements of the complainant and without resorting to the provisions of Section 294 of the Cr.P.C., 1973 cannot be held to be within the contours of Section 143A of the NI Act, 1881 to be with sufficient reasons - there are no inherent powers conferred on a criminal court of a Magistrate dehors enabling provisions of a statute. Matter remanded back to the learned Trial Court to dispose of the application under Section 143A of the NI Act, 1881 filed by the complainants of the said complaint cases seeking interim compensation from the accused after invocation of Section 294 of the Cr.P.C., 1973 - Application disposed off. Issues Involved:1. Legality of the interim compensation order under Section 143A of the NI Act, 1881.2. Discretionary vs. mandatory nature of Section 143A of the NI Act, 1881.3. Applicability of Section 294 of the Cr.P.C., 1973 in proceedings under Section 138 of the NI Act, 1881.4. Consideration of the defense's evidence at the interim compensation stage.Detailed Analysis:1. Legality of the Interim Compensation Order under Section 143A of the NI Act, 1881:The petitions challenged the consolidated order of the Metropolitan Magistrate directing the accused to pay interim compensation under Section 143A of the NI Act, 1881. The complainants sought interim compensation after the accused pleaded not guilty. The trial court granted the compensation, stating that the complainants would repay the amount with interest if the accused were acquitted. The petitioners argued that the order was not tenable in law or on facts, as the trial court did not consider their evidence or the legality of the alleged loan agreement.2. Discretionary vs. Mandatory Nature of Section 143A of the NI Act, 1881:The petitioners contended that Section 143A is discretionary, not mandatory. They argued that the word 'may' in the provision indicates discretion, allowing the court to decide whether to award interim compensation based on the case's merits. The trial court, however, treated the provision as mandatory, directing the payment of 20% of the cheque amount without considering the defense's arguments. The judgment highlighted divergent views from various High Courts on this issue, with some treating the provision as discretionary and others as mandatory.3. Applicability of Section 294 of the Cr.P.C., 1973 in Proceedings under Section 138 of the NI Act, 1881:The judgment emphasized that Section 294 of the Cr.P.C., 1973, which deals with the admission and denial of documents, applies to all criminal proceedings, including those under Section 138 of the NI Act. The trial court was required to consider the defense's documents and submissions before deciding on the interim compensation. The judgment cited precedents where courts have applied Section 294 in proceedings under Section 138, ensuring that both parties' evidence is duly considered.4. Consideration of the Defense's Evidence at the Interim Compensation Stage:The petitioners argued that the trial court failed to consider their documents and evidence, such as bank statements and the alleged excess payment to the complainants. They contended that the court should have invoked Section 294 of the Cr.P.C., 1973, to admit or deny the genuineness of the documents before awarding interim compensation. The judgment agreed with this view, stating that the trial court must provide sufficient reasons for awarding interim compensation and consider the defense's evidence.Conclusion:The judgment set aside the trial court's order and remanded the matter for reconsideration. It directed the trial court to apply Section 294 of the Cr.P.C., 1973, and consider the defense's submissions before deciding on the interim compensation. The judgment clarified that Section 143A of the NI Act, 1881, is directory, not mandatory, and the trial court must provide sufficient reasons for awarding interim compensation. The trial court was instructed to dispose of the application within 30 days, ensuring a fair and just process.