Supreme Court allows appeal, directs cross-examination, and interim compensation deposit

The Supreme Court allowed the appeal, setting aside the decisions of the lower courts that denied the appellant the right to cross-examine the respondent due to non-payment of interim compensation. The court found this denial to be illegal and directed the trial court to permit the appellant to cross-examine the respondent and proceed with the case. The appellant was also instructed to deposit 20% of the cheque amount as interim compensation, emphasizing that the court had not assessed the case's merits, which would be reviewed by the trial court.

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Issues Involved:
1. Legality of the order directing the appellant to deposit 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instruments Act, 1881.
2. Whether the appellant's failure to deposit interim compensation justified the denial of the right to cross-examine the respondent.
3. Validity of the judgments passed by the lower courts affirming the appellant's conviction under Section 138 of the Negotiable Instruments Act, 1881.

Issue-wise Detailed Analysis:

1. Legality of the Order Directing Interim Compensation:
The appeal challenges the correctness of the judgment and order dated 17.12.2021 passed by the High Court of Karnataka at Bengaluru in Criminal Revision Petition No. 39 of 2021. The proceedings arise out of Complaint Case No. 244 of 2019, where the respondent alleged that a cheque dated 25.02.2019 for Rs.7,00,000/- drawn by the appellant was dishonored due to insufficient funds. The trial court directed the appellant to deposit 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instruments Act, 1881. The appellant failed to comply within the stipulated period, leading to an extension which also lapsed without deposit.

2. Denial of Right to Cross-Examine Due to Non-Compliance:
The appellant sought permission to cross-examine the respondent under Section 145(2) of the Act. However, due to the appellant's failure to deposit the interim compensation, the trial court dismissed this application. The trial court subsequently found the appellant guilty under Section 138 of the Act and imposed a fine of Rs.7,00,000/-, with Rs.6,95,000/- directed as compensation to the respondent. The appellate court and the High Court affirmed this decision, emphasizing that the appellant's conduct showed a reluctance to comply with court orders and an intention to protract proceedings.

3. Validity of Judgments by Lower Courts:
The Supreme Court examined Section 143A of the Act, which empowers the court to direct the accused to pay interim compensation not exceeding 20% of the cheque amount. The provision outlines the recovery method for interim compensation as if it were a fine under Section 421 of the Criminal Procedure Code, 1973. The court emphasized that the statute provides a specific method for recovery and does not contemplate any additional penalties, such as denying the right to cross-examine witnesses. The court cited precedents to assert that statutory powers must be exercised strictly as prescribed by the statute.

Conclusion:
The Supreme Court found that the lower courts erred in denying the appellant the right to cross-examine the respondent due to non-payment of interim compensation. This denial constituted an inherent infirmity and illegality in the judgments. Consequently, the Supreme Court allowed the appeal, setting aside the decisions of the lower courts. The Complaint Case No. 244 of 2019 was restored to the file of the trial court, directing it to permit the appellant to cross-examine the respondent and proceed to a logical conclusion. The appellant was also directed to deposit 20% of the cheque amount as interim compensation, with specific instructions for the registry to handle the deposited amount. The Supreme Court clarified that it had not reflected on the merits of the case, which would be examined afresh by the trial court.

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