2022 (10) TMI 136 - HC - Indian Laws

Court Upholds Interim Compensation Orders under Section 143-A of NI Act

Capital Scaffolding through its Proprietor Salim Chohan and anr. Versus State of Haryana and another.

The court upheld the orders granting interim compensation under Section 143-A of the Negotiable Instruments Act, dismissing the petitioners' arguments ... Dishonor of Cheque - discharge of legal liability or not - delaying tactics of unscrupulous drawers of dishonoured cheques - prayer for interim relief - Section 143-A of NI Act - HELD THAT:- The facts clearly shows that the petitioner No.2-accused has adopted dilatory tactics by moving repeated applications for exemption before and after obtaining bail. In fact, bailable warrants/non-bailable warrants had also been issued against the accused on a few occasions. Further, as per interim bail order dated 30.07.2021 (Annexure P-11) in FIR No.09 dated 18.01.2021 under Sections 406/506/120-B IPC, the petitioner No.2 (accused) only chose to appear in these proceedings when his counsel gave an undertaking to this effect to the Court of the Additional Sessions Judge, Gurugram, pursuant to which he finally appeared on 12.11.2021 and was granted bail. The statement of Objects and Reasons as enumerated hereinabove clearly show that the need for the insertion of Section 143-A to the Negotiable Instruments Act, 1881 was in order to prevent delaying tactics of unscrupulous drawers of dishonoured cheques. The present case is a classic case wherein the petitioner No.2-accused has delayed proceedings significantly. Therefore, no fault can be found with the passing of the impugned orders. The arguments of the learned counsel for the petitioners as setout in the present petition are a virtual reproduction of the reply to the application under Section 143-A of the Act, which have been dealt with by the Courts below - Whether the cheque, in question, had been issued as a security cheque or was a blank cheque or whether the filing of the complaint was a pressure tactic or not etc. are not matters to be examined by the Court while adjudicating upon an application under Section 143-A of the Act. If the merits of the case was to be minutely examined at this stage, it would amount to the conducting of a virtual mini trial thereby defeating the very purpose of Section 143-A of the Act, which seeks to provide succour to an aggrieved person. There are no merit in the present petition - petition dismissed. Issues Involved:1. Legality of the order granting interim compensation under Section 143-A of the Negotiable Instruments Act.2. Allegations of misuse of the cheque as a security instrument.3. Accusations of delay tactics by the petitioner-accused.4. Applicability and interpretation of Section 143-A of the Negotiable Instruments Act.Detailed Analysis:1. Legality of the Order Granting Interim Compensation:The petitioners sought to set aside the order dated 26.07.2022 passed by the Additional Sessions Judge, Gurugram, affirming the Judicial Magistrate Ist Class's order dated 09.05.2022, which granted interim compensation under Section 143-A of the Negotiable Instruments Act. The petitioners argued that the grant of interim compensation was discretionary and should not have been awarded given the merits of their case. However, the court concluded that the Judicial Magistrate Ist Class, Gurugram, was justified in awarding 20% of the cheque amount as interim compensation, considering the delay tactics adopted by the petitioner-accused.2. Allegations of Misuse of the Cheque as a Security Instrument:The petitioners contended that the cheque in question was given as a security cheque for rented material and was blank and undated. They argued that since it was a security cheque, it could not be presumed to discharge any debt or liability. This claim was admitted by the complainant-respondent. However, the court noted that such defenses are matters to be examined during the trial and not at the stage of adjudicating an application under Section 143-A of the Act.3. Accusations of Delay Tactics by the Petitioner-Accused:The court observed that the petitioner-accused had adopted dilatory tactics by repeatedly moving applications for exemption from personal appearance, leading to significant delays in the trial. The court detailed multiple instances where the petitioner-accused either failed to appear or sought exemptions, resulting in the issuance of bailable and non-bailable warrants. The court emphasized that the purpose of Section 143-A was to prevent such delaying tactics by unscrupulous drawers of dishonoured cheques.4. Applicability and Interpretation of Section 143-A of the Negotiable Instruments Act:Section 143-A allows the court to order the drawer of a dishonoured cheque to pay interim compensation to the complainant, not exceeding 20% of the cheque amount. The court highlighted the legislative intent behind the insertion of Section 143-A, which aimed to provide relief to payees of dishonoured cheques and discourage frivolous litigation. The court reiterated that the merits of the case, such as whether the cheque was a security cheque or a blank cheque, are not relevant at this stage. The court concluded that the interim compensation was justified and that the petitioners would not suffer irreparable loss as they would be refunded the amount with interest if they succeeded in the trial.Conclusion:The court dismissed the petition, finding no merit in the arguments presented by the petitioners. The orders granting interim compensation were upheld, emphasizing the legislative intent to prevent delay tactics and provide timely relief to the complainant.