2024 (6) TMI 436 - HC - Indian Laws

Courts must evaluate complainant's claim and accused's defence before awarding interim compensation under Section 143A NI Act

M/s. Bajaj Constructions Versus The State of Maharashtra, M/s. Paint Art and Shakeel Khan.

The Bombay HC held that courts must conduct prima facie evaluation of complainant's claim and accused's defence before awarding interim compensation under ... Dishonour of cheque - interim compensation u/s 143A of the NI Act, 1881 - determination of the quantum of interim compensation - HELD THAT:- A prima facie evaluation of the merits of the complainant’s claim and the defence of the accused is warranted to adjudge as to whether a case for grant of interim compensation is made out. In the event the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation. Furthermore, if the Court finds that interim compensation has to be awarded it is required to pose unto itself the question of appropriate quantum of the interim compensation. 20% of the amount covered by the cheque, which is the upper threshold, cannot be awarded as a matter of course. In the case at hand, in the reply to the application, the accused alleged, inter alia, that a substantial part of the amount covered by the cheques was paid in cash and the 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-merited. The impugned order singularly lacks any consideration as regards the determination of quantum of compensation. The judgment and order passed by the learned Additional Sessions Judge stands quashed and set aside - Petition allowed. Issues Involved:1. Legality of the order directing the accused to pay interim compensation u/s 143A of the NI Act, 1881.2. Quantum of interim compensation awarded under Section 143A of the NI Act, 1881.Summary:Issue 1: Legality of the order directing the accused to pay interim compensation u/s 143A of the NI Act, 1881:This petition under Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973 takes exception to a judgment and order dated 19th August, 2023 passed by the learned Additional Sessions Judge, Greater Bombay, in Criminal Revision Application No. 400 of 2023, whereby the learned Additional Sessions Judge allowed the revision setting aside an order passed by the learned Metropolitan Magistrate, 30th Court, Kurla, on 10th April, 2023 rejecting an application (Exhibit-11) for direction to pay interim compensation under Section 143A of the Negotiable Instruments Act, 1881 ('NI Act, 1881'), and directed the petitioner - accused to deposit 20% of the amount of the cheques by way of interim compensation.The learned Additional Sessions Judge was of the view that the learned Magistrate failed to exercise the jurisdiction conferred under Section 143A of the NI Act, 1881 in a lawful manner. The factors, which were germane for the determination of the application under Section 143A of the NI Act, 1881 were not kept in view by the learned Magistrate.Mr. Mundargi, 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.The Supreme Court in the case of Rakesh Ranjan Shrivastava vs. State of Jharkhand and another 2024 SCC OnLine SC 309 ruled that the provisions under Section 143A will have to be held as a directory and not mandatory. The word 'may' used in Section 143A, cannot be construed or interpreted as 'shall'. Thus, the power under Sub-section (1) of Section 143A is discretionary.In the case at hand, the learned Metropolitan 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 the totality of the circumstances, in my view, the order passed by the learned Metropolitan Magistrate did not suffer from such legal infirmity as to warrant interference in exercise of the revisional jurisdiction.Issue 2: Quantum of interim compensation awarded under Section 143A of the NI Act, 1881: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-merited. The impugned order singularly lacks any consideration as regards the determination of quantum of compensation.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.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 (Exhibit-11) in CC No. 97/SC/2022 stands rejected.(v) By way of abundant caution, it is clarified that the observations made hereinabove are confined to the determination of entitlement of interim compensation under Section 143A of the NI Act, 1881 and they shall not be construed as an expression of opinion on the guilt or otherwise of the accused, and the trial Court shall not be influenced by any of the observations while deciding CC No. 97/SC/2022.Rule made absolute in the aforesaid terms.No costs.