2025 (10) TMI 1257 - HC - Indian Laws

Petition dismissed; refund of Rs 1 lakh to accused upheld; complainant cannot adjust deposited amount in new proceedings

Neeraj Waretwar @ Neeraj Varetwar Versus Arvind Jain, Durg

HC dismissed the petition and upheld the trial court's order directing refund of Rs.1 lakh to the accused. The appellate court had set aside the earlier ... Dishonour of Cheque - seeking refund of amount deposited u/s 143 A of the N.I. Act - refund sought on the ground that the judgment of conviction and sentence under which he has deposited the amount is set aside by the learned Appellate Court - HELD THAT:- From perusal of the document annexed with the petitioner, it transpires that, although, the accused had earlier convicted by the learned trial Court, however, he has been acquitted by the learned Appellate Court and liberty was granted to the complainant to file his complaint afresh along with the application under Section 142 (1)(b) of N.I. Act and in compliance thereof, the petitioner has filed another complaint before the learned trial Court which is pending for its consideration. The amount of Rs. 1 Lakh for which the parties are claiming, is deposited by the accused against the earlier judgment passed by learned trial Court by which he was convicted and since, the judgment of conviction and award of compensation has been set aside by the learned Appellate Court, the accused is entitled for refund of the said amount as there is no order at present against him. Admittedly, there is no application filed by the petitioner or there is no order with respect to grant of interim compensation in the subsequent complaint filed by the complainant, the complainant cannot claim for adjustment of the said amount of Rs. 1 Lakh as interim compensation towards the total amount of cheque without there being any order passed by the learned trial Court in the subsequent complaint filed by the petitioner. The learned trial Court, in the recovery proceeding initiated by the accused, has considered that since the judgment of conviction and order of compensation has been set aside by the learned Appellate Court, the accused is entitled for refund of his amount, which is, in the opinion of this Court is correctly considered by the learned trial Court. There are no perversity or illegality which warrants interference in the order impugned in the present petition - the present petition is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether an accused is entitled to refund of an amount deposited pursuant to a trial court's order of conviction and compensation when that conviction and compensation order are set aside by the appellate court. 2. Whether the complainant may claim adjustment of an amount deposited by the accused as interim compensation in a subsequent complaint under Section 142(1)(b) of the Negotiable Instruments Act without any interim order being passed in that subsequent complaint. 3. Whether an application to stay recovery/refund of the deposited amount should have been granted in the absence of any order granting interim compensation in the subsequent proceedings. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to refund where conviction and compensation order set aside Legal framework: The deposit by an accused was made pursuant to a judgment of conviction and award of compensation by the trial court under provisions of the Negotiable Instruments Act; appellate reversal set aside the conviction and the compensation award. Principles of restitution and the absence of any subsisting order against the accused govern entitlement to refund. Precedent Treatment: No authoritative precedents were cited or relied upon in the record. The Court evaluated the matter on statutory and factual matrix presented. Interpretation and reasoning: The Court reasoned that the deposit was made solely on the footing of the earlier conviction and compensation order. Once that conviction and order of compensation were set aside by the appellate court, there remained no subsisting order justifying retention of the deposited amount. In that factual and legal posture, the accused is entitled to recover the deposit because there is no operative adjudication against him that would support continued detention of funds. Ratio vs. Obiter: Ratio - where a monetary deposit by an accused was made in consequence of a conviction and award of compensation, an appellate order setting aside that conviction and award extinguishes the legal basis for retention and entitles the depositor to refund absent any other valid order. Obiter - none material to this point. Conclusions: The trial court correctly directed refund of the deposited amount after the appellate court set aside the conviction and compensation; entitlement to refund follows from absence of any present order against the accused. Issue 2: Claim of adjustment of deposited sum as interim compensation in subsequent complaint without any interim order Legal framework: Section 142(1)(b) of the Negotiable Instruments Act (procedure for filing subsequent complaint) and the mechanism for grant of interim compensation (and related Section 143A reference in submissions) govern the availability of interim relief/compensation to a complainant in fresh proceedings. An adjustment of funds held by court as interim compensation requires a formal order in the pending proceedings. Precedent Treatment: The Court did not cite or rely upon prior decisions; it applied statutory logic that interim compensation requires judicial determination/ order in the pending complaint. Interpretation and reasoning: The Court held that mere filing of a subsequent complaint and a general submission that Section 143A permits interim compensation does not suffice to appropriate funds previously deposited by the accused. There must be an application and an express order in the subsequent complaint granting interim compensation or directing adjustment. In absence of any such application or order in the pending complaint, the complainant has no established right to claim or adjust the deposited sum against any future compensation award. Ratio vs. Obiter: Ratio - adjustment of a previously deposited amount as interim compensation in fresh proceedings is permissible only upon an order in those proceedings; absent such an order, the depositor is entitled to refund. Obiter - discussion of Section 143A as a general ground for claiming interim compensation was explanatory but does not alter the requirement of a judicial order. Conclusions: The complainant cannot claim adjustment of the Rs. 1 Lakh deposited by the accused as interim compensation in the subsequent complaint without a specific order in that subsequent proceeding; therefore the trial court correctly refused to treat the deposit as automatically available to the complainant. Issue 3: Appropriateness of refusing stay of recovery/refund in the circumstances Legal framework: Principles governing grant of interim relief - entitlement based on presence of a prima facie case, balance of convenience, and absence of prejudice to the party entitled to refund - applied to applications for stay of recovery of deposits held pursuant to earlier orders. Precedent Treatment: No precedent was applied; the decision proceeded on application of ordinary principles to the factual matrix. Interpretation and reasoning: Given that the appellate court set aside the conviction and compensation award, and no interim compensation order exists in the newly filed complaint, there was no basis to maintain the deposit against the accused. The Court found no perversity or illegality in the trial court's decision to permit refund. Accordingly, there was no compelling ground to grant a stay of recovery. The balance of convenience favored the depositor where no subsisting adjudication justified retention. Ratio vs. Obiter: Ratio - a stay of refund should not be granted where the underlying judgment that produced the deposit has been set aside and there is no interim order in fresh proceedings justifying continued detention; relief by stay requires a proper juridical basis. Obiter - none material beyond explanatory points. Conclusions: The refusal to stay the refund of the deposited amount was appropriate; the order allowing refund was untainted by perversity or illegality and did not warrant interference. Cross-references and Interaction of Issues The entitlement to refund (Issue 1) and the inadmissibility of automatic adjustment in subsequent proceedings (Issue 2) are interdependent: refund follows because there is no operative order in the subsequent complaint to support adjustment; consequently, refusal to grant stay (Issue 3) logically follows from Issues 1 and 2. The Court applied this integrated reasoning to uphold the trial court's refund direction.