TaxTMI 
TaxTMI 
2022 (7) TMI 38
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.... producer of Ice Cream. The petitioner and the respondent entered into an agreement in the year 2017 for distribution of Ice Cream and frozen dessert products manufactured by the respondent/complainant, in and around city of Coimbatore. Pursuant to the agreement, it is the case of the petitioner that the complainant had demanded the petitioner for issuance of blank cheques as security in lieu of proposed supply to be made to the petitioner for the purpose of such distribution. Accordingly, the petitioner claims that he had handed over several blank cheques, one of which, was cheque bearing No.011226, as security to the respondent and not towards any liability which the petitioner owed to the complainant. The respondent/complainant had been supplying Ice Creams and frozen products more than the quantity of the order placed by the petitioner which was brought to the notice of the complainant and in the light of reduced demand it was indicated that the supply of the products be reduced and further the petitioner refused to accept the stock as it was a perishable commodity with a short shelf life. Despite refusal of the order, the complainant went on supplying the stock. 4. It appea....
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....,56,71,208/- is admitted by the petitioner and in the teeth of such admission it cannot be said that the respondent was not entitled to such compensation as available under the statute. He would submit that the order impugned does not suffer from want of application of mind, as it is rendered exercising such discretion by granting only 10% as interim compensation. 8. I have given my anxious consideration to the submissions made by the respective learned counsel and perused the material on record. 9. In the light of the order impugned being an order of grant of interim compensation of 10% of the total cheque amount under Section 143A of the Act, I deem it appropriate to notice Section 143A of the Act and its purport. 10. Section 143A of the Act was introduced for a specific purpose. The objects and reasons for such amendment to Section 143 of the Act by insertion of Section 143A are germane to be noticed and they read as follows: "STATEMENT OF OBJECTS AND REASONS The Negotiable Instruments Act, 1881 (the Act) was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The said Act has been amended from time to time so as ....
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....lay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings. The injustice caused to the payee of a dishonoured cheque had to be considered. Therefore, the purpose for introduction of the amendment was delay in proceedings. 11. With the aforesaid objects and reasons, the Act was amended by the amending Act of 2018. It is by way of the said amendment, Section 143A came to be inserted. Therefore, it is germane to notice Section 143A of the Act and the same runs as follows: "1. Short title and commencement.- (1) This Act may be called the Negotiable Instruments (Amendment) Act, 2018. (2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. 2. Insertion of new Section 143-A.- In the Negotiable Instruments Act, 1881 (26 of 1881) (hereinafter referred to as the principal Act), after Section 143, the following section shall be inserted, namely:- "143A. Power to direct interim compensation.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under ....
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.... 421. Warrant for levy of fine.-(1) When an offender has been sentenced to pay a fine, the Court passing the sentence may take action for the recovery of the fine in either or both of the following ways, that is to say, it may- (a) issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender; (b) issue a warrant to the Collector of the district, authorising him to realise the amount as arrears of land revenue from the movable or immovable property, or both, of the defaulter: Provided that, if the sentence directs that in default of payment of the fine, the offender shall be imprisoned, and if such offender has undergone the whole of such imprisonment in default, no Court shall issue such warrant unless, for special reasons to be recorded in writing, it considers it necessary so to do, or unless it has made an order for the payment of expenses or compensation out of the fine under section 357. (2) The State Government may make rules regulating the manner in which warrants under clause (a) of subsection (1) are to be executed, and for the summary determination of any claims made by any person ....
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....r such an application is to be considered at all, as every application that is made need not result in grant of 20% interim compensation. Several factors need be gone into for considering such applications bearing in mind the reason and backdrop of the amendment. As quoted herein-above the bedrock of the amendment was to stall unscrupulous drawers of cheques drawing proceedings with frivolous applications, absenting themselves, seeking continuous adjournments causing delay and grave prejudice to the case of the complainants. In these factors, the learned Magistrate after analyzing the conduct of the accused should grant compensation which would vary from 1% to 20% after recording reasons. In a given case if the accused is cooperating with the trial without seeking any unnecessary adjournments, not absenting himself or his counsel on any date and cooperating with the conclusion of the trial in such cases, the learned Magistrate will have to apply his mind, exercise his discretion as to whether such applications should be entertained at all. Therefore, it forms two classes of litigants. One who would cooperate with the proceedings and the other who would not. In cases where there ....
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....on merits may take considerable time. Under the facts and circumstances, the accused should be directed to deposit 10% of the liability/amount involved in the cheque within 60 days. This is all the reasoning that the learned Magistrate renders to grant such compensation. 15. There is no reason recorded by the learned Magistrate that the accused in the case at hand has adopted any of the factors as narrated hereinabove that would entail consideration of an application under Section 143A of the Act. With the reason that is rendered by the learned Magistrate as quoted (supra), the order granting 10% compensation, in the case at hand, becomes unsustainable. This Court is flooded with litigation with regard to grant of compensation under Section 143A of the Act by criminal courts. In several cases discretion is exercised for grant of compensation and in several other cases there are no reasons for exercise of such discretion. Therefore, it has become necessary to direct learned Magistrates that while considering applications filed under Section 143A of the Act, to notice at the outset, the conduct of the accused. If the accused has been unnecessarily evading the proceedings by seekin....