TaxTMI 
TaxTMI 
2024 (4) TMI 783
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....Shivalik Ventures Private Limited And Ors., allowing the application filed by the respondent no. 2 / complainant under Section 143A of the Negotiable Instruments Act, 1881 (in short, 'NI Act') and directing the petitioners to pay to the respondents no. 2 interim compensation at 12% of the cheque amount, that is, Rs. 2,71,52,880/- within 60 days of the passing of the order. 2. The above captioned remaining petition(s) being Crl. Rev. P No(s). 525/2022, 527/2022, 528/2022, and 532/2022 have been filed by the petitioners challenging the order(s) dated 11.03.2022 (hereinafter referred to as the 'Impugned Order') passed by the Metropolitan Magistrate-01, South District, NI Act, Saket Courts in Complaint Case being CC Nos. 2432/2020, 27675/2019, 4311/2020, and 45926/2019, respectively, allowing the application filed by the respondent no. 2/complainant in each of these petitions under Section 143A of the NI Act and directing the petitioners to pay to the respondent no. 2 herein 10% of the cheque amount involved in each of the Complaint(s) as interim compensation, that is, Rs. 1,60,00,000/; Rs. 80,00,000/-; Rs. 1,60,00,000/-; Rs. 80,00,000/-; respectively. 3. As common questions on the a....
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....une of Rs. 94 Crores, however, due to the financial constraints, fell short on the schedule for repayment to the respondent no. 2. (f) Being aggrieved of the above act of M/s SVPL, the respondent no. 2 filed contempt petition(s), being Contempt Petition No. 55 of 2018 and Commercial Contempt Petition (L) No. 21 of 2018, both titled as Addon Realty Pvt. Ltd. v. Shivalik Ventures Pvt. Ltd. & Ors. These contempt petitions were, then, disposed of vide order dated 17.07.2018, inter alia revising the repayment schedule for the remaining balance of Rs. 93.50 Crores to be paid by M/s SVPL. (g) Thereafter, M/s SVPL could pay only a sum of Rs.17 Crores, which again constrained the respondent no. 2 to file two Execution Petitions before the High Court of Judicature at Bombay, being Commercial Execution Application No. 184 of 2019 and 185 of 2019, both titled as Addon Realty Pvt. Ltd. v. Shivalik Ventures Pvt. Ltd. & Ors. The respondent no. 2 also filed two fresh Contempt Petitions, being Contempt Petition 15 of 2019 and 17 of 2019 before the High Court of Judicature at Bombay. (h) During the pendency of the above contempt petitions, the respondent no. 2 had also released 133 flats in vi....
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.... spite of the receipt of the said notice, the company or the petitioners had not paid the said amount. (q) The petitioners herein were arrayed as accused in the said complaints, alleging that the petitioner nos. 1 to 3 herein are the Directors of the company and are responsible for day to day affairs and management of the said company, while the petitioner nos. 4 and 5 are its authorized signatories and the cheques have been signed by them. (r) In the meantime, M/s SVPL filed an application before the Supreme Court, being I.A. No. 48514/2021 in I.A. No. 80216/2020 in Civil Appeal No.10856/2016, titled as Bhupender Singh v. Unitech Limited, seeking modification of the order dated 24.03.2021, passed by the Supreme Court in the above Civil Appeal so as to exclude the application of the said order to the functioning of M/s SVPL. (s) The learned Metropolitan Magistrate, in view of the pendency of the application of M/s SVPL before the Supreme Court, vide its order dated 17.04.2021 (in CC No. 5061/2020) and order dated 25.01.2022 (in CC No. 2432/2020, 27675/2019, 4311/2020, and 45926/2019), directed that the complaint be proceeded only against the petitioners herein. (t) The resp....
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....laces reliance on the following judgments: (i) Bachahan Devi v. Nagar Nigam, Gorakhpur, (2008) 12 SCC 372; (ii) Rajesh Soni v. Mukesh Verma, 2021 SCC OnLine Chh. 1761; (iii) Surinder Singh Deswal v. Virender Gandhi, (2019) 11 SCC 341; and, (iv) L.G.R. Enterprises v. Anbazhagan, 2019 SCC OnLine Mad 38991. 11. He further submits that the facts of the present case would show that the petitioners have been abusing the process of the Court inasmuch as they have been intentionally not complying with the Consent Terms and not paying the amount as agreed. 12. He submits that the respondent no. 2 is and has always been willing and ready to release all the flats that have been held as security by them in terms of the Consent Terms and in accordance therewith. 13. As far as the stay of proceedings is concerned, he submits that there is no order passed by the Supreme Court restraining the continuation as against the petitioners herein. ANALYSIS AND FINDINGS 14. I have considered the submissions made by the learned counsels for the parties. 15. Section 143A of the NI Act is reproduced herein below: "143A. Power to direct interim compensation. "(1) Notwithstanding anything cont....
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....ich the word "may" has been used is also relevant. 11. The power under sub-section (1) of Section 143A is to direct the payment of interim compensation in a summary trial or a summons case upon the recording of the plea of the accused that he was not guilty and, in other cases, upon framing of charge. As the maximum punishment under Section 138 of the N.I. Act is of imprisonment up to 2 years, in view of clause (w) read with clause (x) of Section 2 of the Code of Criminal Procedure, 1973 (for short, 'the Cr. PC'), the cases under Section 138 of the N.I. Act are triable as summons cases. However, sub-section (1) of Section 143 provides that notwithstanding anything contained in the Cr. PC, the learned Magistrate shall try the complaint by adopting a summary procedure under Sections 262 to 265 of the Cr. PC. However, when at the commencement of the trial or during the course of a summary trial, it appears to the Court that a sentence of imprisonment for a term exceeding one year may have to be passed or for any other reason it is undesirable to try the case summarily, the case shall be tried in the manner provided by the CrPC. Therefore, the complaint under Section 138 beco....
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....ery will be impossible. xxxx 16. In the case of Section 143A, the power can be exercised even before the accused is held guilty. Sub-section (1) of Section 143A provides for passing a drastic order for payment of interim compensation against the accused in a complaint under Section 138, even before any adjudication is made on the guilt of the accused. The power can be exercised at the threshold even before the evidence is recorded. If the word 'may' is interpreted as 'shall', it will have drastic consequences as in every complaint under Section 138, the accused will have to pay interim compensation up to 20 per cent of the cheque amount. Such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice. If such an interpretation is made, the provision may expose itself to the vice of manifest arbitrariness. The provision can be held to be violative of Article 14 of the Constitution. In a sense, subsection (1) of Section 143A provides for penalising an accused even before his guilt is established. Considering the drastic consequences of exercising the power under Section 143A and that also before the finding of the guilt is re....
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....n of applying the presumption will arise at the trial. Only if the complainant makes out a prima facie case, a direction can be issued to pay interim compensation. At this stage, the fact that the accused is in financial distress can also be a consideration. 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 granted. Even at this stage, the Court will have to consider various factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant and the paying capacity of the accused. If the defence of the accused is found to be prima facie a plausible defence, the Court may exercise discretion in refusing to grant interim compensation. We may note that the factors required to be considered, which we have set out above, are not exhaustive. There could be several other factors in the facts of a given case, such as, the pendency of a civil suit, etc. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all the relevant factors. xxxx 22. Subject to what is held ....
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....rder Pvt. Ltd. (supra), which had held that the provision of Section 143A of the NI Act was 'directory' and not 'mandatory' in nature, still it proceeded to direct the petitioners to pay 10% of the cheque amount to the respondent no. 2, observing that the petitioners have not specifically disputed the liability to pay the cheque amount. 20. In Rakesh Ranjan Shrivastava (supra), the Supreme Court clarified that the presumption under Section 139 of the NI Act, by itself, is no ground to direct the payment of interim compensation; presumption being rebuttable, the question of applying the same will arise only at the trial. It was further held that the financial distress of the accused shall also be a factor that should be taken into consideration by the Trial Courts while considering an application under Section 143A of the NI Act. 21. The Impugned Orders do not reflect any consideration of the learned Trial Court to the plea of the petitioners that the respondent no. 2 also holds security in form of the flats and in form of a statement made in the course of the proceedings before the High Court of Judicature at Bombay that the said company will not be disposing of the flats or crea....
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.... of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. For the purposes of this section,- (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm." 24. The above provision is not intended to make such persons "drawer" of the cheque. In Anil Hada v. Indian Acrylic Ltd., (2000) 1 SCC 1, the Supreme Court clarified that the offender in Section 138 of the NI Act is the drawer of the cheque, and that such drawer alone would have been the offender thereunder if the Act did not contain other provisions; it is because of the Section 141 of the NI Act that penal liability under Section 138 of the NI Act is cast on other persons connected with the company. In N. Harihara Krishna v. J. Thomans, (2018) 13 SCC 663, the Supreme Court clarified that person signing a cheque on behalf of the company does not become 'drawer of the cheque'. 25. It is to be noted that Section 143A of the NI Act, though inserted post the judgment of the Supreme Court in Anil Hada (supra) and N. Harihara Krishana (supra), still makes only the "drawer of the c....