TaxTMI 
TaxTMI 
2024 (6) TMI 436
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.... Act, 1881 ("NI Act, 1881"), and direct the petitioner - accused to deposit 20% of the amount of the cheques by way of interim compensation. 3. Shorn of superfluities, the background facts necessary for the determination of this petition can be stated as under: (a) For the sake of clarity and convenience, parties are hereinafter referred to in the capacity in which they are arrayed before the learned Magistrate in CC No. 97/SC/2022. (b) Mr. Shakeel Khan - respondent No. 3 is the Proprietor of M/s. Paint Art - respondent No. 1/complainant. M/s. Paint Art is engaged in the business of internal and external painting of building, plumbing and reconstruction work. M/s. Bajaj Construction is the sole proprietary concern of Manish Bajaj - accused No. 2. Accused No. 2 also deals in the business of building construction and real estate development. (c) One of the buildings namely; Vandana Building, then being developed by accused was incomplete. At the instance of the accused, the complainant carried out balance civil work of the said building. Accused had agreed to pay consideration of Rs. 1,70,00,000/-. Despite execution of the entire work in May, 2019, the accused committed defa....
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....d a revision application before the learned Sessions Judge, Greater Bombay. (h) 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. Since there appeared no dispute regarding the contract between the complainant and accused and issue of the subject cheques, the learned Magistrate ought to have awarded interim compensation. Holding thus, the learned Additional Sessions Judge allowed the revision application and directed the accused to deposit 20% of the amount covered by the cheque by way of interim compensation, under Section 143A of the NI Act, 1881. (i) Being aggrieved the accused has invoked the writ jurisdiction of this Court. 4. I have heard Mr. Mundargi, the learned Counsel for the petitioner, Mr. Jadhav, the learned APP for the State - respondent No. 1, and Mr. Nangre, the learned Counsel for respondent Nos. 2 and 3 - complainant. With the assistance of the learned Counsel for ....
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....e AIR 2001 Supreme Court 3897., to demonstrate the nature of the presumptions envisaged by the provisions contained in Sections 118, 138 and 139 of the NI Act, 1881. In the face of the said presumptions, the learned Magistrate could not have observed that it was probable that the accused could succeed in dispelling the presumptions, urged Mr. Nangre. 8. Section 143A of the NI Act, 1881 came to be inserted by the Negotiable Instruments (Amendment) Act 20 of 2018. It reads as under: ''143A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant- (a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and (b) in any other case, upon framing of charge. (2) The interim compensation under sub-section (1) shall not exceed twenty per cent. of the amount of the cheque. (3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on suffi....
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.... 3. It is, therefore, proposed to introduce the Negotiable Instruments (Amendment) Bill, 2017 to provide, inter alia, for the following, namely:- (i) to insert a new section 143A in the said Act to provide that the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant, in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and in any other case, upon framing of charge. The interim compensation so payable shall be such sum not exceeding twenty per cent, of the amount of the cheque; and (ii) to insert a new section 148 in the said Act so as to provide that in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent, of the fine or compensation awarded by the trail court. 4. The Bill seeks to achieve the above objectives." (emphasis supplied) 10. The Parliament, as is evident, was anxious to address the issue of undue delay in the disposal of the complaints for the offence punishable under Section 138 of the NI Act, 1881. It was experienced ....
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.... (b) whether the pleadings disclose the drawing of the presumption (c) whether the proceedings were within limitation and (d) whether prima facie a legal debt or liability was disclosed from the complaint or the notice of demand preceding it, and factors as such [see : B.R. Upadhya and Anant H. Ulahalkar (supra)]." (emphasis supplied) 13. The learned Single Judge further held that the Court has to record reasons to determine the quantum of interim compensation, if it comes to the conclusion that interim compensation is required to be awarded in the given circumstances of the case; which can be anywhere up to 20% of the amount covered by the cheques. 14. In the case of Rakesh Shrivastava (supra) the Supreme Court considered the question as to whether the provisions contained in Section 143A of the NI Act, 1881 are directory or mandatory. After analysing the provisions of Section 143A and comparing and contrasting the same with Section 148 of the NI Act, 1881, the Supreme Court ruled that the provisions under Section 143A will have to be held as a directory and not mandatory. And the word "may" used in Section 143A, cannot be construed or interpreted as "shall". Th....
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....ly 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. ............. 22. Subject to what is held earlier, the main conclusions can be summar....
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....e of cheques, the existence of legally enforceable liability can hardly be contested. Placing reliance on the decision of the Supreme Court in the case of Hiten Dalal (supra) Mr. Nangre would urge that since the presumptions contained in Sections 118 and 139 of the NI Act, 1881 are presumptions of law, the award of interim compensation cannot be faulted at. 18. I find it rather difficult to accede to the broad submission sought to be canvassed by Mr. Nangre premised on the presumptions under Sections 118 and 139 of the NI Act, 1881. In fact, in the case of Rakesh Shrivastava (supra), the Supreme Court enunciated in clear and explicit terms that the presumption under Section 139 of the NI Act, 1881, by itself, is no ground to direct the payment of interim compensation. The reason is that the presumption is rebuttable and the question of application of presumption will arise at the trial. Thus, only when the complainant makes out a prima facie case, a direction can be issued to pay an interim compensation. 19. 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 s....
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.... award the compensation. 24. In my view, 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, as noted above, 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. 25. 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. Since the order passed by the learned Metropolitan Magistrate was discretionary in nature, it was not open to the revisional Court to lightly interfere with the exercise of discretion by the Magistrate, unless it appeared that the discretion was exercised in an arbitrary manner by either ignoring the relevant material or taking into account irrelevant material. Nor could ....