NI Act I Its Not a Duty of the Court to Grant Interim Compensation to the Complainant In Cheque Bounce Case: Bombay High Court

Cheque Bounce Case: Bombay High Court

MUMBAI: In the case of Mr. Ashwin Ashokrao Karokar v Mr. Laxmikant Govind Joshi, the Bombay High Court held that it’s not a court’s duty to grant interim compensation to the complainant in a cheque bounce case and if interim compensation is granted to the complainant the judge has to record reasons for determining the amount of interim compensation. The court said that section 143-A of the Negotiable Instruments Act, 1881 is directory rather than mandatory.

The bench of Justice Avinash Gharote bench set aside lower court orders which directed the petitioner-accused to give interim compensation to the respondent-complainant in a cheque bounce case. He remanded the matter back to the Special Court under NI Act to decide the case afresh.

In the said case the petitioner had issued two cheques of Rs.15 lakhs and 5 lakhs respectively in favor of the respondent. When the cheque is presented to the bank, the bank dishonored the cheque due to insufficient funds. The respondent filed a case under section 138 of the NI Act and also filed an application under section 143-A requesting interim compensation. The Magistrate court directed the petitioner to pay 20% of the cheque value to the respondent within 60 days.

Bombay High Court noted that sections 143-A and 148 (Power of Appellate Court to order payment pending appeal against conviction) were inserted via an amendment in 2018 to address the delay in disposal of cheque dishonor cases and to deter the filing of frivolous cases.

The Court concluded that sections 148 and 143-A are inherently different and what has been held with respect to ‘may’ in section 148 may not be applicable to section 143-A.

There is no ‘duty to act, upon the Court, spelt out by the provisions of Section 143-A of the N.I. Act, considering which Frederic Guilder Julius; Jogendra Singh, Deewan Singh and judgments taking a similar view would clearly not be applicable“, the court added.

Further, the Court said that the word ‘may’ in section 143-A has to be construed in light of the fact that it is an interim measure. Many times the complaint under section 138 itself is not maintainable. In such cases, granting compensation merely due to the existence of a cheque is not justifiable.

Court further said that the lawmakers could have used express words to make it mandatory if they wanted to. The power in section 143-A is wide enough to include both refusal and grant of interim compensation, hence, it is discretionary.

The provision of Section 143-A (5) of the N.I. Act, which permits recovery of the interim compensation as a fine, under section 421 of Cr.P.C., by itself would not make Section 143-A of the N.I. Act mandatory, as the same will come into picture only if interim compensation is awarded, and merely prescribes, what would be the mode of recovery in case, interim compensation is awarded“, the court said.

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