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Section 143A of Negotiable Instrumentts Act: Power of the Court to Direct Interim Compensation
KISHAN DUTT RETD JUDGE
The Negotiable Instruments Act, 1881 can be defined as 'an Act to define and amend the law relating to promissory notes, bill of exchange and cheques.' The Negotiable Instruments (Amendment) Bill was presented before the Lok Sabha by the Finance Minister on January 2, 2018. It received the assent of the President and was notified in the Official Gazette on 2nd August, 2018 to become an Act called the Negotiable Instruments (Amendment) Act, 2018 (No. 20 of 2018).
The Negotiable Instruments (Amendment) Act, 2018 introduces a new provision, Section 143A, to the Act of 1881. Section 143A of the Act provides -
"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."
The amount of the interim compensation cannot exceed 20% of the value of the dishonored cheque.
The interim compensation described above must be paid within 60 days of the order requiring it or within such period not exceeding thirty days as maybe directed by the Court. Any compensation received can be deducted from the fine imposed by the Magistrate on the drawer's conviction under Section 138 of the Act, or from any compensation ordered to be paid under Section 357 of the Code of Criminal Procedure of 1973. Section 138 of the Act provides for imprisonment of up to two years or a fine extending to twice the amount of the dishonored cheque, or both.
The interim compensation can be recovered using the procedures outlined in Section 421 of the Criminal Procedure Code, which allow for the attachment and sale of the drawer's movable property or the issuance of a warrant to the Collector to recover the compensation from the drawer's movable or immovable property as if it were unpaid land revenue.
If the drawer of the cheque is found not guilty, the court will order the complainant to pay back the interim compensation to the drawer, along with interest at the bank rate published by the Reserve Bank of India in the beginning of the relevant financial year within 60 days from the date of such order.
Landmark Judgments:
The Hon'ble Supreme Court in the case of G.J. Raja vs. Tejraj Surana, SLP (Criminal) No. 3342 of 2019 ruled that Section 143A of the Negotiable Instruments Act will not be applied retrospectively. "The provisions of said section 143A can be applied or invoked only in cases where the offence under section 138 of NI Act was committed after the introduction of said section 143A." the court observed. Therefore, this provision is not applicable when the court has taken cognizance of the offense before the amendment came into effect. Section 143A is only applicable when the court has taken cognizance of the offense after the amendment.
The Supreme Court ruled in the case of Noor Mohammed v. Khurram Pasha, Special Leave Petition (Criminal) No. 2872 of 2022, that an accused person who fails to pay the interim compensation required by Section 143A of the Negotiable Instruments Act cannot be denied the right to cross-examine witnesses on behalf of the complainant. The Court agreed with the arguments made by the appellant and concluded that Section 143A does not indicate that an accused person who fails to pay interim compensation should be subjected to any other limitations, including the loss of the right to cross-examine the complainant's witnesses. "Any such order foreclosing the right would not be within the powers conferred upon the court and would, as a matter of fact, go well beyond the permissible exercise of power," the Court observed.
The Delhi High Court ruled in the case of M/S JSB Cargo and Freight Forwarder Pvt Ltd v State and Anr, CRL.M.C.2663/2021, that Section 143A of the Negotiable Instruments Act of 1881 is a directory provision rather than a mandatory one. The court also noted that the use of the word "may'' in Section 143-A(1) of the Act conveys that the granting of interim compensation is not mandatory and a discretion was conferred upon the Court, to either grant or not to grant interim compensation. Additionally, the Court has to record reasons for determining the quantum of interim compensation, if it decides to award it, which can be up to 20% of the cheque amount based on the facts and circumstances of the case.
References:
https://www.mondaq.com/india/financial-services/734716/new-cheque-bounce-provisions-143a-148
KISHAN DUTT RETD JUDGE
About Advocate Kishan Dutt Kalaskar Retd Judge 20 years service as Judge in different capacities. Read and prepared Head Notes for more than 10,000 judgments of different High Courts and Supreme Court. Head Notes published by various Law Publishers. Now preparing Head notes for www.scconline.com. Worked in different capacities and dealt with several categories of cases. Having practical knowledge of law in practice and drafting and counselling.
Sophie Asveld
February 14, 2019
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Sophie Asveld
February 14, 2019
Email is a crucial channel in any marketing mix, and never has this been truer than for today’s entrepreneur. Curious what to say.