Interim Compensation In Section 138 (NI Act) Cases; Complainant's Right Or The Discretion Of A Court?- Delhi High Court Affirmed. (Part -2)

However, at/ around the time of submission of the first part of the article, the Hon'ble High Court of Delhi has pronounced a detailed and  comprehensive 57-page judgment on section 143 A of the Act in the case titled "M/s JSB Cargo and Freight Forwarder Pvt. Ltd.& ors. vs. State & Anr"^[3], (for brevity – "JSB Cargo Case"), but the same couldn't get covered earlier. Ergo, in order to provide comprehensive and detailed research on this important issue,  the JBL Cargo case is inculcated  among other relevant aspects via this piece of writing.

It is submitted that the High Court of Madras in LGR case held that the interim compensation in cheque bounce cases is at the discretion of a court, and it is not mandatory  for a court to award interim compensation in each and every case. Moreover, the Hon'ble High Court held that a Magistrate is bound to give reasoned order while deciding an application under section 143A of the Act.

Whereas, the High Court of Chhattisgarh in Rajesh Soni case took the different view of the provision and held that a Court/ Magistrate is statutory bound to award interim compensation in such cases. It is worth to note that the Hon'ble High Court of Chhattisgarh has duly referred the LGR case; despite that Chhattisgarh High Court deemed fit to interpret the provision as a mandatory one, instead finding the same in the realm of the discretion of a court as LGR case stipulates so.

M/S JSB Cargo And Freight Forwarder Pvt. Ltd. & Ors. Vs State & Anr. (JSB Cargo Case)

Now on 20.12.2021, the Hon'ble High Court of Delhi in the case of JBL Cargo has, inter alia, discussed section 143-A of the Act quite comprehensively while covering the relevant cases including the LGR case and Rajesh Soni case.

In the JBL Cargo case, the petitioners have challenged the order dated 21.09.2021 of the Ld. Magistrate (NI Act), Digital Court- 1, Patiala House Courts, New Delhi wherein the Ld. Magistrate has awarded interim compensation as per section 143A of the Act in favour of the complainants/ respondents.

As stated earlier that the Delhi High Court while adjudicating the present case has referred various previous judgments pertaining to interim compensation in cheque bounce cases. Asunder from LGR case, and Rajesh Soni case, the High Court observed that in the case titled "Jahangir vs. Farooq Ahmed Abdul Razak"^[4] the High Court of Karnataka held that section 143-A is discretionary in nature, and the same can't be held to be a mandatory provision.

Moreover, the Delhi High Court observed that the Bombay High Court in the case titled "Ajay Vinodchandra Shah vs. State of Maharashtra & Anr."^[5] observed the difference between section 143A and section 148 of the Act, and drawn up a comparison chart to show the intention of the legislature qua section 143A and 148 of the Act.

It is apposite to mention that the Hon'ble Supreme Court in the case titled "Surinder Singh Deswal alia Colonel S.S.Deswal & Ors. vs. Virender Gandhi & Anr"^[6] held that Ajay Vinodchandra case (Supra) is not good in law as far as it's observation qua consequences of non-compliance of condition of suspension of sentence is concerned. However, the Delhi High Court while noting down the aforesaid limitation didn't shy away from relying upon the difference between section 143A and section 148 of the Act as highlighted by the Bombay High Court in Ajay Vinodchandra case (Supra).

The Delhi High Court also noted that an accused person is innocent until proven guilty, and at the time of deciding application under section 143-A of the Act, the trial is yet to be concluded, ergo this cardinal principle of law can't be simply ignored.

In addition to the aforesaid, the Delhi High court observed the guidelines/ observations laid by the Hon'ble Supreme Court^[7] in order to find out whether a provision is mandatory or discretionary. The court further said that the regard must be given to the object of a provision, and the word "shall" or "may" are not decisive in nature. The Court also observed that if a statutory remedy is provided for violation of a particular provision, then it can be inferred that the said provision is mandatory in nature.

On these lines, the Delhi High Court observed that although section 421 of the CrPC is provided qua recovery of the interim award pronounced under section 143A of the Act as fine, but no further imprisonment/ sentence is given qua default committed by the accused. The court further observed that the word "may" in section 143A(1) clearly indicates the intention of the legislature to bring the provision i.e., section 143 A under the purview of the discretion of a Magistrate.

Inter alia, the Delhi High Court with the help of the aforesaid case laws, guidelines/ tests laid down by the Hon'ble Supreme Court, and the objectives of the legislature for introducing section 143 A of the Act, observed that section 143A of the Act is not mandatory in nature, and the same is subject to the discretion of a Magistrate.

Way Forward

It is submitted that the Hon'ble High Court of Delhi vide the aforesaid JBL Cargo case has categorically held interim compensation is not mandatory in nature. Moreover, the Court directed the registry to circulate the said judgment in all the lower/ district courts of the capital in order to bring uniform disposal of such applications.

The said judgment has indeed removed a lot of confusion qua interim compensation in section 138 cases (cheque bounce cases). Furthermore, if we refer the relevant cases, then it appears that the majority of High Courts are in consonance with the interpretation stipulating that section 143A is not mandatory in nature. Ergo, it may be safe to infer that section 143A may witness the uniform interpretation in future by various courts, despite a bleak possibility of different interpretation as the Hon'ble Supreme Court is yet to express its views on this issue.

( Read Part-1 here)