NI Act | Hardship To Accused No Ground To Not Release Interim Compensation In Favour Of Complainants: Karnataka High Court

The Karnataka High Court has quashed an order passed by the appellate court refusing to release interim compensation deposited by the accused convicted under Negotiable Instruments Act in favour of complainants.

A single judge bench of Justice K Natarajan allowed a batch of petitions and directed that 20% of the amount in deposit be released to the petitioners - complainants with due identification, with a condition that they shall refund the amount within 60 days from the date of the order or plus 30 days, as per the proviso to Section 148(3) of the NI Act, if the accused is acquitted by the Appellate Court.

The petitioners had approached the court seeking to quash the order of rejection of the application filed by them under Section 148(3) of the Act for release of interim compensation amount.

The accused Lokesh had on direction of the court deposited the amount while his appeal was challenging the conviction order and seeking to suspend the sentence imposed was admitted.

The First appellate court rejected the application filed by the complainants on the ground that the amount, if released, would cause hardship to the accused and lead to the multiplicity of litigations.

The petitioners counsel argued that as per the amended Section 143(A) of the NI Act, the complainants are entitled upto 20% of the cheque amount as interim compensation. After recording the plea, the accused was convicted. It is also mandatory on the part of the First Appellate Court to order for depositing upto 20% of the fine amount as interim compensation.

Further it was said “The application rejected by the First Appellate Court is not correct. Even if the accused succeeds in the appeals that amount shall be refunded by the complainants within 30 days along with interest. Such being the case, rejection of the application is not correct.”

On hearing the submission made by the petitioners the bench said “In my considered opinion, the order passed by the First Appellate Court is not correct.”

It held “It is settled position of law under Sections 143(A) and 148(3) of NI Act, it is mandatory on the part of the Trial Court as well as the First Appellate Court to impose interim compensation payable by the accused persons while challenging the case and judgment of sentence in the appeals.”

Further it said “On perusal of Section 148 of the Act, a proviso is also there that this fine amount imposed by the First Appellate Court is also in addition to the interim compensation paid by the appellant under Section 143(A) of the NI Act and there is time limit also prescribed by the Legislature to deposit the said amount within 60 days and another 30 days.”

Following which it said “Such being the case, rejection of the application by the First Appellate Court is not correct and against the law. Therefore, the order under challenge is liable to be set aside.”

Case Title: Lakshminarayana And Lokesh L

Case NO: CRIMINAL PETITION NO.1189 OF 2023 C/W CRIMINAL PETITION NO.1151 OF 2023 CRIMINAL PETITION NO.1153 OF 2023 CRIMINAL PETITION NO.1158 OF 2023 CRIMINAL PETITION NO.1311 OF 2023 CRIMINAL PETITION NO.1346 OF 2023 CRIMINAL PETITION NO.1350 OF 2023 CRIMINAL PETITION NO.1355 OF 2023 CRIMINAL PETITION NO.1356 OF 2023.

Citation: 2023 LiveLaw (Kar) 108

Date of Order: 28-02-2023

Appearance: Advocate Prasad B S for petitioners

Advocate Muniswamy Gowda for respondent.