Madhya Pradesh High Court Dismisses Plea Challenging Vires Of S.143-A Negotiable Instruments Act

Elaborating on the legislative intent behind introduction of the provision through an amendment, the division bench comprising Chief Justice Ravi Malimath and Justice Vishal Mishra observed that it aims to protect the Complainant from the double-edged sword for loss of receivables-

The basis of introduction of provisions of Section 143-A of the Act, we have considered the legislature and it was found that the proceedings under Section 138 of the Act are being delayed unnecessarily, therefore, the provisions for grant of interim compensation is required to be inserted into the Act. The intent behind this provision is to provide aid to the complainant during pendency of the proceedings under Section 138 of the Act, wherein he is already suffering a double-edged sword for loss of receivables by dishonor of cheque and subsequent legal costs in pursuing claim and offences.

It was considered that the amendments would reduce pendency in courts because of the deterrent effect on the masses along with ensuring certainty of process that was very much lacking in the past. The changes brought forth by way of 2018 amendment to the Negotiable Instruments Act, 1881 are substantial in nature and focus heavily on upholding the interests of the complainants in such proceedings.

Facts of the case were that a complaint was filed under Section 138 of the Act against the Petitioner. Later, the Complainant moved an application under Section 143-A seeking interim compensation. The trial court allowed the application and directed the Petitioner to pay 20 percent of the cheque amount. Aggrieved, the Petitioner moved the Court.

Challenging the constitutionality of Section 143-A, the Petitioner submitted that Section 143-A violates principles of audi alteram partem. Thus, it was prayed that the impugned order be set aside and Section 143-A be declared as ultra vires the Constitution.

Examining the submissions of parties and documents on record, the Court noted that time and again, the Apex Court has dealt with the provisions under Section 143-A of the Act and has never declared it to be ultra vires. The Court further observed that the applicability of Section 143-A depends on the facts and circumstances of each case-

As far as the argument raised by the petitioner with respect to constitutional validity of Section 143-A of the Act is concerned, the aforesaid provisions have been considered repeatedly by the Hon'ble Supreme Court in large numbers of cases and consistently the Hon'ble Supreme Court has not declared the provisions as ultra vires. The grant of interim compensation depends upon the facts and circumstances of the each case. The Hon'ble Supreme Court in the case of G.J. Raja vs. Tejraj Sharma, (2019) 19 SCC 469 has considered the scope of Section 143-A of the Act and held it to be applicable only in those offences under Section 138 of the Act which are committed after introduction of Section 143-A of the Act in the statute book. The Hon'ble Supreme Court further held that the trial Court may exercise its jurisdiction under Section 143-A of the Act. It is required to record the reasons as to why the accused persons are required to be directed to pay interim compensation to the complainant.

The Court, thus, held that considering the legal proposition of law and also the aim and object of introducing of Section 143-A of the Act, the same could not be said to be ultra vires the Constitution.

The Court then turned its attention to the argument regarding Section 143-A being contrary to the principles of audi alteram partem. The Court observed that providing any opportunity of hearing while dealing with an application under Section 143-A is totally at the discretion of the court-

As far as passing of the impugned order without providing any opportunity of hearing is concerned, it is totally the discretion of the court to pass an order under Section 143-A of the Act. The basic object of the Act is to provide some financial help to the complainant who is suffering from a double- edged sword. From the impugned order it is seen that there is no provision in the Act for providing any opportunity of hearing before imposing such a condition. The aforesaid aspect was considered by the Court in the case of Padmesh Gupta (supra).

With respect to the provision of depositing 20 percent of the cheque amount, the Court opined that doing so was in the interest of the Accused as well as the Complainant-

As far as grant of 20% interim compensation is concerned, the aforesaid aspect was considered in the case of Rajesh Soni s/o Shri P. R. Soni Vs. Mukesh Verma s/o Late Shri J. P. Verma, CRMP No.562 of 2021, decided on 30/06/2021, wherein it is held that the word 'may' used is beneficial for the complainant because the complainant has already suffered for mass deed committed by the accused by not paying the amount towards the cheque, therefore, in the interest of complainant as well as accused, 20% of the cheque amount is to be paid by the accused, he may be able to utilize the same for his own purpose, whereas the accused will be in safer side as the amount is already deposited in pursuance to the order passed under Section 143-A of the Act of 1881 and when the final judgment is passed against him he has to pay allowances on the lower side. The provision has been drafted in such a manner that it secures the interest of the complainant as well as that of accused.

With the aforesaid observations, the Court held that the Petitioner could not make out a case seeking interference in the order passed by the lower court. Holding the impugned order to be just and proper, the Court found the petition sans merit and accordingly, the same was dismissed.