Magistrate Not Obligated To Provide Reasons For Amount Of Interim Compensation Awarded To Complainant In Cheque Dishonour Case: Bombay HC

Justice Anil Pansare of the Nagpur Bench observed that satisfaction of Section 143A is reason enough for awarding 20 percent interim compensation to the complainant and requiring trial court to give additional reasons for the amount would defeat the purpose of the section.

“To expect the learned Magistrate to assign additional reasons, in a way, will defeat the amendment for the reason that every order passed under Section 143A will then be challenged on the ground that there are no additional reasons assigned by the learned Magistrate and if additional reasons are assigned, the challenge will be that the reasons assigned are not adequate etc. thereby opening flood-gates of litigations”, the court observed.

The court in a writ petition further clarified that if the trial court decides to reduce the interim compensation, additional reasons may be necessary indicating why it was being done.

The present case was filed by one Guljama Shah against Shri Sadguru Kaka Stone Crusher. The petitioner challenged an order dated December 20, 2022, passed by Judicial Magistrate, First Class, Khamgaon, which had allowed the respondent's application under Section 143A of the NI Act. This order directed the petitioner to deposit an amount of Rs. 3,09,100 within sixty days, which represented 20 percent of the cheque amount of Rs. 15,45,500.

Advocate RD Dhande for the petitioner-accused relied on judgment of a coordinate bench of the HC in Ashwin Ashokrao Karokar v. Laxmikant Govind Joshi, arguing that while deciding applications under Section 143A of the NI Act, the court should assign reasons for awarding interim compensation, which can range up to 20 percent of the cheque amount. He contended that the trial court in the present case had not assigned such reasons.

Dhande contended that the NI Act did not provide any remedy if the accused is acquitted after paying interim compensation. The court in Ashwin Karokar case had also raised this concern, observed that the NI Act lacked provisions specifying the effect of non-restitution by the complainant in cases of acquittal. The court in that case suggested that the legislature might need to revisit these provisions in the future.

On the other hand, Advocate Bhavin Suchak for the respondent-complainant argued that the trial court had considered the judgment in Ashwin Karokar case while awarding interim compensation. He pointed out that the trial court cited relevant portions of the judgment, indicating the requirements of awarding interim compensation.

As per section 143A (a) to (d) of the Act, these include whether the requirements of Section 138 are met, whether the pleadings show the drawing of the presumption, whether the proceedings are within the limitation period, and whether a prima facie legal debt or liability is evident from the complaint or the preceding notice of demand.

The court noted that the purpose of introducing Section 143A of the NI Act was to curtail the delaying tactics used by unscrupulous individuals who issued dishonoured cheques. The amendment of 2018 aimed to address the issue of undue delay in resolving such cases, saving time and resources for payees.

The court clarified that interim compensation is awarded at a stage where the accused has pleaded not guilty to the charges. In such cases, even if the conditions in section 143A are met, not awarding interim compensation at the maximum rate of 20 percent would undermine the purpose of Section 143A. The court said that if there are doubts about the fulfilment of any of these conditions, the magistrate could reduce the interim compensation or refrain from granting it altogether.

“once the factors enumerated in clauses (a) to (d) above are satisfied/ fulfilled, then those are reasons enough and thus case for awarding interim compensation exists. In such circumstances, the learned Magistrate will be fully justified in awarding 20% interim compensation”, said the court.

Further, the court proposed that in cases where interim compensation is granted and the trial resulted in the accused's acquittal, an additional condition could be imposed. This condition would require the complainant to provide an undertaking to deposit the amount of interim compensation, along with interest, if the accused was acquitted.

Thus, the court dismissed the petition and directed the complainant to give an undertaking to deposit the amount of interim compensation along with interest at 6 percent per annum if the accused is acquitted.

Case no. – Criminal Writ Petition No. 83/2023

Case Title – Guljama Shah Jahir Shah v. Shri Sadguru Kaka Stone Crusher

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