Order 1

Order Details: Order
Pdf Text: 1 C.C.NO. 3746/SS/2018
ORDER BELOW EXH. 18
Present application is filed U/s. 143 -A of Negotiable Instruments
Act (hereinafter referred as “N. I. Act.) by the complainant to issue
direction to accused to pay 20% of cheques amount as interim
compensation.
2. It is the submission of complainant that, the complaint is filed
U/s. 138 of N.I.Act. Further as per Section 143-A of N. I. Act, this court
can direct the accused to pay interim compensation up to 20 % of the
cheques amount. The total amount of dishonoured cheques are of Rs.
1,71,838/-. On account of non-payment of cheques amount, the present
complaint is filed. Therefore, complainant lastly prayed for grant of 20
% interim compensation amount of the cheque amount.
3. Accused have filed their reply below Exh. 20 and submitted that,
complainant has approached this court with unclean hands and with
ulterior motives to harass the accused persons. The word “may” is used
in the Section 143- A of N.I.Act. Therefore, it is a discretionary power
of the court to grant interim compensation up to 20 % of the cheques
amount. Further they submitted that, accused has good defence on
merits. The complaint filed by the complainant is based on false and
concocted stories, even otherwise the complaint discloses illegal,
unaccounted and Benami transactions in cash. Accused is not liable to
pay any amount to the complainant. Therefore, lastly prayed to reject
the application.
4. Heard. Perused the application and say.
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5. The present private complaint is filed U/s. 138 of N.I.Act. In
response to the summons, the accused appeared in the complaint and
the plea of the accused came to be recorded on 31/01/2024. The
complainant has already filed his evidence affidavit below Exh. 10 and
matter is posted for further examination in chief and for cross-
examination. The present application is filed U/s. 143 -A of N.I. Act
and Section 143-A is reproduced below:-
“ (1) Notwithstanding anything contained in the code of
Criminal Procedure, 1973 (2 of 1974), 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.
(2) The interim compensation under sub-section (1) shall
not exceed 20 % of the amount of the cheque.
(3) The interim compensation shall be paid within
sixty days from the date of the order under sub-
section (1) or within such further period not
exceeding thirty days as may be directed by the
Court on sufficient cause being shown by the
drawer of the cheque.
(4) if the drawer of the cheque is acquitted, the
Court shall direct the complainant to repay to the
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drawer the amount of interim compensation, with
interest at the bank rate as published by the
Reserve Bank of India, prevalent at the beginning
of the relevant financial year, within 60 days from
the date of the order, or within such further period
not exceeding thirty days as may be directed by the
court on sufficient cause being shown by the
complainant.
(5) The interim compensation payable under this
section may be recovered as if it were as fine under
section 421 of the Code of Criminal Procedure,
1973 (2 of 1974).
(6) The amount of fine imposed under section 138
or the amount of compensation awarded under
section 357 of the Code of Criminal Procedure,
1973 (2 of 1974), shall be reduced by the
amount paid or recovered as interim
compensation under this section.
6. I have perused the decision of Hon’ble Supreme Court of India in
Rakesh Ranjan Shrivastava V/s. State of Zarkhand and Anr., Criminal
Appeal No. 741 of 2024, decided on 15/03/2024. It has held that,
“power under sub section (1) of Section 143-A is discretionary and not
mandatory. Sub section (1 )of Section 143-A provides for passing for a
drastic order for payment of interim compensation against the accused
in a complaint U/s. 138, even before any adjudication is made on the
guilt of the accused. The power can be exercised at the threshold even
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before the evidence is recorded. If the word ‘may’ is interpreted as
‘shall’, it will have drastic consequences as in every complaint U/s. 138”.
It is further held that, “subject to what is held earlier, the main
conclusions can be summarised as follows:-
a. The exercise of power under sub-section (1) of Section 143-A is
discretionary. The provision is directory and not mandatory. The word
“may” used in the provision cannot be construed as “shall.”
b. While deciding the prayer made under Section 143A, the Court
must record brief reasons indicating consideration of all relevant
factors.
c. The broad parameters for exercising the discretion under
Section 143-A are as follows:-
i. The Court will have to prima facie evaluate the merits of the case
made out by the complainant and the merits of the defence pleaded by
the accused in the reply to the application. The financial distress of the
accused can also be a consideration.
ii. A direction to pay interim compensation can be issued, only if the
complainant makes out a prima facie case.
iii. If the defence of the accused is found to be prima facie plausible, the
Court may exercise discretion in refusing to grant interim
compensation.
iv. If the Court concludes that a case is made out to grant interim
compensation, it will also have to apply its mind to the quantum of
interim compensation to be granted. While doing so, the Court will have
to consider several factors such as the nature of the transaction, the
relationship, if any, between the accused and the complainant, etc.
v. There could be several other relevant factors in the peculiar facts of a
given case, which cannot be exhaustively stated. The parameters stated
above are not exhaustive.
7. Perusal of above provision as well as above cited decision, it
makes clear that, the Section 143-A N. I. Act is a directory and not
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mandatory. Further, while deciding application U/s. 143-A of the
N.I.Act, the guidelines issued by Hon’ble Supreme Court of India in the
case of Rakesh Shrivastava (cited supra) are required to be considered.
8. In the case in hand, the complainant submitted that, the accused
have not paid the cheques amount, though he sent demand notice. The
accused has not sent reply to the demand notice of the complainant. I
have perused the complaint, present application as well as documents
produced on record. As per the case of complainant, the accused no. 1 is
a partnership firm and accused no. 2 and 3 are its partners and they are
responsible for day-to-day conduct and affairs of the accused no. 1. The
accused approached to the complainant company for purchase of
aluminum panel Sheet of Rs. 2,70,000/-. The complainant has delivered
the goods of Rs. 2,63,485/- to the accused vide four invoices. The
accused had paid part payment and the amount of Rs. 2,07,196/- is due
from the accused. For the payment of said amount, the accused has
issued these cheques which were dishonoured with reason Funds
Insufficient. The complainant has sent demand notice to the accused
and after service of notice, the accused did not reply to the
complainant. As per the reply filed by the accused to the present
application, it is submitted by the accused that, the Section 143-A is
discretionary and it is not mandatory. The accused has good defence. It
seems from the reply that, the accused has not disclosed his defence nor
denied the issuance of the cheques and signature on the cheques.
9. Perusal of present application, the complaint and record, it seems
that, the complainant has shown prima-facie case in her favour. The
accused have not raised any defences in the say filed to this application.
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Further, the accused did not send reply to the demand notice. Case will
take some time for its disposal and in the meantime complainant is to
be compensated. In such circumstances, I am of the view that
complainant is entitled for interim compensation to the extent of 15%
of cheques amount as prayed. In the result, I Pass following order :-
ORDER
1. Application is partly allowed.
2. Accused are hereby directed to pay interim
compensation to the extent of 15% of the cheques amount
to the complainant within period of 60 days from the
date of this order.
3. If accused have not complied this order, Complainant is at
liberty to recover said amount from the accused as per
Section 421 of Cr.P.C.
Date : 25/09/2025
Sd/-
( Y. P. Pujari)
Judicial Magistrate (First Class)
48th Court, Andheri, Mumbai.
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