{"id":269136,"date":"2022-06-28T11:00:56","date_gmt":"2022-06-28T05:30:56","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=269136"},"modified":"2022-07-01T14:05:44","modified_gmt":"2022-07-01T08:35:44","slug":"karnataka-high-court-magistrates-to-consider-conduct-of-accused-while-deciding-application-for-interim-compensation-in-cheque-dishonour-cases","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/06\/28\/karnataka-high-court-magistrates-to-consider-conduct-of-accused-while-deciding-application-for-interim-compensation-in-cheque-dishonour-cases\/","title":{"rendered":"Karnataka High Court| Magistrates to consider ‘conduct of Accused’ while deciding application for interim compensation in Cheque dishonour cases"},"content":{"rendered":"
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Karnataka High Court<\/span>: M. Nagarprasanna J. allowed a petition filed under Section 482<\/a> of Criminal Procedure Code, 1973<\/a> (CrPC) seeking quashing of the impugned order passed by the Additional Chief Metropolitan Magistrate. Therefore, the magistrate court directed that interim compensation be given as per the \u201cconduct of the accused\u201d for the applications filed under Section 143-A<\/a> of the Negotiable Instruments Act, 1881<\/a> (NI Act).<\/p>\n

The observation came after the Court noticed that it was \u201cflooded with litigation with regard to grant of compensation under Section 143-A<\/a> of the NI Act<\/a> by criminal courts\u201d. Noticing that in several cases discretion is exercised for grant of compensation and in several other cases there are no reasons for exercise of such discretion, the Court found it necessary to direct Magistrates to consider the conduct of the accused at the outset while considering applications filed under Section 143-A of the Act.<\/p>\n

\u201cIf the accused has been unnecessarily evading the proceedings by seeking adjournments, consideration of the application would become imperative as the amendment itself is introduced to compensate such payees of delay tactics adopted by unscrupulous drawers of cheques.\u201d<\/p>\n

Facts of the case<\/p>\n

The petitioner and the respondent entered into an agreement in 2017 for the distribution of ice cream and frozen dessert products manufactured by the respondent. As per the agreement, the respondent had demanded the petitioner the issuance of blank cheques as security instead of the proposed supply to be made to the petitioner. Therefore, the petitioner issued several blank cheques to the respondent.<\/p>\n

A complaint was filed invoking Section 200<\/a> of the CrPC<\/a> for offences punishable under Section 138<\/a> of the NI Act<\/a> when the cheque of Rs 5,56,71,208\/- was dishonored on the grounds of want of sufficient funds in the account.<\/p>\n

The trial court, after considering the facts, gave the impugned order of granting 10% interim compensation in terms of section 143-A<\/a> of the NI Act<\/a>.<\/p>\n

Analysis of the court<\/p>\n

Firstly, the court noted that Section 143-A of the Act was introduced for a specific purpose. The purport of the amendment was that the court may, in certain circumstances, award interim compensation which shall not exceed 20% of the amount of the cheque and such interim compensation can be permitted to be withdrawn in terms of the said amendment. Therefore, the court in such cases directs the accused to pay interim compensation under section 143-A. In circumstances when the accused would not deposit the amount directed by the Court, it is recoverable by initiating proceedings under Section 421<\/a> of the CrPC<\/a>. Therefore, the provision which is a directory in the beginning snowballs into becoming mandatory and penal by the time the realization of the deposit amount is made. <\/span><\/p>\n

The Court, further, explained the following \u201ctwo-fold discretion\u201d that are sine qua non<\/span> for an order to be passed by the Magistrate while considering the application under Section 143-A<\/a> of the NI Act<\/a>.:<\/p>\n