INTERIM COMPENSATION UNDER NEGOTIABLE INSTRUMENTS ACT

 INTERIM COMPENSATION UNDER NEGOTIABLE INSTRUMENTS ACT

 

The Negotiable Instruments (Amendment) Act of 2018 inserted the provisions under Sections 143A and 148 into the N.I. Act. The Amendment Act was notified on 02.08.2018 and came into force on 01.09.2018. The newly added provisions have introduced the concept of awarding interim compensation during the pendency of a trial or an appeal in respect of an offence under Section 138.

143A. Power to direct interim compensation

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, 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 the charges.

(2) The interim compensation under Sub-section (1) shall not exceed twenty per cent 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 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 sixty 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 a fine under Section 421 of the Code of Criminal Procedure, 1973.

(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, shall be reduced by the amount paid or recovered as interim compensation under this Section.

Section 148 of the N.I. Act is directed towards the appellate Court. It reads as under.

148. Power of Appellate Court to order payment pending appeal against conviction

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in an appeal by the drawer against conviction under Section 138, the appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court: Provided

that the amount payable under this Sub-section shall be in addition to any interim compensation paid by the appellant under Section 143A.

(2) The amount referred to in Sub-section (1) shall be deposited within sixty 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 appellant.

(3) The appellate Court may direct the release of the amount

deposited by the appellant to the complainant at any time during the pendency of the appeal: Provided that if the appellant is acquitted, the Court shall direct the complainant to repay to the appellant the amount so released, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty 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.

Section 143A, N.I. Act is Prospective; Section 148 is Retrospective

In G. J. Raja v. Tejraj Surana, [2019 SCC online SC 989] a Division Bench of the Supreme Court has very expressly held Section 143A, N.I. Act to be prospective in operation and that the provisions of said Section 143A can be applied or invoked only in cases where the offence under Section 138 of the Act was committed after the introduction of said Section 143A in the statute book.

The newly added Section 148, N.I. Act, however, does operate retrospectively as per the judgment of the Supreme Court in Surinder Singh Deswal @ Col. S. S. Deswal v.Virender Gandhi[ (2019 )11 SCC 431]

Whether it is Mandatory For a Magistrate To Order Payment Of Interim Compensation in every case ?

The Hon’ble Madras High Court in the case of L.G.R.Enterprises vs

P.Anbazhagan [2019(4) LW 44] has held that  whenever the trial Court exercises its jurisdiction under Section 143A(1) of the Act, it shall record reasons as to why it directs the accused person (drawer of the cheque) to pay the interim compensation to the

complainant. The reasons may be varied. For instance,

1.The accused person would have absconded for a

longtime and thereby would have protracted the proceedings

or the accused person would have intentionally evaded service for a long time and only after repeated attempts, appears before the Court, or

2. The enforceable debt or liability in a case, is borne out by overwhelming materials which the accused person could not on the face of it deny or where the accused person accepts the debt or liability partly or

3. Where the accused person does not cross examine the witnesses and keeps on dragging with the proceedings by filing one petition after another or

4. the accused person absonds and by virtue of a nonbailable

warrant he is secured and brought before the Court after a long time or

5. he files a recall non-bailable warrant petition after a long time and the Court while considering his petition for recalling the non-bailable warrant can invoke Section 143A(1) of the Act.

This list is not exhaustive and it is more illustrative as to the various circumstances under which the trial Court will be justified in exercising its jurisdiction under Section 143A(1) of the Act, by directing the accused person to pay the interim compensation of 20% to the complainant.