Interim Compensation under Section 143A of Negotiable Instruments Act, What Madras HC held

The Madras High Court recently highlighted that a court cannot pass an order directing a person accused of an offence under the Negotiable Instruments Act, 1888 to pay interim compensation to the complainant unless it is supported by reasons. Further, applying the principles laid down in the Supreme Court case of Surinder Singh Deswal @ Col SS Deswal and others v. Virender Gandhi, the Court also noted that provision dealing with the same, i.e. Section 143A of the Negotiable Instruments Act, would be applicable to proceedings pending at the time of its introduction as well..Justice N Anand Venkatesh noted,.“The amendment through which Section 143A was brought into force will be applicable even to pending proceedings. If such a purposive interpretation is not given to this provision, it will defeat the very purpose of the amendment which was brought in as a beneficial piece of legislation for the complainant prosecuting a criminal complaint under Section 138 of the Negotiable Instrument Act.” .Section 143A confers on trial courts the power to direct an accused to pay interim compensation to the complainant up to 20% of the amount involved. Commenting on the manner in which this provision must be applied, the Court said,.“…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.”.This observation was made in view of the fact that the power under Section 143A is discretionary. As noted by the Court,.“The exercise of discretion must always be supported by reasons, failing which the exercise of discretion will become arbitrary….…It is not necessary that in all cases, the trial Court must necessarily direct the complainant to pay interim compensation and such a direction should be given only on a case to case basis, by taking into consideration the facts of each case..The legislature has intentionally not used the word “shall“, since it would have prevented the accused persons, even in genuine cases, from defending themselves without paying 20% as interim compensation amount to the complainant. This would have directly affected the fundamental right of an accused person to defend himself in a criminal case. This is the reason why the legislature had thoughtfully used the word “may” under Section 143A(1) of the Negotiable Instruments Act. Therefore, it is not possible to read the word “shall” into the word “may” which is used in the provision.”.The judge proceeded to observe that the reasons cited to justify the direction for payment of interim compensation in particular cases may be varied. With a view to laying down guidelines for the trial courts to follow in the application of Section 143A, the Court also made note of the following possible scenarios which may call for such an interim direction..“The reasons may be varied. For instance, 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 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 where the accused person does not cross examine the witnesses and keeps on dragging with the proceedings by filing one petition after another or the accused person absonds and by virtue of a non-bailable warrant he is secured and brought before the Court after a long time or 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.”.The Court also added,.“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.“.Bearing these observations in mind, the Court found that the lower court order challenged before it had not recorded reasons for directing the petitioners in the case (who were accused of dishonouring a cheque) to pay interim compensation to the complainant. Therefore, Justice Venkatesh set aside the lower court order and directed it to complete the case proceedings within three months.