In the case of V. Krishnamurthy v. Dairy Classic Ice Creams Pvt. Ltd, the Karnataka High Court has directed the magistrate Courts to consider the conduct of the accused while deciding the application filed for cheque dishonour case by the drawee, seeking interim compensation under Section 143A of the Negotiable Instruments Act,1881.
The Bench was deciding the case against an order passed by the Additional Chief Magistrate, Bangalore, dated 12-10-2021, which allowed an application under 143A by the complainant Dairy Classic Ice Creams Pvt Ltd. and directed to pay compensation of 10%, in a proceeding instituted for the offenses punishable under Section 138 of the NI Act, Delhi High Court Lawyers.
It was observed by the Court, that “it has become necessary to direct learned magistrates that while considering applications filed under Section 143A if the NI Act,to notice at the outset the conduct of the accused. If the accused has been unnecessarily evading proceedings by seeking adjournments, consideration of the application would become imperative as amendment itself is introduced to compensate such payees of delay tactics adopted by unscrupulous drawers of cheques”.
The Single Judge Bench of Justice M Nagaprasanna further observed that Section 143A was introduced for a specific purpose. The amendment was, ade as the government was receiving representations from several from the public related to the pendency of cheque dishonor cases.
The drawers of dishonoured cheques were using the delay tactics as it was easy to file an appeal and have a stay on the proceedings. The court said that the injustice to the payee had to be considered. Hence, the purpose of the amendment was to deal with this delay in proceedings, Delhi High Court Advocate.
The amendment came into force on 1/09/2018; the purpose of the amendment was that the Court may award an interim compensation of no more than 20% of the cheque amount. The accused will have to comply with the directions of the court if the court directs him to deposit the amount as interim compensation. In case the accused does not follow through with the directions of the court, the amount is recoverable by initiating proceedings under Section421 of the Crpc
The Court observed that failure in paying the compensation so directed by the Court would result in the initiation of a criminal case against the accused and him being taken into custody and thus such orders which would result in penal consequences should be passed only after hearing the accused in the matter, High Court Lawyers In Delhi.
The Court further directed that the magistrate has to exercise such discretion based on two considerations-
Whether the application is so made is necessary as not in every case the compensation has to be paid, several factors are required to be taken into consideration while deciding such application.
The MAgistrate after analyzing the facts of the case and the conditions of the accused can decide whether to grant such compensation or the compensation so granted can vary from 1% to 20% after recording reasons.
In the case if the accused is cooperating with the trial and not seeking any unnecessary adjournments, is not absent from the proceedings, the magistrate will have to apply his mind and exercise his discretion as to whether such applications should be entertained at all.
Secondly, the compensation may vary from 1% to20%. It is particularly directed in the provision that only 20% of the amount could be granted as interim compensation. The Magistrate can apply discretion and direct to pay an amount varying from 1% to 20% of the total amount as interim compensation.
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