Karnataka High Court
Syed Salahuddin Aga vs M/S Tech Steel Products Ltd on 19 April, 2022
Author: M. Nagaprasanna
Bench: M. Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF APRIL, 2022
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
CRIMINAL PETITION No.2844 OF 2022
BETWEEN:
M/S GHOUSIA FOOD PRODUCTS (P) LTD.,
NO.14, BERLIE STREET,
LANGFORD TOWN,
SHANTHINAGAR,
BENGALURU - 560 025.
REPRESENTED BY ITS
AUTHORISED SIGNATORY,
MR.SYED MISBAH AGA
... PETITIONER
(BY SRI ARJUN REGO, ADVOCATE)
AND:
M/S TECH STEEL PRODUCTS LTD.,
NO.671, NAGAWARA,
THANISANDRA MAIN ROAD,
S.R.K NAGAR POST,
BENGALURU - 560 077.
REPRESENTED BY ITS DIRECTOR,
MRS.MUBEENA.
... RESPONDENT
(BY SRI J.PRASHANTH, ADVOCATE)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF
CR.P.C., PRAYING TO:
2
A. QUASH THE ORDER DATED 30.12.2021 PASSED IN
C.C.NO.8420/2021 ON THE FILE OF THE HONBLE 14th ASCJ AND
ACMM, SCCH-10 BENGALURU.
B. HOLD, DECLARE AND ADJUDGE THAT THE PROVISION OF
SEC.143-A OF NI ACT, 1881 ARE ULTRA VIRES THE CONSTITUTION
OF INDIA, 1950 AND ARE THUS UNCONSTITUTIONAL.
THIS CRIMINAL PETITION COMING ON FOR FURTHER
SUBMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioner is before this Court calling in question the order dated 30.12.2021, passed in C.C.No.8420/2021, by the 14th ASCJ and ACMM, Bengaluru, whereby, 10% of the amount on the instrument - cheque is directed to be deposited within 60 days under Section 143A of the Negotiable Instruments (Amendment) Act, 2018 (for short 'the Act').
2. Heard Sri Arjun Rego, learned counsel for the petitioner and Sri J. Prashanth, learned counsel for the respondent.
3. Brief facts leading to the filing of the present petition, as borne out from the pleadings, are as follows:
The petitioner and the respondent had transactions between themselves and the allegations of the complainant is 3 that, the cheque issued by the accused for an amount of Rs.95,45,192/-, when presented for its realisation, was dishonoured on account of an endorsement as 'exceeds arrangement'. Based upon this, legal proceedings were initiated by the complainant against the petitioner. Pursuant to which, a private complaint came to be filed invoking Section 200 of the Cr.P.C., in P.C.R.No.4443/2021, which is subsequently numbered as C.C.No.8420/2021 and the case is now pending.
4. In the said proceedings, the complainant files an application on 04.12.2021, in terms of Section 143A(1)(a) of the Act, which directs the Court to consider an application seeking deposit of 20% of the amount of an instrument - cheque, involved in the transaction. The application having been accepted by the learned Magistrate, directed 10% of the cheque amount to be deposited. This order of the learned Magistrate drives the petitioner to this Court in this petition.
5. Learned counsel for the petitioner submits that the order directing 10% deposit his bereft of reasons as is required 4 in law, as the discretion that has to be exercised is not done as known to law.
6. On the other hand, learned counsel for the respondent would vehemently refute the submissions and contend that what is directed to be deposited under Section 143A of the Act is 10% of the amount on the instrument - cheque and the discretion is exercised after application of judicious mind by the learned Magistrate and the impugned order does not call for any interference.
7. I have given my anxious consideration to the submissions made by the learned counsel for both parties and perused the material on record.
8. The issue with regard to consideration of the application under Section 143A of the Act, need not detain this Court and delve deep into the matter as this Court in Crl.P.No.100261/2022 disposed on 17.02.2022, considering the same issue has held as follows:
5"8. The Act was amended by the Amendment Act of 2018. It is by way of this amendment Section 143A came to be inserted. The relevant text of the amendment concerning, Section 143A of the Act reads as follows:
"1. Short title and commencement.-- (1) This Act may be called the Negotiable Instruments (Amendment) Act, 2018.
(2) It shall come into force on such date 2 as the Central Government may, by notification in the Official Gazette, appoint.
2. Insertion of new Section 143-A.-- In the Negotiable Instruments Act, 1881 (26 of 1881) (hereinafter referred to as the principal Act), after Section 143, the following section shall be inserted, namely:--
"143A. Power to direct interim compensation.--
(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 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 6 (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(2 of 11974).
(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.".
9. This amendment has come into force with effect from 1.9.2018 on its publication in the official gazette. The purport of the amendment is 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. It is invoking the afore-quoted provision of law an application was filed by the complainant seeking interim compensation of 20% of the amount involved. The petitioner files her objections in detail and the Court considering the application passes an order, relevant portion of which reads as follows:-
7"7. Point No.1: The complainant before the court is drawee and accused is drawer of cheque in question, upon which the present case has been filed by the complainant against the accused for non-payment of amount covered under cheque which was dishonoured for the reason of insufficient funds in the account of accused to honour the cheque.
xxx.xxx.xxx.xxx.
Therefore, on going through entire amended provision of Negotiable Instruments Amendment Act, 2018 makes it clear that, if the drawer not pleaded the guilt, then he shall pay the interim compensation at the rate of 20% of the cheque amount, hence the amended provision clearly applicable to the case on hand, because, the accused did not plead the guilt, hence before going for trial she has to pay the 20% of the cheque amount as interim compensation to the complainant. Hence, the objection raised by the accused counsel does not hold any water, accordingly I answer point No.1 in the affirmative.
8. Point No.2: For the above said reasons and discussion, I proceed to pass the following:
ORDER Interim application filed by the complainant under Section 143(A) of Negotiable Instrument Amendment Act, 2018 is hereby allowed.
The accused is hereby directed to pay 20% of the cheque amount as interim compensation to the complainant within 60 days from the date of this order failing which the complainant is at liberty to take action as per Section 421 and 357 of the Cr.P.C.
For payment of interim compensation call on 30- 06-2021."8
10. The afore-extracted order passed by the Court does not bear reason as to why 20% of the amount is awarded as interim compensation. All that the Court records on going through the entire amended provision is, if the drawer of the cheque has not pleaded guilty, then he shall pay interim compensation at the rate of 20%. The petitioner in the case at hand did not plead guilty. Therefore, the Court grants interim compensation. There is no application of mind as to why the said compensation has to be awarded. Section 143A is completely misread that once the accused does not plead guilty, the complainant becomes automatically entitled to 20% of the cheque amount as interim compensation. Sub-section (1) of Section 143A reads that notwithstanding anything contained in the Cr.P.C. the Court trying an offence under Section 138 may order drawer to pay interim compensation to the complainant. If an order is passed for payment of interim compensation, it shall be paid within 60 days from the date of the order.
11. Therefore, the Legislature has cautiously worded sub-section (1) of Section 143A not to make it mandatory in all cases where clauses (a) and (b) of sub-section (1) would empower the learned Magistrate before whom proceedings are pending consideration to award interim compensation. It is the discretion conferred, as the word used is "may". If the order is passed, then the payment is mandatory. Therefore, the learned Magistrate who is hearing the application for interim compensation should apply his mind, record his reasons in exercise of his discretion, as to why 20% of the cheque amount is to be granted, as interim compensation in any given case.
12. The other side of the coin of discretion available to the learned Magistrate is that the amount should not exceed 20%. Therefore, it is not that 20% has to be the interim compensation in every case. Here again the discretion is required to be exercised by the 9 learned Magistrate as the interim compensation can vary from 1% to 20% but shall not exceed 20%. The language of Section 143A being couched with such discretion, the discretion if not exercised in a manner known to law, becomes an arbitrary action.
13. Application of mind in exercise of discretion is discernible only in an order that contains reasons, and reasons can be found only if they are recorded in writing, and if reasons are recorded in writing, it is only then the order will be within the counters of law.
14. The consequence of non-payment of interim compensation so awarded is penal, as proceedings can be initiated by the complainant under Sections 357 and 421 of the Cr.P.C. which are recoverable as fine paid under Section 421 of the Cr.P.C. The impugned action now alleged is that in terms of the order passed by the competent Court, the proceedings for attachment of the property are initiated by the complainant and the property of the petitioner is put to auction. Therefore, the consequences of such order are grave where the petitioner whose liability is yet to be determined will have to face grave hardship in the event of non-payment. It is therefore imperative for the learned Magistrates to pass appropriate orders which bear application of mind and record reasons as to why interim compensation is to be awarded in a given case.
15. In the case at hand, there is not even a semblance of application of mind on the part of the learned Magistrate as the learned Magistrate misconstrues the provision that in the event the accused does not plead guilty he becomes liable to pay 20% as interim compensation. This is not the purport of the Act. But, that does not preclude the learned Magistrate to pass appropriate orders of grant of compensation in a given case. What is the necessary is only application of mind and recording detailed reasons as to 10 why such compensation is to be awarded in a given case. The learned Magistrate will have to apply his mind and pass appropriate orders basing on the averments in the claim inter alia, the case on hand is a classic one where the transaction has happened in cash that too for an amount of rupees two crores. It is the claim of the complainant that cash of rupees two crores was paid as a hand loan and a cheque was obtained from the accused.
16. For the aforesaid reasons, I pass the following:
ORDER
(i) Criminal Petition is allowed and the order dated 10.01.2022 of attachment of property in Criminal Miscellaneous No.313 of 2021 stands quashed. Public auction notification dated 25.01.2022 in furtherance of the order dated 10.01.2022 also stands quashed.
(ii) The Principal District and Sessions Judge, Koppal, shall hear Criminal Revision Petition No.48 of 2021 on its merit within an outer limit of four weeks' from the date of receipt of a copy of this order strictly bearing in mind the observations made in the course of this order and pass appropriate orders in accordance with law after affording adequate opportunity to the parties to the petition. Till such time, the order dated 1.6.2021 granting 20% of the amount involved as interim compensation shall remain stayed.
(iii) It is made clear that the trial in C.C.No.67 of 2021 is not stayed and the trial Court shall proceed with further proceedings in accordance with law."
(Emphasis supplied) In the light of the order passed by this Court (supra) and considering the order passed by the learned Magistrate granting such relief, I deem it appropriate to quash the impugned 11 proceedings and remit the matter to the learned Magistrate to bear in mind the observations made in the afore-extracted order and pass appropriate orders in accordance with law.
9. For the aforesaid reasons, the following:
ORDER
(i) The criminal petition is allowed.
(ii) The order dated 30.12.2021, passed in C.C.No.8420/2021, by the 14th ASCJ and ACMM, Bengaluru, stands quashed.
(iii) The learned Magistrate to consider the application bearing in mind the observations made in the course of the order and pass appropriate orders in accordance with law, within four weeks from the date of the receipt of the copy of the order.
Sd/-
JUDGE nvj CT:MJ