INTRODUCTION
“AN ACT TO EXPLAIN AND AMEND THE LAW RELATING TO PROMISSORY NOTES, BILLS OF EXCHANGE AND CHEQUES”.
The NI (AMENDMENT) ACT, 2018, which received permission from the head of the state on 02, August 2018 inserted a new Section in the NI ACT,1881 which is S 143(A)[1] Which confers power to the judicature to direct interim compensation. This provision deals with matters related to cheque bounce lawsuits and gives more protection to the payee of the cheque. The main purpose of S 143(A) is to decree interim compensation to the plaintiff and the interim compensation can be specified not more than 20% of the cheque amount. The interim compensation shall be reimbursed within 60 days from the date of the decree or a further period not put forth 30 days as may governed by the judicature on sufficient grounds shown by the cheque drawer. The refund can be specified to the payee if governed by the judicature if acquitted and the payee can recover the amount as fine under S 421 of CRIMINAL PROCEDURE CODE. The S 143(A) of NI, ACT does not have the retrospective effect.
CONCEPT OF INTERIM COMPENSATION UNDER S 143(A)
The NI Act, of 1881[2] can be explained as ‘an Act to explain and amend the law relating to bank notes, fiduciary currency and bonds.’ The NI (Amendment) Bill was introduced before the House of People by the Finance Minister on January 2, 2018. It received permission from the head of the state and was notified in the Official Gazette on 2nd August 2018 to become an Act known as the NI (Amendment) Act, 2018 (No. 20 of 2018). S 143(A) of NI gives power to the judicature to grant interim compensation to the person if he is found not guilty in the summary trial or in a summon lawsuit and in any other lawsuit the judicature finds suitable. The compensation can’t exceed 20% of the amount. The compensation can be paid within 60 days from the date of the order under sub-section (1) or within the period not exceeding 30 days directed by the courts. If the drawer of the cheque was acquitted, the complainant has to repay the amount of the compensation. This interim compensation can be payable under S 421 of the Code of Criminal Procedure, 1973. The fine under S 138 of the NI Act can be reduced by the amount paid and recovered as interim compensation under this section.
We can easily understand with the suitable lawsuit laws:
NOOR MOHAMMED V. KHURRAM PASHA: The Hon’ble Supreme Judicature ruled in the lawsuit that an accused man who is unable to pay the interim compensation required by S 143A of the NI Act cannot repudiate the right to cross-examine witnesses on behalf of the complainant. The Judicature agreed with the reasons of the appellant and in the end, said that S 143A does not hint that an accused person who fails to pay interim compensation should be subjected to any other limitations, including the loss of the right to cross-examine the complainant’s witnesses. “Any such decree confiscating the right would not be inside in the powers bestow upon the judicature and would go well beyond the permissible exercise of power,” the Judicature observed[3].
PAWAN BHASIN V. STATE OF UTTAR PRADESH: In this lawsuit, the Hon’ble Supreme Judicature of India analysed the provisions of S 143A(1) of the NI Act, 1881 (“N.I. Act”) about the discharge of interim compensation in lawsuits of dishonoured cheques.
S 143A was introduced in the N.I. Act through the NI (Amendment) Act, 2018. It provides for the discharge of interim compensation to the complainant while the trial for an offence under S 138 of the N.I. Act (relating to dishonour of cheques due to insufficient funds) is pending. Under S 143A(1), the judicature may direct the accused to give the complainant interim compensation, which cannot be more than 20% of the cheque amount, if the accused is found guilty of the crime under S. 138. However, the crucial point of interpretation arose as to when the judicature can direct the discharge of interim compensation.
The Supreme Judicature in Pawan Bhasin’s lawsuit held that the discharge of interim compensation can be governed only after the accused has pleaded not guilty to the charge. This means that the accused must have been formally charge-sheeted and have entered a plea of not guilty, indicating his intention to contest the lawsuit.
The Judicature rationale is that the mandate under S 143A(1) is contingent upon the accused pleading not guilty, and the purpose of providing interim compensation is to address the financial impediment faced by the complainant during the pendency of the trial. Therefore, the discharge of interim compensation should be decreed only when it is established that there is a genuine dispute and the accused has chosen to contest the lawsuit.
In conclusion, as per the analysis in Pawan Bhasin v. State of U.P., the discharge of interim compensation under S 143A(1) of the N.I. The act can only be governed after the accused has pleaded not guilty. This interpretation clarifies the timing of such discharge and ensures that it is decreed inappropriate lawsuits to assist the complainant in meeting their financial needs during the trial.[4].
The Hon’ble Supreme Judicature held that where a cheque is dishonoured, the interim compensation can be governed to be reimbursed only after the accused has pleaded not as per section 143(A) of the NI Act[5].
INTERIM COMPENSATION MANDATORY OR DIRECTORY?
The provisions of S 143-A of the NI Act, 1881 are directory and not mandatory as discretion was conferred upon the Judicature, to either or not to grant interim compensation. Under S 143-A of the NI Act, the judicature can direct discharge of interim compensation even without the complainant making an application for the same, but not without following the principles of natural justice. The interim compensation must be paid back within 60 days of the decree date under sub-S (1), or within any further thirty-day period that the judge may determine if the drawer of the check provides acceptable justification. If the cheque drawer is found not guilty, the judge will order the complainant to reimburse the drawer for the interim compensation, plus interest at the financial institution rate, within 60 days of the decree’s date. Alternatively, the judge may set a later deadline of up to thirty days if the complainant provides sufficient justification.
The Hon’ble Supreme Judicature held that where a cheque is bounced, the interim compensation can be governed to be reimbursed only after the accused has pleaded not as per S 143(A) of the NI Act[6].
CONCLUSION
Through, this I concluded that S 143(A) is very important for the negotiable act which enforces the judicature to assign interim compensation to the payee of the cheque in a lawsuit of default. Through the above, we can easily understand that interim compensation can be specified in two situations. 1) when the drawer of the cheque pleads not guilty in a summary trial and in the summon lawsuit.2) or any other situation in which framing of the charges of another lawsuit. S 143(A) generally works in matters related to cheque bounce lawsuits and gives more protection to the payee of the cheque. Through the lawsuits, we can say that the Hon’ble Supreme Judicature says that if the accused fails to Pay interim compensation the right to cross-examination is not to be taken and interim compensation can be specified only when the accused pleads not guilty.
Author(s) Name: Ibra Khan (Aligarh Muslim University, Aligarh)
Reference(s):
[1] The Negotiable Instrument Act 1881, s 143(A)
[2] Vidhikarya,’ The Negotiable Instrument Act, 1881’(Vidhikarya, 13 May 2024) <https://www.vidhikarya.com/legal-blog/the-negotiable-instruments-act-1881 > accessed 10 July 2024.
[3] NOOR MOHAMMED V. KHURRAM PASHA (Arising out of Special Leave Petition (Criminal)No. 2872 of 2022
[4] PAWAN BHASIN V. STATE OF UTTAR PRADESH 2023
[5] Suhasini Singh, ’Interim Compensation in cheque Dishonour lawsuits: Understanding of Section 143-A NI Act’(LinkedIn, 14 April 2024) <https://www.linkedin.com/pulse/interim-compensation-cheque-dishonour-lawsuits-section-143-a-singh-o4fof/>accessed 11 July 2024.
[6] Ibid
