S.143A NI Act | Interim Compensation Cannot Be Granted Without Giving An Opportunity Of Hearing To Accused: Karnataka High Court

The Karnataka High Court has said under Section 143-A of the Negotiable Instruments Act, the court can direct payment of interim compensation even without the complainant making an application praying for the same, but not without following principles of natural justice. A single judge bench of Justice M Nagaprasanna allowed the petition filed by one Himanshu Gupta and quashed the order directing him to pay 20% interim compensation. It said, "The impugned order being a judicial order which is likely to result a proceeding being instituted under Section 421 of the Cr.P.C, in the event the accused would fail complying with the order of deposit of 20% of the amount of the instrument, it ought not to have been passed without hearing the accused. Though the provision does not indicate any hearing to that effect, in the light of the order having penal consequences, principles of natural justice will have to be read into the provision." The petitioner had approached the court questioning the order dated 07.10.2021, directing him to deposit 20% of cheque amount under Section 143-A of the Negotiable Instruments Act, 1881, as amended in the year 2018. In the proceedings initiated by the respondent under section 138 of the NI act against the accused the court suo-motu passed the order. It was said the complainant himself did not prefer an application seeking any amount to be paid in terms of Section 143A of the Act and accused had no opportunity to even rebut the order in the light of no application being filed. Court findings: The bench referred to Section 143-A of the Act and said, "Section 143A of the Act, would result in acceptance of the submission of the learned counsel for the petitioner only partially. Section 143A of the Act does not in every circumstance mandate filing of an application. The Court, trying an offence under Section 138, may order the drawer of the cheque to pay interim compensation to the complainant and the interim compensation shall not exceed 20% of the amount of the instrument/cheque." It added, "Till this stage, it is the discretion of the Court, as the statute depicts that the Court may award interim compensation. But once the Court awards, its non-payment results in penal consequences. Sub-section (5) of Section 143A mandates that if the interim compensation is not paid, it may be recovered as if it were a fine under Section 421 of the Cr.P.C. Section 421 of the Cr.P.C." Further it said, "Therefore, non-payment of compensation ensues dire consequences. The scheme of the provision being thus,though no application is filed, the Court may grant interim compensation, but it shall not be without hearing the accused, as, if the, Courts would pass orders suo motu without calling upon the respondent to respond on such suo motu action, such action would be in blatant violation of principles of natural justice." It then opined, "It is trite law that any order both judicial and administrative if entail penal or civil consequences, it cannot be passed without at the outset complying with principles of natural justice." Accordingly it allowed the petition. Case Title: Himanshu Gupta And V Narayana Reddy Case No: Criminal Petition No. 3555 of 2022 Citation: 2022 LiveLaw (Kar) 275 Date of Order: May 26, 2022 Appearance: Advocate Vidyashree K S for Advocate K S Shiva Kumar for petitioner Click Here To Read/Download Order

S.143A NI Act | Interim Compensation Cannot Be Granted Without Giving An Opportunity Of Hearing To Accused: Karnataka High Court

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S.143A NI Act | Interim Compensation Cannot Be Granted Without Giving An Opportunity Of Hearing To Accused: Karnataka High Court

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