December 31, 2021 In Uncategorized


The #DelhiHighCourt has in a recent case of M/S JSB Cargo and Freight Forwarder Pvt. Ltd. and Ors vs State and Anr. passed a #Judgment dated 20-12-2021 and decided upon the issue of #powers of the #TrialCourt to grant #interim #compensation in a #chequedishonour case in terms of Section 143A of the Negotiable Instruments Act 1881 (#NIAct).

In this case, M/S JSB Cargo and Freight Forwarder Pvt. Ltd and its Directors (Accused) had to refund certain amounts to Mr. Suneel Suryavanshi and Mrs. Savita Suryavanshi (Complainants), for which, they issued Cheques of Rs. 76,92,000/- and Rs. 53,40,000/-, totalling to Rs. 1,30,32,000 (Cheque Amount). However, those Cheques got dishonoured and the Complainants filed Complaint under Section 138 of the NI Act before the Metropolitan Magistrate (NI Act), Digital Court-01, PHC/New Delhi (Trial Court) against the Accused Persons. The Trial Court then summoned the Accused and they pleaded not guilty in terms of Section 251 of the Code of Criminal Procedure 1973 (CrPC).

Thereafter, the Complainants filed an Application before the Trial Court seeking grant of interim compensation under Section 143A of NI Act (Power to direct interim compensation). The Trial Court has powers under Section 143A (1) (a) of NI Act to order the drawer of cheque to pay interim compensation to the complainant in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint. Accordingly, the Trial Court passed an Order dated 21-09-2021 (Impugned Order) and allowed the Section 143A Application and directed the Accused to pay a consolidated amount of Rs. 26,06,400/- to the Complainants, which is 20% of the total Cheque Amount.

Aggrieved, the Accused filed Petition before the Delhi High Court and opposed the Impugned Order on the ground that the amounts paid under the Cheques were in excess of the amount received from the Complainants and that the Complainants are not registered money lenders, hence, the Complaint is barred by law.

The Delhi High Court passed a Judgment dated 20-12-2021 and made the following observations in this case:

(1) That the object behind introducing Section 143A NI Act was to address the issue of undue delay in final resolution of cheque dishonour cases by providing relief to payees of dishonoured cheques by way of interim compensation not exceeding 20% of cheque amount. This would also help the strengthen the credibility of cheques in trade and commerce sector.

(2) However, the provision of Section 143A NI Act is directory in nature and not mandatory. Hence, it is not compulsory for the Trial Court to order for interim compensation under Section 143A NI Act in all proceedings tried under Section 138 NI Act.

(3) Further, although the Trial Court is empowered under Section 143A NI Act to grant interim compensation, but the same can be done only after providing sufficient reasons.

(4) Therefore, an order to grant interim compensation under Section 143A NI Act has to be a reasoned order, which is passed after considering the documents and submissions put forth by both parties in terms of Section 294 of CrPC (No formal proof of certain documents).

(5) In this case, the Trial Court has to thus, consider the submissions of both Complainant and Accused and also consider the genuineness and authenticity of the documents including Cheques, Loan Agreement, etc and then decide upon grant or dismissal of interim compensation under Section 143A NI Act.

Therefore, the High Court set aside the Impugned Order and remanded the matter back to the Trial Court for proper hearing and disposal of Section 143A Application, after taking into consideration the submissions and documents produced by both Parties.


Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

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