Interim compensation in NI Act: Failure to deposit interim compensation does not bar the right to cross-examine witnesses and is not within the power of the court to foreclose right.

Recently, the Hon’ble Supreme Court held in a case, an order of foreclosing the right to cross examine the witnesses because of the failure to deposit interim compensation is not within the powers conferred upon the Court and would go well beyond the permissible exercise of power. 

Power under a statute has to be exercised in accordance with the provisions of the statute and in no other manner - Supreme Court.

The is case of the Appellant who challenges the correctness of the judgment  and order passed by the High Court of Karnataka at Bengaluru and also the courts below in respect of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

        The High Court of Karnataka in its criminal revision petition observed that the conduct of the Appellant in not depositing the interim compensation as directed showed that he is only interested in protracting the proceedings for one reason or the other. Thus dismissed the said petition by affirming the order of the below two courts.
 
        The fact of the case is that the Appellant took loan of Rs. 70,000/- from the Respondent. The Appellant drawn a cheque of 70,000/- in favour of Respondent but the same was dishonoured on account of insufficient funds. After the Appellant failed to pay the amount to the Respondent, a complaint was filed and the Appellant was found guilty of offence under Section 138 of the NI Act.

On the cognizance of the said complaint, an order was passed by the Trial Court directing the appellant to deposit 20% of the cheque amount as interim compensation in term of Section 143(A) of the NI Act within 30 days and further grant of 30 days. But the Appellant failed to pay and because of this reason his prayer seeking permission to cross-examine the Respondent was rejected as deemed not maintainable.

        Thereafter the Trial Court passed an order to undergo simple imprisonment for six months in default of payment of fine in the sum of Rs. 70,000/-.
So, being aggrieved, he preferred an appeal in the Court of Additional District and Sessions Judge. However it was dismissed and order of conviction of trial Court was affirmed.

        The High Court too in its Criminal Revision too affirmed the order of below two courts which finally  came up for  challenge for correctness of the orders of three courts below before the Supreme Court.

        The Learned Advocate of the Appellate submitted that it is not within the competence of the Court to deprive an accused of his right to cross-examine a witness and as such the judgments and orders of the courts below suffered from illegality and required to be set aside.

        Whereas the learned advocate for Respondent submitted that the orders passed by the courts below were consistent with the mandate of section 143A and the right to cross-examine was rightly closed by the courts below.

“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 (1), or within such further period not exceeding thirty days as maybe 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 years, 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 1974).
 
(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.”

        Before coming to the conclusion, the courts relied on the several previous decisions regarding a method or modality for exercise of power prescribed by a statute and in no other method that Court has to follow.

        By relying on the decision of Privy Council in Nazir Ahmed vs King Emperor (1936), the Apex Court observed in State of Uttar Pradesh vs Singhara Singh and others (AIR 1964 SC 358) that where a power is given to do a certain thing in a certain way, the thing must be done in that way and not at all and that other methods of performance are necessarily forbidden.

        The Court also reiterated the decisions made in the case J.N. Ganatra vs Morvi Municipality (1996) 9 SCC 495. It was held that it is well settled preposition of law that a power under a stature has to be exercised in accordance with the provisions of the statute and in no other manner.

        The Hon’ble Court in the present case viewed that the trial Court has not followed the provision of sub-Section 5 of Section 143A of the Act which states, the interim compensation payable can be recovered as if it were a fine and has exceeded its power by not allowing the Appellant to cross examine the Respondent.

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        It is pertinent to note that the provision of Section 143A does not contemplates that an accused who had failed to deposit interim compensation cannot be fastened with any other disability including denial of right to cross examine the witness.

        Thus such order that forecloses the right will not be within the powers of the Court, as a matter of fact, go beyond the permissible exercise of power.

        Therefore, the Hon’ble Supreme Court after setting aside decision of all the courts restored back the complaint case to the trial Court for reconsideration of Appellant’s prayer to cross-examine the Respondent and then take the proceedings to a logical conclusion.

 

Coram:

Justice Uday Umesh Lalit

Justice S. Ravindra Bhat

Justice Sudhanshu Dhulia

 

Case:

Noor Mohammed Versus Khurram Pasha 

DOJ:  2.08.2022

Click here to read full judgment.

 

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