compensation u/s 143-A NI Act NOT PAID: accused still entiTled to cross
examine complainant?
The mandate to pay compensation to the accused in
cheque bouncing complaints as contained in section 143-A of Negotiable
Instruments Act has travelled a distance, since its inclusion in the statute
book. The circumstances under that a Magistrate can invoke the discretion of
granting interim compensation up to 20% value
of the cheque amount during pendency of the complaint are too well known to
need any further elucidation. However, another aspect that may need further exploration
is, as regards the situation of non-payment of interim compensation by the accused,
despite the order passed to that effect by a competent Magistrate dealing with
the trial of such cases. Whether, non-payment of interim compensation as per the
order as above referred shall disentitle
the accused from cross examining the complainant witness or not is a moot point
needing adequate deliberation.
Precisely, on this aspect itself, the hon’ble Supreme
Court in a matter reported as Noor Mohammed Vs Khurram Pasha
MANU/SC0954/2022 has analysed it and settled the legal position.
The decision of
Supreme Court was arrived at in a criminal Appeal bearing no. 1123 of 2022
emanating from the judgment of Karnataka High Court in Criminal revision
Petition no. 39 of 2021.
To set out the details, the instant proceedings arose out
of a Complaint Case No. 244 of 2019 instituted by the Respondent herein in
respect of offence punishable under Section 138 of the Negotiable Instruments
Act, 1881 (‘the Act’, for short) in the court of the Senior Civil Judge &
JMFC, Nagamangala, submitting inter alia:
a) A cheque dated 25.02.2019 in the sum of Rs.
7,00,000/- was drawn by the Appellant in favour of the Respondent towards
repayment of hand loan received by the Appellant from the Respondent.
b) Said cheque was presented for encashment on
01.03.2019 but was dishonoured on account of “insufficient funds”.
c) Statutory notice was issued by the Respondent to
the Appellant on 12.03.2019.
d) However, the Appellant failed to repay the amount
to the Respondent.
e) Consequently, the Appellant was guilty of offence
punishable under Section 138 of the Act.
The cognisance were taken
and summons were issued. The accused/ Appellant appeared before the concerned
court through his counsel on 16.08.2019. The trial court on the very same date was
pleased to pass order, directing the Appellant to deposit 20% of the cheque
amount as interim compensation in terms of Section 143(A) of the Act within 60
days. The period so granted expired on 15.10.2019 and it was extended for another
30 days at the instance of the accused/appellant. The deposits not made, still.
At the stage of examination
of witness an application was made on
behalf of the Appellant under Section 145(2) of the Act seeking permission to
cross-examine the Respondent. The ld trial court, however had rejected the permission
to the accused in view of his failure to deposit the interim compensation as
directed and hence, the application was adjudged to be not maintainable.
Subsequently, the ld trial
court vide order dated 29.11.2019 had held
the accused guilty under Section 138 of the Act. The Trial Court directed the
Appellant to pay fine in the sum of Rs. 7,00,000/-, in default, whereof to
undergo simple imprisonment for six months. Out of the aforesaid sum, Rs.
5,000/- was to be remitted to the State while the remaining amount of Rs.
6,95,000/- was directed to be made over to the Respondent as compensation under
Section 357 of the Criminal Procedure Code, 1973.
Aggrieved, the appellant/accused
had preferred Criminal Appeal No. 190 of 2019 in the court of V Addl. District
and Sessions Judge, Mandya. The appeal was dismissed. by its order dated
28.10.2020. The order of conviction and sentence passed by the Trial Court was
thus affirmed.
Interestingly, during the course of its order, one of
the points raised for consideration, was, whether the Trial Court had given
sufficient opportunity to the Appellant to cross-examine the Respondent. It was
observed by the Court:—
“18.
It is relevant to mention here that in the present appeal also, after filing of
this appeal, accused did not comply with the order of this Court dated
30.12.2019 to deposit 20% of cheque amount, hence, it discloses that the
accused is reluctant in complying with the order of this Court. Under these
circumstances, this Court is of the opinion that learned Magistrate has rightly
refused the prayer made by accused seeking permission to cross-examine P.W.1
and proceeded to pass impugned order”
In the above backdrop, a Criminal Revision Petition No. 39 of 2021 was filed by
the appellant/accused in the High Court of Karnataka. The High Court by its
judgment and order dated 17.12.2021,had also dismissed the revision petition. It was observed that
the conduct of the Appellant in not depositing the interim compensation as
directed, showed that he was only interested in protracting the proceedings for
one reason or the other.
The appellant was now before the Supreme Court.
The Supreme Court, in the appeal was pleased to issue notice
to the Respondent vide Order dated 01.04.2022 while appellant was directed to
deposit a sum of Rs. 3,50,000/- in the Registry of the Supreme Court and the
amount, was accordingly deposited.
The broad aspect of the arguments canvassed on behalf
of the appellant revolved around the issue that in case, the order of interim
compensation, as directed in terms of Section 143A of the Act is not complied
with, the amount can be recovered in terms of Sub-Section 5 of said Section 143
A, as if, it were a fine under Section 421 of the Code, but it would not be
within the competence of the court to deprive an accused of his right to
cross-examine a witness. It is so, because, such denial of rights resulted in
great prejudice to the Appellant and thus, the judgments and orders passed by
the courts below suffered from patent illegality calling for interference from
the Supreme Court.
The Supreme Court before probing the matter further opted
to peruse, for reference, the provisions
of section 143 A of the Negotiable Instruments Act.
“143
A. 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 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 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.”
It was therefore observed by the Supreme Court that the
provisions of section 143 A of the Negotiable Instruments Act are self -contained,
in as much as, after empowering the court to pass an order directing the
accused to pay interim compensation, under Sub-Section 1 of Section 143A, sub-section 2 comes in to the picture
mandating that quantum of such interim compensation should not exceed 20 per
cent of the amount of the cheque. Still further, the time line is also
prescribed i.e the period within which the interim compensation must be paid is
stipulated in Sub-Section 3. Yet another situation is also factored in
sub-section 4 , where the drawer of the cheque is acquitted, it contemplates
repayment of interim compensation along with interest as stipulated. Another
additional component of the said section is contained in Sub-Section 5 of said
Section 143A and that states “the interim compensation payable under this
Section can be recovered as if it were a fine”.
It was observed that the expression interim
compensation is one which is “payable under this Section” and would thus take
within its sweep the interim compensation directed to be paid under Sub-Section
1 of said Section 143A.
As per the Supreme Court, the remedy, for failure to
pay interim compensation, as directed by the court is clearly provided for by
the Legislature. The method and modality of recovery of interim compensation is
also clearly discerning. It is well known principle that if a statute
prescribes a method or modality for exercise of power, by necessary
implication, the other methods of performance are not acceptable. While relying
on the decision of the Privy Council in Nazir Ahmad v. King
Emperor AIR 1936 Privy Council 253 (2), a Bench of three Judges of Supreme Court
made following observations in State of Uttar Pradesh v. Singhara
Singh AIR 1964 SC 358.
“7.
In Nazir Ahmed case, 63 Ind App 372; (AIR 1936 PC 253 (2)) the Judicial
Committee observed that the principle applied in Taylor v. Taylor [(1875)
1 Ch D 426, 431] to a court, namely, that where a power is given to do
a certain thing in a certain way, the thing must be done in that way or not at
all and that other methods of performance are necessarily forbidden, applied to
judicial officers making a record under Section 164 and, therefore,
held that the Magistrate could not give oral evidence of the confession made to
him which he had purported to record under Section 164 of the Code. It was said
that otherwise all the precautions and safeguards laid down in Sections 164 and
364, both of which had to be read together, would become of such trifling value
as to be almost idle and that “it would be an unnatural construction to hold
that any other procedure was permitted than that which is laid down with such
minute particularity in the sections themselves”.
“8.
The rule adopted in Taylor v. Taylor [(1875) 1 Ch D 426,
431] is well recognised and is founded on sound principle. Its result is that
if a statute has conferred a power to do an act and has laid down the method in
which that power has to be exercised, it necessarily prohibits the doing of the
act in any other manner than that which has been prescribed. The principle
behind the rule is that if this were not so, the statutory provision might as
well not have been enacted. A Magistrate, therefore, cannot in the
course of investigation record a confession except in the manner laid down in
Section 164. The power to record the confession had obviously been
given so that the confession might be proved by the record of it made in the
manner laid down. If proof of the confession by other means was permissible,
the whole provision of Section 164 including the safeguards contained in it for
the protection of accused persons would be rendered nugatory. The
section, therefore, by conferring on Magistrates the power to record statements
or confessions, by necessary implication, prohibited a Magistrate from giving
oral evidence of the statements or confessions made to him.”
In J.N. Ganatra v. Morvi
Municipalit (1996) 9 SCC 495, exercise of power of dismissal having not
been done in conformity of the Act, the same was set aside. It was stated:—
“4.
We have heard the learned counsel for the parties. We are of the view that the
High Court fell into patent error in reaching the conclusion that the dismissal
of the appellant from service, in utter violation of Rule 35 of the Rules, was
an “act done in pursuance or execution or intended execution of this Act …”. It
is no doubt correct that the General Board of the Municipality had the power
under the Act to dismiss the appellant but the said power could only be
exercised in the manner indicated by Rule 35 of the Rules. Admittedly
the power of dismissal has not been exercised the way it was required to be
done under the Act. It is settled proposition of law that a power under a
statute has to be exercised in accordance with the provisions of the statute
and in no other manner. In view of the categoric finding given by the
High Court to the effect that the order of dismissal was on the face of it
illegal and void, we have no hesitation in holding that the dismissal of the
appellant was not an act done in pursuance or execution or intended execution
of the Act. The order of dismissal being patently and grossly in violation of
the plain provisions of the Rules. It cannot be treated to have been passed
under the Act.”
In Commissioner of
Income Tax, Mumbai v. Anjum M.H. Ghaswal (2002)1 SCC 633
a Constitution Bench of this Court
stated the normal rule of construction in such cases as under:—
“27.
Then it is to be seen that the Act requires the Board to exercise the power
under Section 119 in a particular manner i.e. by way of issuance of orders,
instructions and directions. These orders, instructions and directions are
meant to be issued to other income tax authorities for proper administration of
the Act. The Commission while exercising its quasi-judicial power of arriving
at a settlement under Section 245-D cannot have the administrative power of
issuing directions to other income tax authorities. It is a normal rule
of construction that when a statute vests certain power in an authority to be
exercised in a particular manner then the said authority has to exercise it
only in the manner provided in the statute itself. If that be so, since the
Commission cannot exercise the power of relaxation found in Section 119(2)(a)
in the manner provided therein it cannot invoke that power under Section
119(2)(a) to exercise the same in its judicial proceedings by following a
procedure contrary to that provided in sub-section (2) of Section 119.”
The Supreme Court has
therefore, while taking note of section 143-A and its sub-sections has observed
in Noor Mohammed Vs Khurram Pasha (Supra) in the light of
above, and held as under:
“18. The
concerned provision nowhere contemplates that an accused who had failed to
deposit interim compensation could be fastened with any other disability
including denial of right to cross-examine the witnesses examined on behalf of
the complainant. Any such order foreclosing the right would not be within the
powers conferred upon the court and would, as a matter of fact, go well beyond
the permissible exercise of power”.
19. Since
the right to cross-examine the respondent was denied to the Appellant, the
decisions rendered by the courts below suffer from an inherent infirmity and
illegality. Therefore, we have no hesitation in allowing this appeal and
setting aside the decisions of all three courts with further direction that
Complaint Case No. 244 of 2019 shall stand restored to the file of the Trial
Court. The Trial Court is directed to permit the Appellant to cross-examine the
Respondent and then take the proceedings to a logical conclusion. With these
observations the appeal is allowed”.
The Supreme Court was thus pleased
to direct that 20% of the cheque amount namely Rs. 1,40,000/- must be deposited
by the Appellant as interim compensation. The Registry was further directed to
make over a sum of Rs. 1,40,000/- to the Trial Court i.e. Senior Civil Judge
& JMFC, Nagamangala, Karnataka. The amount was ordered to be kept in
deposit in Complaint Case No. 244 of 2019 and shall abide by such orders as the
Trial Court may deem appropriate to pass. Rest of the amount along with accrued
interest, if any, was ordered to be returned to the Appellant.
The Supreme Court has therefore
without touching upon the merit of the case has clearly observed that when
section 143 A along with its sub-sections are self- contained, the part of the section,
therefore, should not be read in isolation and holistic view has to be taken.
The section 143 A of Negotiable Instruments Act does not in any manner indicate
that non -payment of the interim compensation shall disentitle the accused from
cross examining complainant witness. The recovery of the interim compensation
and its mode and manner is well elucidated in the said section and sub-sections
itself. The essence of trial is fair opportunity to parties and according no
opportunity to cross examine shall vitiate the very process of trial and therefore,
the accused cannot be denied right to cross examine the complainant witness for
a fair trial , if no amount of interim compensation could be paid.
-------
Anil K Khaware
Founder
& Senior Associate
Societylawandjustice.com
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