BENGALURU: While considering applications for interim compensation in cases of cheque bounce, magistrates should note the conduct of the accused before passing orders, the high court observed recently.
The magistrate has to see whether the accused cooperates with the proceedings and should also use discretion while awarding interim compensation, which can vary from 1% to 20%. "If the accused has been unnecessarily evading proceedings by seeking adjournments, consideration of application would become imperative...," justice M Nagaprasanna observed while granting relief to V Krishnamurthy, a resident of Mettupalayam in Tamil Nadu.
Introduced by way of an amendment to the Negotiable Instruments Act in 2018, section 143A empowers magistrates to direct payment of up to 20% of the value of the cheque as interim compensation.
Krishnamurthy, a retailer, had signed an agreement with Diary Classic Ice Creams Pvt Ltd, Bengaluru (the complainant) in 2017 for distribution of ice cream and frozen dessert products. He alleged that one of the blank cheques given by him as security was misused by the company by entering an amount of Rs 5,56,71,208 and attempting to encash it. The cheque came to be dishonoured for want of funds.
According to the petitioner, despite requests for reducing supply owing to lack of demand, the complainant went on supplying stocks. He claimed that an October 12, 2021 order by a magistrate directing him to pay 10% of the cheque amount as interim compensation suffered from want of application of mind, as it did not consider the circumstances under which such a claim became due.
Justice Nagaprasanna noted that the amount involved in the transaction is Rs 5,56,71,208 and 10% of this would mean Rs 55 lakh. Therefore, he said, it was necessary for the magistrate to apply his mind and record reasons before granting the interim compensation.
The matter has now been remanded back to the 28th additional chief metropolitan magistrate, Bengaluru, for fresh consideration.
