Allowed

M/S R v. Constructions v Sri Narayan Reddy v

Karnataka HC26 May 2022CRL.P/3589/2022

Case brief

AI extract

What is this about?

The Karnataka High Court quashed a suo motu order directing 20% interim compensation under Section 143-A of the N.I. Act. The Court held that passing such an order without filing an application and without affording the accused an opportunity to be heard violates principles of natural justice. Criminal Petition allowed.

What did the court decide?

The impugned order dated 20.09.2021 directing 20% deposit under Section 143-A N.I. Act is quashed. Petitioners inducted. Further proceedings open in accordance with law.

M/S R v Constructions Vs Sri Narayan Reddy v — Cheque Dishonour | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 26^TH DAY OF MAY, 2022

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BEFORE

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THE HON’BLE MR.JUSTICE M. NAGAPRASANNA

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CRIMINAL PETITION NO.3589/2022

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BETWEEN:

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1 . M/S R. V. CONSTRUCTIONS A PARTNERSHIP FIRM REPRESENTED BY ITS PARTNERS SRI. HIMANSHU GUPTA SRI. RAVI VIJAY SARATHY

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HAVING ADDRESS AT: F-407, 4^TH FLOOR, ARYA HUB MALL HOPE FARM CIRCLE, WHITE FIELD BENGALURU-560 066

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2 . SRI. HIMANSHU GUPTA S/O GOPIKRISHAN GUPTA AGED ABOUT 47 YEARS PARTNER, M/S. R. V. CONSTRUCTION F-407, 4^TH FLOOR, ARYA HUB MALL HOPE FARM CIRCLE, WHITEFIELD BENGALURU-560 066

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3 . SRI. RAVI VIJAY SARATHY S/O LATE K. T. VIJAY SARATHY AGED ABOUT 57 YEARS PARTNER, M/S R. V. CONSTRUCTION R/AT FLAT NO.401, RV APARTMENTS

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NO.30, 10^TH MAIN ROAD MALLESHWARAM, BENGALURU-560 005

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... PETITIONERS

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(BY SMT. VIDYASHREE K.S., ADVOCATE FOR SRI. K.B. SHIVA KUMAR, ADVOCATE)

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AND:

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SRI. NARAYAN REDDY V S/O LATE VENAKATARAYAPPA AGED ABOUT 61 YEARS OCCUPATION - CIVIL CONTRACTOR R/A NO.46, 8^TH MAIN BANDAPPA GARDEN MUTHYALA NAGARA BENGALURU-560 054

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... RESPONDENT

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(RESPONDENT IS SERVED)

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THIS PETITION IS FILED UNDER SECTION 482 OF Cr.P.C PRAYING TO QUASH THE IMPUGNED ORDER DATED 20.09.2021 PASSED BY XII ADDITIONAL CHIEF METROPOLITAN MAGISTRATE BENGALURU IN C.C.NO.2364/2020 DIRECTING THE PETITIONERS TO DEPOSIT 20 PERCENTAGE OF THE DEPOSIT AMOUNT U/S.143-A OF NI ACT 1881 AND ETC.

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THIS PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:

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O R D E R

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The petitioners are before this Court calling in question the order dated 20.09.2021 passed in CC No.2364/2020 directing the petitioners to deposit 20% of

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cheque amount under Section 143-A of the Negotiable Instruments Act, 1881 ( ‘N.I Act’ for short), as amended in the year 2018.

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Heard the learned counsel appearing for the petitioners.

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The respondent though served, remains

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unrepresented.

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The petitioners and the respondent had certain transactions and certain cheques issued by the petitioners in favor of the respondent/complainant appears to have been dishonoured which leads to registration of the crime invoking Section 200 of the Cr.P.C. for an offence punishable under Section 138 of the N.I. Act.

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The present case is not with regard to the merit of the claim of the complainant. In the proceedings i.e., in C.C.No.2364/2020, the Court suo motu passes an order on 20.09.2021, directing payment of 20% of the amount involved in the transaction without notifying the accused or

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giving him an opportunity to file his objections. It is this

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order that drives the petitioners-accused to this Court.

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The learned counsel for the petitioners would submit that the complainant himself did not prefer an application seeking any amount to be paid in terms of Section 143A of the N.I.Act and had no opportunity to even rebut the order in the light of no application being filed. The Court suo motu takes upon itself and passes the said order.

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To consider the submission made by the learned counsel for the petitioners, it is germane to notice Section 143A of the N.I.Act and it reads as follows:

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“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—

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(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and

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(b) in any other case, upon framing of charge.

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(2) The interim compensation under subsection (1) shall not exceed twenty per cent of the amount of the cheque.

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(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.

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(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 year, 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.

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(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 11974).

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(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.”.

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(Emphasis supplied)

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A perusal at Section 143A of the N.I.Act (supra) would result in acceptance of the submission of the learned counsel for the petitioners only partially. Section 143A of the N.I.Act does not in every circumstance mandate filing of an application. The Court trying an offence under

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Section 138 of the N.I.Act 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. 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 of the N.I.Act 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. reads as

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follows:

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“ 421. Warrant for levy of fine.

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(1) When an offender has been sentenced to pay a fine, the Court passing the sentence may take action for the recovery of the fine in either or both of the following ways, that is to say, it may-

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(a) issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender;

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(b) issue a warrant to the Collector of the district, authorising him to realise the amount as arrears of land revenue from the movable or immovable property, or both, of the defaulter:

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Provided that, if the sentence directs that in default of payment of the fine, the offender shall be imprisoned, and if such offender has undergone the whole of such imprisonment in default, no Court shall issue such warrant unless, for special reasons to be recorded in writing, it considers it necessary so to do, or unless it has made an order for the payment of expenses or compensation out of the fine under section 357.

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(2) The State Government may make rules regulating the manner in which warrants under clause (a) of sub-section (1) are to be executed, and for the summary determination of any claims made by any person other than the offender in respect of any property attached in execution of such warrant.

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(3) Where the Court issues a warrant to the Collector under clause (b) of sub- section (1), the Collector shall realise the amount in accordance with the law relating to recovery of arrears of land revenue, as if such warrant were a certificate issued under such law:

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Provided that no such warrant shall be executed by the arrest or detention in prison of the offender.”

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In terms of Section 421 of the Cr.P.C., a fine can be recovered in a manner as depicted hereinabove. 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

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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 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.

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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.

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In the light of what is aforesaid, on the solitary ground that there was no application filed by the

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complainant and no hearing afforded to the accused, the order impugned is rendered unsustainable. Wherefore, the following:

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ORDER

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(i) The Criminal Petition is allowed .

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(ii) The order dated 20.09.2021 passed by the XII Additional Chief Metropolitan Magistrate, Bengaluru in CC No.2364/2020, stands quashed.

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(iii) It is open to the concerned Court to take further proceedings, in accordance with law.

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Sd/-

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JUDGE

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KGR*

M/S R v. Constructions v Sri Narayan Reddy v

Case brief

What is this about?

What did the court decide?

M/S R v. Constructions v Sri Narayan Reddy v

Case brief

What is this about?

What did the court decide?

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