BENGALURU: The Karnataka High Court has directed magistrates to “apply their mind” and consider only applications under Section 143A of the Negotiable Instruments Act for interim compensation to complainants in cheque bounce cases, if the accused adopts delay tactics like evading proceedings by seeking adjournments.
Quashing an order passed by a magistrate in the city to pay interim compensation of 10 per cent (Rs 55 lakh) on the total amount of the cheque of Rs 5.5 crore, which was dishonoured for want of funds, Justice M Nagaprasanna also directed the magistrates to exercise discretion by recording the reasons in writing and specify the compensation in figure, as it varies from 1 to 20 per cent, only after hearing the accused. The court remitted back the matter to the magistrate to pass appropriate orders.
The petition was filed by V Krishnamurthy, proprietor of Raghvenk Industries at Mettupalyam in Coimbatore, questioning the order passed by a magistrate ordering that he pay interim compensation to the complainant -- Diary Classic Ice Creams Pvt Ltd in city.
Noting that the court is flooded with litigations seeking grant of compensation under Section 143 A of the Act, the court observed that the mandate of the statute is that it should not exceed 20 per cent. In cases where magistrates proceed to grant compensation, they have to bear in mind the amount involved in the instrument, as certain transactions would run into several crores of rupees and the accused may have formidable defence against the complainant.
“In cases where magistrates are to exercise discretion, it should become two-fold. In a given case, if the accused is cooperating with the trial without seeking any unnecessary adjournments, not absenting himself or his counsel... the magistrate will have to apply his mind, exercise his discretion as to whether such applications should be entertained at all. In cases where there is no cooperation, the court may proceed to consider the application,” the court said.