High Court of Delhi was dealing with the petition seeking quashing of the complaint filed under Section 138 of the Negotiable Instruments Act pending before the learned Metropolitan Magistrate and quashing of the order passed by the learned Metropolitan Magistrate under Section 143A of the NI Act directing the petitioner to pay 20% of the cheque amount within 60 days of the passing of the order.
Brief Facts:
Respondent filed complaint case against the petitioner as proprietor of Tyagi Tent House. As per the respondent, he gave a friendly loan to the petitioner for a sum of ₹40 lakhs and in discharge of the said liability, the petitioner issued 12 post-dated cheques out of which the 8 cheques when presented were dishonoured for the reason “funds insufficient” Thus, the respondent gave a legal notice to the petitioner and despite service of legal notice since the petitioner failed to pay the amount of ₹40 lakhs, the complaint was filed before the Court of competent jurisdiction. The petitioner had issued 11 cheques of ₹5 lakhs and one blank cheque and executed GPA of his brother’s immovable property in favour of Pinki Sharma, W/o Tirender Sharma as security towards advance payment of some future business transaction. The respondent filed an application under Section 143A NI Act seeking awarding 20% interim compensation. The petitioner filed a response to the said application and the learned Trial Court granted interim compensation to the tune of ₹4 lakhs i.e., 10% of the cheque amount. Aggrieved by the order the petitioner filed a revision petition before the learned ASJ which was dismissed as withdrawn and thereafter the petitioner has filed the present petition.
Petitioner’s Contention:
Learned counsel for the petitioner submitted that there being no merit in the complaint and no legally enforceable liability being shown by the respondent in the complaint, the complaint is liable to be quashed. It was contended that the learned Metropolitan Magistrate erred in passing the order under Section 143A NI Act directing him to pay compensation of 10% of the cheque amount i.e., ₹4 lakhs within 60 days. It was stated that the learned Metropolitan Magistrate failed to apply his judicial mind while exercising the discretion of granting interim compensation of 10% to the complainant.
It was submitted that no reasons have been recorded in the impugned order as to why the petitioner was being directed to pay compensation under Section 143A (1) of the NI Act. The complainant in his evidence has clearly stated that he does not have the financial capacity, and is running a re-charge shop, he is not an income-tax assessee and hence has failed to prove his capacity to give loan to the petitioner. It was submitted that since the respondent is not in a position to prove legally enforceable debt, the complaint and the order are liable to be quashed.
Respondent’s Contention:
Learned Counsel for the respondent submitted that the respondent has in the complaint stated and, in this regard, affidavit has also been filed which would indicate that the respondent took loan from his mother to raise money for the petitioner and the non-return of the money has left the respondent in a difficult penury situation.
HC’s Observations:
After hearing both the sides Court observed that the impugned order passed by the learned MM directing the petitioner to pay interim compensation of ₹4 lakhs to the respondent, the learned Trial Court vide the impugned order noted that for an application under Section 143A NI Act, the first requirement is that the complaint should be tried as a summary/ summons trial case and that notice should have been framed on which the accused has pleaded not guilty. At this stage, the merits of the parties are not to be gone into.
Court stated that the important conditions which are required to be complied before directing interim compensation are that the trial should be a summary trial or a summons case, notice/charge should be framed, and the petitioner had pleaded not guilty. Thus, the requirements under Section 143A NI Act stands proved beyond reasonable doubt by the respondent. HC relied upon the case of Surinder Singh Deswal & Ors. Vs. Virender Gandhi & Anr. where the SC held that “Section 148 NI Act used the word “may” is generally to be construed as a rule as “shall” and not as an exception for which the Court has to assign special reasons for directing interim compensation.”
HC Held:
After evaluating submissions made by both the parties the Court held that “the twin conditions of the complaint being tried as a summary trial and secondly the charge/notice having been framed against the petitioner to which he pleaded not guilty having complied with, the Court finds no infirmity in the impugned order. Further, the petitioner filed a revision petition against the said order which was dismissed as withdrawn and hence the petitioner cannot now avail the remedy of filing a petition under Article 226 of the Constitution of India in respect of the said relief.”
Bench: Hon'ble Ms. Justice Mukta Gupta
Case Title: Suryodhan Tyagi Propreieter Of Tyagi Tent House & Anr. v. Tirender Sharma
Case Details: W.P.(CRL) 68/2022 and CRL.M.A. 732/2022 (stay)
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