dismissing the revision petition filed by the petitioner.
2. Heard learned counsel for both sides and perused the
3. A perusal of the material on record will indicate that the
Negotiable Instruments Act. Pursuant to the petitioner - accused
an application under Section 143A of the N.I. Act seeking direction
amount. The said application having been contested by the
directions. It is pertinent to state that the said order was passed at
It is further submitted that, additionally, since the
investment made by the Respondent is backed by
mortgages of certain assets, in the event of a recall or need
for funds, the Appellant is typically granted a reasonable
timeframe, such as 90 days, to either refinance or sell the
assets in order to fulfil their financial obligations and make
payments. Therefore, resorting to encashment of these
cheques was unnecessary action done by the Respondent
with the sole intention of harassing the Appellant and to bring
pressure on the Appellant. It is these important factual
nuances that have been overlooked by the Learned
Magistrate, while relying on the acknowledgement of the
cheque and the signatures on it, as reasons to grant interim
compensation and that too disproportionately.
NC: 2025:KHC:3918
It is further submitted that, secondly, the fact that the
accused failed to appear after receiving summons and only
appeared once a warrant was issued, also does not justify
granting an interim compensation. It is to be noted that, since
appearing before the Learned Magistrate, the Appellant or
their Counsels have been present for every hearing.
Furthermore, only 2-3 opportunities were taken for filing of
objections to the application and the same was also done
due to the unavailability of the Appellant to provide
necessary instructions to their counsels and no unnecessary
adjournments were ever sought. Therefore, the Appellant
has never attempted to delay or disrupt the proceedings and
has been cooperative with the Respondent and the Trial
Court throughout. Most notably, the Appellant, as submitted
earlier, has already paid a substantial sum of the total
outstanding debt. Therefore, this itself shows the goodwill of
the Appellant, and their bona fide intention to cooperate with
the Respondent and make all the necessary payment.
It is further submitted that, Learned Magistrate's order
lacked a detailed prima facie evaluation of the merits of the
Respondent case and the defence provided by the Appellant,
particularly the fact that the cheques issued were not as debt
payment but as the Covid-19 crisis. Furthermore, the
substantial repayments made by the accused and the
complexities of the transaction between the parties were also
overlooked. The impugned Order dated 11.03.2024
mandates the Appellant to pay or deposit 10% of the cheque
amount as interim compensation without any explanation on
how this quantum was arrived at. While the statutory
NC: 2025:KHC:3918
provision allows the maximum of 20% of the cheque amount
as the interim compensation, it is the discretion of the
magistrate to decide the exact quantum.
It is further submitted that, in the subject case, the
Respondent has presented a cheque for Rs.12,35,05,759/-.
Therefore 10% of the amount of the cheque would be
Rs.1,23,50,575/-. The Learned Magistrate has ordered for
such a substantial amount of money to be paid without any
explanation as to why 10% was required and this lack of
detailed reasoning in determining the quantum of interim
compensation raises questions about whether the court fully
applied its mind to the relevant facts of the case. The
Learned Magistrate has failed to take notice that the
Appellant had several formidable defences.
Therefore the Revision Petitioners prays that the order
dated 11.03.2024 Magistrate Judge Mayo Hall is not
substantiated in law or in facts and therefore requires to be
set aside.
3. The Respondent appeared through his counsel and
filed his objections contending that, the present proceeding
has been filed by the Appellants under Section 374(3) of
Cr.P.C against order dated 11-03-2024, passed by the
Learned Magistrate, on an application under Section 143 of
the N.I Act. However, the same has been treated as a
Criminal Revision Petition under Section 397 of Cr.P.C. The
present proceeding, either as criminal appeal or as criminal
revision, is not maintainable in law or on facts. The
Appellants have suppressed material facts and have
NC: 2025:KHC:3918
attempted to mislead the Court. Section 374 of Cr.P.C under
which the present proceeding is preferred reads as follows.
374 Appeals from Conviction
1........
2. Any person convicted on a trial held by a Sessions
Judge or an Additional Sessions Judge or on a trial held by any
other Court in which a sentence of Imprisonment passed against
him or against any other person convicted at the same trial, may
appeal to the High Court.
3. Same as otherwise provided in subsection (2), any
person;
a) Convicted on a trial held by a Metropolitan Magistrate or
Assistant Sessions Judge or Magistrate of the 1st Class or of the
2nd Class; or
b) Sentenced under Section 325, or
c) In respect of whom an order has been made or a
sentence has been passed under Section 360 by any Magistrate,
may appeal to the Court of Session.
From a bare perusal of Section 374(3) extracted
above, it is evident that the said section is applicable only to
appeals from orders of conviction. In the present case, the
impugned order is one passed under Section 143 of the NI
Act. The impugned order is not one of conviction. In fact, the
trial is still pending before the Learned Magistrate. The
impugned order is not a final decree. Hence, the present
appeal under Section 374(3) of Cr.P.C is not maintainable
and deserves to be dismissed. Hence prays to dismiss the
petition.
4. I have heard learned P.P and Counsel appearing
for revision petitioners.
NC: 2025:KHC:3918
5. Perused the Records. After perusal, the points arise
for my consideration are:
1. Whether the revision petitioner has made out the
orders passed by the Trial Court is perverse in correct and illegal?
2. What Order?
6. For the above points, my findings are:
Point No.1: In the Negative
Point No.2: As per final order for the following:-
REASONS
7. Point No.1:- As held in unreported Judgment in
Criminal Petition No.5944/2023, Sanjay P.S Vs.
Abhishkek M, in which Hon'ble Court was pleased to held
that, the revision before the Court of Sessions U/s 397 of
Cr.P.C would be maintainable as an order on the application
filed U/s 143A of the Act is not interlocutory order, but interim
order.
8. The petitioners No.1 to 5 have taken the contention
that the learned 34th ACMM is not justified in granting the
interim compensation to the respondent. They admit the
transactional relationship between the respondent
(complainant) and petitioners (accused). However that itself
does not warrant to grant of interim compensation without
understanding and examining contestants in condition under
which these cheques were issued by the appellant/accused.
Proper reasonings are not given for grant of compensation to
the extent of 10% of the amount of the cheque. The Learned
Magistrate has not given proper reasons to fix the
compensation at the rate of 10% of the total amount of the
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cheque. The learned Magistrate has not appreciated the
defence taken by the Revision Petitioners. The learned
Magistrate has not appreciated the merits of the case made
out by the complainant and the merits of the defence
pleaded by the accused. The complainant has not made out
the prima facie case. The learned Magistrate has not applied
his mind to fix the quantum of interim compensation.
Therefore the Revision Petitioners has relied on the
Judgments reported in Rakesh Ranjan Shrivastava Vs. The
State of Jharkhan & another, 2024 SCC Online SC 309, in
which the at Para 22 the Hon'ble Court has held that,
22. Subject to what is held earlier, the main conclusions
can be summarized as follows:
a. The exercise of power under sub-section (1) of Section
143A is discretionary. The provision is directory and not
mandatory. The word "may" used in the provision cannot be
construed as "shall."
b. While deciding the prayer made under Section 143A, the
Court must record brief reasons indicating consideration of all
relevant factors.
c. The broad parameters for exercising the discretion
under Section 143A are as follows:
i. The Court will have to prima facie evaluate the merits of
the case made out by the complainant and the merits of the
defence pleaded by the accused in the reply to the application. The
financial distress of the accused can also be a consideration.
ii. A direction to pay interim compensation can be issued,
only if the complainant makes out a prima facie case.
iii. If the defence of the accused is found to be prima facie
plausible, the Court may exercise discretion in refusing to grant
interim compensation.
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iv. If the Court concludes that a case is made out to grant
interim compensation, it will also have to apply its mind to the
quantum of interim compensation to be granted. While doing so,
the Court will have to consider several factors such as the nature
of the transaction, the relationship, if any, between the accused
and the complainant, etc.
v. There could be several other relevant factors in the
peculiar facts of a given case, which cannot be exhaustively stated.
The parameters stated above arenot exhaustive
9. Secondly, V. Krishnamurthy Vs. Diary Classic
ICE Creams Pvt., Ltd., 2022 SCC Online Kar. 1047, in
which the Hon'ble Court was pleased to held that,
15. On a conjoint reading of the objects and reasons,
amendment made, and the purport of the provisions, what would
unmistakably emerge is that the learned Magistrate is empowered
to exercise his discretion in the grant of interim compensation
which would in any given case range from 1% to 20%. Once the
discretion by the learned Magistrate happens, the rigour of the
statute sets in as the words in the statute depicts that the Court
may in a given case grant such compensation and once granted
consequences follow. Therefore, the learned Magistrates are
required to exercise discretion by recording reasons in writing
which would demonstrate application of mind, as application of
inseparable. Application of mind is discernible only when the order
reflects adequate reasons being given for exercise of such
discretion.
16. Application of mind and passing of a reasoned order of
grant of compensation becomes necessary in the light of penal
consequences that ensue an accused who failed to comply with the
order granting 20% compensation as the complainant is given
several remedies of recovery which result in the accused being
taken into custody. Therefore, such orders which result in such
penal consequences should be rendered giving cogent reasons
which would demonstrate application of mind and such orders
should be passed only after hearing the accused in the matter. In
cases where the learned Magistrate is to exercise discretion, such
discretion should become two fold."
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10. Thirdly, Vijaya Vs. Shekhapappa and another,
2022 SCC Online Kar 515, in which the Hon'ble Court was
pleased to held that,
"11. Therefore, the Legislature has cautiously worded sub-
section (1) of Section 143A not to make it mandatory in all cases
where clauses (a) and (b) of sub-section (1) would empower the
learned Magistrate before whom proceedings are pending
consideration to award interim compensation. It is the discretion
conferred, as the word used is "may". If the order is passed, then
the payment is mandatory. Therefore, the learned Magistrate who is
hearing the application for interim compensation should apply his
mind, record his reasons in exercise of his discretion, as to why
20% of the cheque amount is to be granted, as interim
compensation in any given case.
12. The other side of the coin of discretion available to the
learned Magistrate is that the amount should not exceed 20%.
Therefore, it is not that 20% has to be the interim compensation in
every case. Here again the discretion is required to be exercised by
the learned Magistrate as the interim compensation can vary from
1% to 20% but shall not exceed 20%. The language of Section 143A
being couched with such discretion, the discretion if not exercised
in a manner known to law, becomes an arbitrary action."
The principles laid down in the above judgements are
applicable to the present facts of the case.
11. The Petitioners have admitted that they borrowed
loan of Rs.40 Crores from HDFC Bank Limited under a
Master Facility Agreement dt: 26/04/2017 for the construction
and completion of a Commercial Building namely Whitefield
Towers. The petitioners became due in a sum of
Rs.23,16,33,800/-. Later HDFC Bank Ltd., assigned the
outstanding amount to the Respondent. During assignment
of the loan they entered into Master Amendment Agreement
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NC: 2025:KHC:3918
dt: 01/12/2020, at that time the Petitioners have issued three
ceques in favour of the Respondent/Complainant.
12. According to the Revision Petitioners those
cheques were issued to make the respondent comfort and
executed a Mortgage Deed and those cheques were not
issued to discharge any liability. The Petitioners admit that
they have borrowed loan. Again the Petitioners contend that
they issued three cheques only to comfort the Respondent
and not for discharge of any liability. This contention of the
Revision Petitioner cannot be accepted. The cheques were
issued for the security of the amount and therefore the
Petitioners cannot expect the Respondent to inform them
before presenting the cheques for collection.
13. The Petitioners also have taken contention that
the Respondent had agreed to invest 42 Crores, however
only Rs.38.6 Crores was sanctioned. It can be seen that as
stated by the Petitioners they have repaid Rs.15,60,33,800/-
towards discharge of the loan. This fact shows that the
Revision Petitioners were satisfied with the loan amount of
Rs.38.6 Crores and therefore without waiting for release of
further amount the Petitioners have made part payment.
According to the Revision Petitioners the cheques were
issued during Covid 19 Pandemic only to comfort the
Respondent.
14. The Covid 19 Pandemic was ended long back.
The Petitioners cannot take a stand that even after expiry of
Covid 19 Pandemic that the respondent has to keep quiet.
These facts prima facie show that the Petitioners borrowed
loan from the Bank and failed to repay the same. The
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defence taken by the Petitioners that due to Covid 19
Pandemic they issued three cheques to comfort the
Respondent, cannot be accepted at this state.
15. The Learned Magistrate has considered the
relationship between the parties, loan transaction, issuance
of the cheques and signatures on the cheques. The order
sheet of SC.No.52097/2023 prima facie show that as on
16/03/2023 the summons was issued to the Revision
Petitioner through Court and RPAD. As on 26/06/2023
summons was served on A1, 2, 4 & 5, but they did not
appear before the Court. Therefore, Case supra, "in a given
case, if the accused is cooperating with the Trial without
seeking unnecessary adjournments, not absenting himself,
or his counsel on any date........"
16. On 26/06/2023 A1, 2, 4 & 5 remained absent. Not
only that their counsel also not appeared before the Court.
On 06/07/2023 A2 to 5 appeared before the Court and filed
application U/s 70(2) of Cr.P.C and Bail Application. The Bail
Application was allowed and the statement of Accused
Persons U/s 313 of Cr.P.C was recorded.
17. On the same day the learned counsel for the
complainant filed application U/s 143A of N.I Act. Then the
matter was posted for objections and cross-examination of
PW.1 to 29/08/2023. On 29/08/2023 petitioners not filed
objections. On 11/10/2023 also objections were not filed. On
09/11/2023 also objections were not filed. On 02/12/2023
objection was filed, but not cross-examined PW.1.
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18. The loan amount given to the petitioners is
Rs.38.6 Crores, after that loan of Rs.15,66,33,800/- was
paid. Out of remaining balance amount of Rs.23,16,33,800/-
only the cheque for Rs.12,35,05,759/- was presented. As
held in Vijaya's Case the learned ACMM has applied his
mind. Considering the balance amount and facts on record
and passed an order directing the petitioners to pay the
interim compensation at the rate of 10% on cheque of
Rs.12,35,05,759/- and it is not exorbitant.
19. The learned Magistrate has recorded the reasons
indicating consideration of the facts. The Trial Court has
discussed about the prima fafcie case of the complainant
and petitioners and therefore granted interim compensation
at the rate of 10% on the cheque amount.
20. As discussed above immediately after service of
summons Accused No.1, 2, 4 & 5 have not appeared before
the Court and therefore NBW was issued against them. On
06/07/2022 the interim application was filed. But the
objection was filed to the petition on 02/12/2023. Though
PW.1 was present on 2/12/2023 the petitioners not cross-
examined PW.2. The interim compensation granted by the
learned Magistrate is reasonable and not illegal. The
contention of the petitioners that only to comfort the
respondent, three cheques were issued cannot be accepted.
Therefore, I hold that the order passed by the Trial Court is
correct legal and in accordance with law, which needs no
interference. Hence for the above reasons, I answer Point
No.1 in the Negative.
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NC: 2025:KHC:3918
21. Point No.2: For the forgoing reasons assigned on
point No.1, I proceed to pass the following:
ORDER
The Crl. Revision Petition filed by the Revision
Petitioners is hereby dismissed.
Send the copy of this order and Trial Court
Records to trial court."
4. Aggrieved by the said order passed by the Trial Court,
the petitioner filed a revision petition in Crl.R.P.No.25044/2024,
which was contested by the respondent before the Sessions Court
which proceeded to dismiss the revision petition filed by the
petitioner by passing the impugned order as under:-
"The Complainant filed instant application seeking
interim compensation of 20% of the Cheque amount. It is
specifically contended that he has prima-facie case. Hence
he prays to allow the application.
2. Per contra, after appearance of Accused through
his counsel has contested the application and filed written
objections to the said application. It is contended that, the
application is not maintainable. It is further contended that,
when the outstanding loan amount at Rs.23,16,33,800/- at
the time of negotiation was being assigned to the
Complainant and the terms of master amendment agreement
dtd.1.12.2020 was being finalized, the Complainant
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requested 3 blank Cheques from the Accused, accordingly,
the Accused issued blank undated Cheques as an additional
comfort against the NCD arose due to the emergency of
Covid 19 pandemic in 2020. It is further contended that
Cheques were issued only as additional comfort for
repayment and were not in discharge of any debt or liability.
The Accused having already created a more than sufficient
collateral on the loan amount. It is further contended that out
of above said due amount, the Accused has paid
Rs.15,66,33,800/- to the Complainant. It is further submitted
that, at no point of time, did the Complainant notify the
Accused either orally or in writing that, they are going to
deposit the Cheques given to them for comfort. Therefore,
for these reasons, the Accused prayed for rejection of
application.
3. Heard both counsels and perused the materials on
record.
4. The Complainant filed this case against the
Accused for the offence punishable u/Sec.138 of N.I.Act. The
Complainant filed this instant application seeking interim
compensation. It is the specific case of the Complainant that,
Complainant is an asset reconstruction company registered
with RBI under the SARFAESI Act. Accused No.1 is a
company and Accused No.2 to 5 are directors. It is further
submitted that on 26.4.2017 Accused had availed a loan
from HDFC Ltd. to a Master Facility Agreement for an
amount of Rs.40 crores for the purpose of construction and
completion of a commercial building known as 'Whitefield
tower'. It is further submitted that an amount of
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NC: 2025:KHC:3918
Rs.23,16,33,800/- was due under the MFA as on 30.11.2023
and HDFC Ltd. assigned the outstanding loan amount to the
Complainant by way of Assignment Agreement
dtd.30.11.2020. It is further submitted that, the Accused upon
the assignment of loan, request to ensure that, the
Complainant enters into a Master Amendment Agreement
with them assuring the Complainant that they would wholly
discharge their outstanding debt. It is further submitted by
the Complainant that the Accused have defaulted on their
payment and towards of repayment of said due amount,
issued Cheque, which was dishonoured for the reason
"funds insufficient". It is further submitted that, Accused
have caused loss and inconvenience to the Complainant.
5. On perusal of documents with respect of issuance
of Cheque the Accused and also business relation is also not
disputed and loan amount also not disputed. The
Complainant has produced statement of account and other
necessary documents in which prima facie appears that,
Accused have committed alleged offence. On perusal of
order sheet, after service of summons all Accused remained
absent and after issuance of warrant only they appeared
before court and taken much time for filing of objections. The
said conduct of the Accused shows that, they causing delay
in the proceedings and trial.
6. After appearance of the Accused, plea was
recorded and Accused pleaded not guilty and case posted
for trial.
7. As per Sec.143(A) of N.I.Act
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"notwithstanding anything contained in the Code of
Criminal Procedure, 1973 the court trying an offence
u/Sec.138 may order the drawer of the Cheque to pay
interim compensation to the Complainant......
8. The Hon'ble High Court of Karnataka in the case of
V.Krishnamurthy V/s. Dairy Classic Ice Creams Pvt. Ltd., in
Cri.Ptn.No.632/2022. It is held in Para No.13 that, the
Magistrate by applying his mind to the facts and
circumstances of the case and taken into consideration the
intend and purpose of introduction of Sec.143(A) by
amendment to the N.I. Act has to pass order regarding
interim compensation. In the said judgement Hon'ble High
Court of Karnataka held that discretion power to the
Magistrate, which in paragraph No.13 of the said decision is
as under;
First fold: Where an application is so made, the
learned Magistrate has to apply his mind whether
such an application is to be considered at all, as every
application that is made need not result in grant of
20% interim compensation. Several factors need be
gone into for considering such applications bearing in
mind the reason and backdrop of the amendment. As
quoted herein-above the bedrock of the amendment
was to stall unscrupulous drawers of cheques drawing
proceedings with frivolous applications, absenting
themselves, seeking continuous adjournments
causing delay and grave prejudice to the case of the
complainants. In these factors, the learned Magistrate
after analyzing the conduct of the accused should
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grant compensation which would vary from 1% to 20%
after recording reasons.
In a given case if the accused is cooperating
with the trial without seeking any unnecessary
adjournments, not absenting himself or his counsel on
any date and cooperating with the conclusion of the
trial in such cases, the learned Magistrate will have to
apply his mind, exercise his discretion as to whether
such applications should be entertained at all.
Therefore, it forms two classes of litigants. One who
would cooperate with the proceedings and the other
who would not. In cases where there is complete co-
operation from the hands of the accused in the trial,
the Court may consider whether interim compensation
has to be granted at all and in cases where there is no
cooperation on the part of the accused, the Court may
proceed to consider the application.
Second fold: The second fold of discretion in
any given case, the compensation may vary from 1%
to 20%. It is nowhere depicted in the statute that the
amount of interim compensation should be of a
particular figure. It can vary from 1% to 20%. It is this
variance that gives the learned Magistrate power to
exercise discretion to grant such compensation. The
mandate of the statute is that it should not exceed
20%. In the cases where learned Magistrate proceeds
to grant compensation, has to bear in mind the
amount involved in the instrument, as certain
transactions would run to several cores and the
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accused may have formidable defence against the
complainant. In such cases, the learned Magistrate
should exercise discretion in a cautious manner. Here
again the conduct of the accused should be noticed.
Therefore, the aforesaid two fold discretion is sine qua
non for an order to be passed by the learned
Magistrate while considering the application under
Section 143A of the Act.
9. It is pertaining to note that, Accused has not denied
issuance of Cheque neither he denied signature on the
Cheque. Therefore, at this stage, the Complainant is entitled
for interim compensation from the Accused. Hence, I
proceed to pass the following;
ORDER
The application u/Sec.143(A) of N.I. Act, is Partly
allowed subject to following conditions;
1. The Accused shall pay or deposit 10% of the
cheque amount on or before 60 days from the date of this
order.
2. The Complainant is entitled to receive the said
amount by executing indemnity bond to the tune of amount
deposited to the court.
3. In the event of failure by the Complainant to prove
the case, he shall repay the said amount with prevailing rate
of interest as on the date of depositing the amount by the
Accused to the court.
For cross of PW1, call on 23.4.2024"
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5. A perusal of the entire material on record including the
impugned orders will indicate that both the courts have correctly
and properly considered and appreciated the entire material on
record and have come to the correct conclusion that the petitioner
has to be directed to pay and deposit 10% of the cheque amount.
Further, both the Courts have taken into account the rival
contentions and the provisions contained in Section 143-A of the
N.I.Act and have correctly exercised their discretion in directing the
petitioner to deposit 10% of the cheque amount.
6. Upon re-appreciation, re-evaluation and
reconsideration of the entire material on record, I do not find any
illegality or infirmity in the impugned orders nor can the same be
said to be perverse or capricious or having occasioned failure of
justice warranting interference by this Court in the present petition.
However, I deem it just and appropriate to direct the petitioner to
deposit 10% of the cheque amount on or before 28.03.2025 before
the trial court and by directing the trial court not to disburse /
release the said amount deposited by the petitioner to the
respondent till conclusion of the proceedings before the trial court
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which shall conclude and dispose of the proceedings within a
period of three months from 11.02.2025.
7. In the result, I pass the following:
ORDER
i) Petition is hereby dismissed without interfering with
the impugned orders passed by the trial court and Sessions Court.
ii) The petitioner is directed to pay/deposit 10% of the
cheque amount on or before 28.03.2025; however, the Trial Court
shall not disburse / release the said amount deposited by the
petitioner-accused to the respondent-complainant till conclusion of
the proceedings
iii) The Trial Court before whom the matter is posted on
11.02.2025, is directed to conclude the proceedings and dispose
of the matter within a period of three months from 11.02.2025.
(iv) All rival contentions between the parties on all aspects of
the matter are kept open and no opinion is expressed on the
same.
Sd/-
(S.R.KRISHNA KUMAR)
JUDGE
MDS/SRL
