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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 and the petitioner had pleaded not guilty. It was observed that the word ‘may’ used in Section 148 of  Negotiable Instruments Act is 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. These were stated by High Court of Delhi, consisting Justice Mukta Gupta in the case of Suryodhan Tyagi Propreieter of Tyagi Tent House & Anr. vs. Tirender Sharma [W.P.(CRL) 68/2022] on 13.01.2022.

The facts of the case are that the petitioner seeks quashing of the complaint under Section 138 of the Negotiable Instruments Act (in short NI Act) pending before the learned Metropolitan Magistrate, South District, Saket Court as also 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 as there was no merit in the complaint and no legally enforceable liability being shown by the respondent in the complaint. The complainant in his evidence clearly stated that he does not have the financial capacity to give loan to the petitioner. The respondent also got admission of his two children under the Economic Weaker Section quota in the nearby Kendriya Vidyalaya. Therefore, the respondent was not in a position to prove a legally enforceable debt.

The Counsel for the petitioner 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. 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 Counsel for the respondent contended that the respondent has in the complaint 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. It was submitted that the respondent 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 and were dishonoured for the reason ‘funds insufficient’. Thus, the respondent filed the complaint before the Court of competent jurisdiction.

The High Court of Delhi held that 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. It was observed that the word ‘may’ used in Section 148 of NI Act is 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. As noted above, 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 found no infirmity in the impugned order. Therefore, the petition and application were dismissed.

Judgment reviewed by Shristi Suman. Read Judgment