The trial Court must provide proper reasons when exercising discretion and awarding compensation under Section 143A of the N.I. Act.

JUDGMENT :

1. By way of this application filed under Articles 226 and 227 of the Constitution of India, the applicants have challenged the order dated 13.04.2022, passed by the learned Additional Chief Metropolitan Magistrate (N.I. Act Court No.30), Ahmedabad whereby in an application Exh.14 for grant of interim compensation under Section 143A of the Negotiable Instrument Act, 1881, (hereinafter referred to as “N.I. Act”), the learned Magistrate has granted compensation @ 20% of the cheque amount in favour of the respondent no.2 (hereinafter referred to as “the complainant”) and directed the applicants to pay the same within 60 days from the date of order.

2. Facts and circumstances giving rise to filing of present application are that, the complainant has filed the private complaint being Criminal Case No.11782 of 2021 under Section 138 and 141 of the N.I. Act, as the cheques drawn by the accused for an amount of Rs.4 crore, in favour of the complainant were returned unpaid on the ground “account closed”.

2.1 According to the case of complainant, the applicants-accused availed a loan, under loan agreement dated 31.07.2018 and amount of Rs.5 crore was disbursed on various dates. The loan was repayable within 12 months from the date of disbursement along with the interest. The accused have defaulted in making payment. The cheques earlier given were dishonoured and thereafter, fresh four cheques each of Rs.1 crore issued in favour of the complainant which were again dishonoured which led to filing of criminal complaint and process was issued to the applicants-accused. The Court has recorded the plea on 13.12.2021 and matter posted for recording evidence on 17.08.2022.

2.2 The application Exh.14 was filed by the complainant under Section 143A of the N.I. Act and the same was opposed by the applicants herein by filing reply Exh.16, contending inter alia, that, the dispute is civil dispute and maliciously with dishonest intention the criminal complaint is filed; that, there is neither any debt or liability, nor, any default for which a criminal proceeding can be initiated under Section 138 of the N.I. Act; that, the accused had entered into loan agreement dated 31.07.2018 with the complainant for securing a loan of Rs.5 crore for expansion of joint venture company i.e. GSEC Monarch Deccan Aviation Pvt. Ltd. and as per the termsheet dated 12.12.2017, the accused were to transfer their business along with old debts, liabilities and dues of DCPL to GMDAPL and subsequently, it were transferred along with business transfer agreement and liability of the repayment of the loan to the complainant. After completion of all formalities, the loan was disbursed to the accused and the same was to be repaid within 12 months from the date of disbursement. The security cheques were given to the complainant and not for repayment of loan and therefore, cheque given as a security does not fall under the purview of Section 138 of N.I. Act and repayment of the loan was the responsibility of the new venture GMDAPL.

2.3 Learned trial Court after considering the contents of application Exh.14 and objections filed by the accused Exh.16 and having considered the contentions raised by learned counsel for the respective parties, vide its order dated 13.04.2022 directed the applicants-accused to pay 20% cheque amount within 60 days from the date of the order. While allowing the application, the trial Court recorded that, the accused have not pleaded guilty and objections raised in the reply cannot be considered at this stage as it is a matter of evidence.

3. Aggrieved with the order dated 13.04.2022, the original accused-applicants have preferred the instant application.

4. This Court has heard Mr. A.S. Mishra, learned counsel appearing for and on behalf of the applicants-accused, Mr. A.H. Mohapatra, learned counsel appearing for and on behalf of respondent no.2-complainant and Mr. J. K. Shah, learned Additional Public Prosecutor for the respondent- State.

5. Mr. Mishr