HC clarifies on cheque bounce cases

But trial courts to give reasons for their decisions, says HC

The Madras High Court on Tuesday clarified that trial courts hearing cheque bounce cases can order payment of interim compensation of up to 20% under the newly inserted Section 143A of the Negotiable Instruments Act of 1881 even in cases pending for long.

Justice N. Anand Venkatesh, however, ordered that the discretionary power granted to the trial courts should be used with care and that they should give valid reasons for either ordering or not ordering payment of interim compensation by the accused to the complainant.

The judge passed the ruling while setting aside an order passed by a Judicial Magistrate in Cheyyar in Tiruvannamalai district on April 11.

The order was set aside because the magistrate had failed to give reasons for having passed such an order.

Justice Venkatesh directed the High Court Registry to circulate his order to all trial courts across the State through the Tamil Nadu State Judicial Academy so that the presiding officers could be educated with regard to the position of law and other legal requirements.

He pointed out that Section 143A was brought into effect only from September 1, 2018 and the debate that took place on the legislation in Parliament and the reply given by the then Minister highlight the importance of the provision.

The idea was to put a better system in place to avoid cheque bounce cases. As per Section 143A, the interim compensation ordered by the court, pending trial, should be paid within a maximum period of 90 days failing which it could be recovered as a fine imposed by a criminal court.

If the cheque bounce case ultimately ends up in acquittal, then the complainant should repay the interim compensation with interest and within a maximum period of 90 days.