IN THE COURT OF HON’BLE CHIEF METROPOLITAN MAGISTRATE,

KARKARDOOMA COURT, EAST DISTRICT, DELHI

I.A. NO. _________ OF 2021
IN
CRIMINAL COMPLAINT NO. ___________ OF 2020

IN THE MATTER OF:

M/S A.P. TRADING COMPANY, A PROPRIETORSHIP

CONCERN OF MR. AJAY SINGHAL
…Complainant

Versus

M/S KANODIA TECHNOPLAST LTD. & ORS.

…Accused(s)

INTERIM APPLICATION SEEKING INTERIM COMPENSATION UNDER

SECTION 143A OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 IN THE
COMPLAINT DATED XXXXX FILED UNDER SECTION 190 R/W SECTION
200 OF THE CODE OF CRIMINAL PROCEDURE, 1973 FOR OFFENCES
COMMITTED, INTER ALIA, UNDER SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT, 1881 ACCOMPANIED WITH AFFIDAVIT.

MOST RESPECTFULLY SHOWETH:

1. That the brief facts of the case are that the Accused person(s) defrauded the
Complainant of Crores of Rupees in a well-planned systematic manner. The
Accused person(s) had malafide intention to cheat right from the beginning.
They first induced the Complainant to supply them tons of paper on the
assurances of timely payments and prosperous business with them.

2. The Complainant acted upon their assurances and supplied tons of papers to the
Accused person s company, but they never paid the full consideration to the
 Complainant. The Accused person(s) kept receiving the payments from their
buyers, but did not release payments towards the Complainant. The Complainant
persistently followed them for clearing the bill, but they kept ignoring him. They
further gave false assurances to pay the entire amount and induced the
Complainant to enter into the Settlement Agreements, assuring that the amount
would be settled once for all.

3. That it is imperative to note that in the aforesaid Settlement Agreements, it was

clearly admitted by Accused No. 2 that the outstanding amount payable by them
to the Complainant for supplying imported Paper worth Rs. 7.35 Crores as
principal amount, and Rs. 82 Lakhs as interest. For inducing the Complainant to
settle the matter with them, they solemnly promised the Complainant to pay Rs.
1.52 Crores in addition to the aforesaid amount. Believing them, the
Complainant executed two Agreements on 02.03.2020, one for settling the
cheated amount i.e. Rs. 7.03 crores along with accrued interest thereon, and
second to pay the additional amount of Rs. 1.52 Crores. The terms of the
payment were duly recorded in the Settlement Agreements. To win trust they
also issued post-dated cheques to the Complainant. Believing their assurances,
the Complainant withdrew the cases against them.

True Copies of the Two Settlement Agreements dated 02.03.2020 is annexed

and marked hereto as Annexure A-1.

4. That in pursuance of the Settlement Agreements dated 02.03.2020, the Accused

person(s) acted in complete defiance of the said Settlement Agreements and
asked the Complainant not to present the first two cheques bearing no. 513693
and 513703 dated 10.03.2020 amount to Rs. 1,00,00,000/- and Rs. 13,66,667/-
respectively. That the Complainant shocked at this incidence of the Accused
person(s), refused to the same and informed the Complainant that he intended to
pursue a contempt case against the Accused person(s) if the said Settlement
Agreements was not honoured. That at this very instance, the Accused person(s)
released a paltry amount of Rs. 88,00,000/- and sent to the Complainant via
RTGS in March 2020.

5. That it is further submitted that the Accused person(s) presented a set of 6 post-
dated cheques to the Complainant bearing no. 513694, 513695, 513696, 513697,
 513698 for the principal amount of Rs. 75,00,000/-, Rs. 1,00,00,000/-, Rs.
1,50,00,000/-, Rs. 1,25,00,000/- and Rs. 1,50,00,000/- dated 10.04.2020,
10.05.2020, 10.06.2020, 10.07.2020 and 10.08.2020 respectively. The Accused
person(s) further presented another set of 6 post-dated cheques to the
Complainant bearing no. 513704, 513705, 513706, 513707 and 513708 for the
amount of interest of Rs. 13,66,667/-, Rs. 13,66,667/-, Rs. 13,66,667/-, Rs.
13,66,667/-, Rs. 13,66,667/-, and Rs. 13,66,667/- dated 10.04.2020, 10.05.2020,
10.06.2020,10.07.2020 and 10.08.2020 respectively.

6. That it is pertinent to mention herein that none of the cheques as mentioned

hereinabove were honoured and to the shock of the Complainant, each of them
had returned from the bank bearing remark "payments stopped by the drawer".

7. Thereafter, the Accused person(s) also, presented another set of 4 post-dated

cheques to the Complainant bearing no. 513699, 513700, 513701 and 513702, of
amount Rs. 25,00,000/-, Rs. 75,00,000/-, Rs. 26,41,000/- and Rs. 26,41,000/-
dated 01.04.2020,01.05.2020, 01.06.2020 and 01.07.2020 respectively, in
reference to the second Settlement Agreement dated 02.03.2020.

8. That also, none of the hereinabove cheques relating to the Second Settlement
Agreement were ever honoured by the Accused person(s).

9. That it is therefore relevant to mention that this aforesaid misconduct on the part
of the Accused person(s) reflects malice and is in direct contravention of the
provision in law. It clearly elucidates the mala fide on the part of the
Complainant and on top of it clearly shows the delay tactics for non-payment of
the hard-earned monies of the Complainant.

10. That it is relevant to mention herein that at the assurance given by the Accused
person(s), the payment shall be rendered to the Complainant vide direct transfer;
the Complainant did not present the first 2 cheques drawn by the Accused
person(s). It is pertinent to mention that the Accused person(s) faded to abide by
any of the assurances and made no payments to the Complainant.

11. That the Negotiable Instruments Act, 1881 has played a substantial role in
shaping the remedies available in commercial landscape to the victims of
financial frauds and breach of trust. Parliament in its legislative wisdom
amended the Negotiable Instruments Act, 1881 by Act 20 of 2018 to insert
Section 143A with effect from 01.09.2018. Section 143A of the Negotiable
Instruments Act, 1881 has been reproduced in verbatim below for the
convenience of this Hon'ble Court:

“143A - Power to direct interim compensation— 

(1) Notwithstanding anything contained in the Code of Criminal Procedure,
1973 (2 of 1974), the Court trying an offence under Section 138 may order
the drawer of the cheque to pay interim compensation to the complainant—
(a) in a summary trial or summon case, where the drawer pleads not
guilty to the accusation made in the complaint; and
(b) in any other case, upon framing charges.
(2) The interim compensation under subsection (1) shall not exceed twenty
per cent of the amount of the cheque.
(3) The interim compensation shall be pad within sixty days from the date of
the order under sub-section (1), or within such further period not exceeding
thirty days as may be directed by the Court on sufficient cause being shown
by the drawer of the cheque.
(4) If the drawer of the cheque is acquitted, the Court shall direct the
complainant to repay to the drawer the amount of interim compensation,
with interest at the bank rate as published by the Reserve Bank of India,
prevalent at the beginning of the relevant financial years, within sixty days
from the date of the order, or within such further period not exceeding thirty
days as may be directed by the Court on sufficient cause being shown by the
complainant.
(5) The interim compensation payable under this section may be recovered
as if it were a find under section 421 of the Code of Criminal Procedure,
1973 (2 of 1974).
(6) The amount of fine imposed under section 138 or the amount of
compensation awarded under section 357 of the Code of Criminal
Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or
recovered as interim compensation under this section.”
12. That the Section 143A imposes an obligation upon the Accused to pay 20% of
the amount of the cheque in respect of which Section 138 proceedings have been
instituted. This liability upon the Accused is fixated by the action of law even
before he is convicted thus there is no possible defence which the Accused may
resort to evade this liability fixated upon him. At this point it is crucial to bring
to notice of this Hon'ble Court an observation of Hon'ble Supreme Court in G.J.
Raja v. Tejraj Surana, (2019) 19 SCC 469:

17. The provisions contained in Section 143-A have two dimensions.

First, the Section creates a liability in that an Accused can be ordered
to pay over up to 20% of the cheque amount to the complainant. Such
an order can be passed while the complaint is not yet adjudicated upon
and the guilt of the Accused has not yet been determined. Secondly, it
makes available the machinery for recovery, as if the interim
compensation were arrears of land revenue. Thus, it not only creates a
new disability or an obligation but also exposes the Accused to
coercive methods of recovery of such interim compensation through
the machinery of the State as if the interim compensation represented
arrears of land revenue. The coercive methods could also, as is evident
from provision like Section 183 of the Maharashtra Land Revenue
Code, in some cases result in arrest and detention of the Accused.

13. That the present case perfectly fits under Sub-Section (1) of Section 143A of
the Negotiable Instruments Act, 1881 as the present complaint case has been
instituted under Section 138 of the Negotiable Instruments Act, 1881 and the
Accused has not pleaded guilty. All the ingredients of sub-section (1) of Section
143A are therefore satisfied. Accordingly, the complainant is entitled to be paid
20% of the amount of the cheque by the Accused(s) pending the final
adjudication of this case. This is the statutory right of the complainant and
statutory obligation of the Accused. The Accused(s) cannot circumvent the
liability imposed upon them by the law.

This also finds favour with the judgement of Hon'ble Supreme Court in G.J.
Raja v. Tejraj Surana, (2019) 19 SCC 469:

19. It must be stated that prior to the insertion of Section 143-A in the
Act there was no provision on the statute book whereunder even
before the pronouncement of the guilt of an Accused, or even before
his conviction for the offence in question, he could be made to pay or
deposit interim compensation. The imposition and consequential
recovery of fine or compensation either through the modality of
 Section 421 of the Code or Section 357 of the Code could also arise
only after the person was found guilty of an offence. That was the
status of law which was sought to be changed by the introduction of
Section 143-A in the Act. It now imposes a liability that even before
the pronouncement of his guilt or order of conviction, the Accused
may, with the aid of State machinery for recovery of the money as
arrears of land revenue, be forced to pay interim compensation. The
person would, therefore, be subjected to a new disability or obligation.
The situation is thus completely different from the one which arose for
consideration in ESI Corpn. case [ESI Corpn. v. Dwarka Nath
Bhargwa, (1997) 7 SCC 131 : 1997 SCC (L&S) 1680] .
21. In our view, the applicability of Section 143-A of the Act must,
therefore, be held to be prospective in nature and confined to cases
where offences were committed after the introduction of Section 143-
A, in order to force an Accused to pay such interim compensation.
23. In the ultimate analysis, we hold Section 143-A to be prospective
in operation and that the provisions of said Section 143-A can be
applied or invoked only in cases where the offence under Section 138
of the Act was committed after the introduction of said Section 143-A
in the statute book. Consequently, the orders passed by the trial court
as well as the High Court are required to be set aside. The money
deposited by the appellant, pursuant to the interim direction passed
[G.J. Raja v. Tejraj Surana, 2019 SCC OnLine SC 1064] by this
Court, shall be returned to the appellant along with interest accrued
thereon within two weeks from the date of this order.

14. That the cause of action in the present complaint case has arisen after the
cheques issued by the Accused(s) have been dishonoured by the Bank which has
been long after the incorporation of Section 143A in the statute book. It is
reiterated for the convenience of this Hon'ble Court that Section 143A was
incorporated in the Negotiable Instruments Act, 1881 with effect from
01.09.2018. Therefore, the complainant is entitled to the interim compensation
of 20% of the amount of the cheque in respect of which proceedings under
Section 138 has been instituted, under Section 143A of Negotiable Instruments
Act, 1881.

The argument put forth by the complainant finds favour with the Hon'ble
Supreme Court, Hon'ble Rajasthan High Court and Hon'ble Chhattisgarh High
Court. Relevant paragraphs of the judgements are reproduced below for the
convenience of this Hon'ble Court.

Hon'ble Supreme Court in G.J. Raja v. Tejraj Surana, (2019) 19 SCC 469 held
as follows:
 21. In our view, the applicability of Section 143-A of the Act must,
therefore, be held to be prospective in nature and confined to cases
where offences were committed after the introduction of Section 143-
A, in order to force an Accused to pay such interim compensation.
23. In the ultimate analysis, we hold Section 143-A to be prospective
in operation and that the provisions of said Section 143-A can be
applied or invoked only in cases where the offence under Section 138
of the Act was committed after the introduction of said Section 143-A
in the statute book. Consequently, the orders passed by the trial court
as well as the High Court are required to be set aside. The money
deposited by the appellant, pursuant to the interim direction passed
[G.J. Raja v. Tejraj Surana, 2019 SCC OnLine SC 1064] by this
Court, shall be returned to the appellant along with interest accrued
thereon within two weeks from the date of this order.

Hon’ble Rajasthan High Court in Budh Ram Regar v. Sanwar Mal Mochi,
2019 SCC OnLine Raj 4328 noted and ordered as follows:

2. Counsel for the petitioner submits that the trial court has referred to
the judgment of Hon'ble Apex Court in Criminal Appeal Nos 917-944
of 2019 (Arising out of SLP (Criminal) Nos 4948-4975/2019 Surinder
Singh Deswal @ Col. S.S. Deswal v. Virender Gandhi, while passing
the impugned order. Counsel for the petitioner argued that the Hon'ble
Apex Court in a recent judgment in the case of G.J. Raja v. Tejraj
Surana (Criminal Appeal No. 1160/2019 dated 30.07.2019 has held
the Section 143A to be prospective in operation and that the
provisions of said Section 143A can be applied or invoked only in
cases where the offence Under Section 138 of the Act was committed
after the introduction of said Section 143A in the statute book w.e.f
01.09.2018. Since the case is pending since last three years, therefore,
the judgment cited by the trial court is not applicable to the case of the
petitioner, therefore, the impugned order may be quashed and set
aside.
3. Per contra, learned Public Prosecutor does not oppose the
submissions made on behalf of the petitioner.
4. I have heard learned counsels for the parties and perused the
material on record and gone through judgment passed by the Hon'ble
Apex Court.
6. In view of above, the present misc. petition is allowed. The
impugned order dated 24.07.2019 is not sustainable and same is
hereby quashed and set aside. The trial court is directed to conclude
the trial expeditiously.

Hon'ble Chhattisgarh High Court in Laxmikant Rathore v. Rakesh Jadwani,

2021 SCC OnLine Chh 435 held as follows:
 5. Section 143A which provides for power to direct interim
compensation was inserted in the Negotiable Instruments Act, 1881
w.e.f 01/09/2018 by the Amendment Act 20 of 2018 with an object to
provide interim compensation to the extent of 20 per cent of the amount
of cheque during the pendency of the complaint and that provision has
been held to be prospective in nature and confined to cases where
offences were committed after the introduction of Section 143A w.e.f
01/09/2018 by the Supreme Court in the matter of G.J Raja v. Tejraj
Surana1.

15. That the Hon'ble Chhattisgarh High Court in Rajesh Soni v. Mukesh Verma,
2021 SCC OnLine Chh 1761 has unequivocally and in clear terms held that the
provisions of Section 143A are mandatory in nature. His lordship has further
made it clear that the word ‘may’ will be read as ‘shall’ thereby making the
provision mandatory. The relevant portion of the judgement is reproduced in
verbatim below:

12. From perusal of the amended provision of Section 143A of the Act,

1881, it is clear that the word ‘may’ used is beneficial for the
complainant because the complainant has already suffered for mass deed
committed by the Accused by not paying the amount, therefore, it is in
the interest of the complainant as well the Accused if the 20% of the
cheque amount is to be paid by the Accused, he may be able to utilize the
same for his own purpose, whereas the Accused will be in safer side as
the amount is already deposited in pursuance of the order passed
under Section 143A of the Act, 1881. When the final judgment passed
against him, he has to pay allowances on lower side. Section 143A of
the Act, 1881 has been drafted in such a manner that it secures the
interest of the complainant as well as the Accused, therefore, from
perusal of aims and object of amended Section 143A of the Act, 1881, it
is quite clear that the word ‘may’ may be treated as ‘shall’ and it is not
discretionary but of directory in nature.
16. Therefore, the word “may” be treated as “shall” and is not
discretionary, but of directory in nature, therefore, the learned Judicial
Magistrate First Class has rightly passed the interim compensation in
favour of the complainant.
19. From perusal of provisions of the Act, 1881 considering the aims
behind object of the Act, 1881 and the law laid down by the Supreme
Court, I am of the considered view that the amendment
in Section 143A of the Act, 1881 is mandatory in nature, therefore, the
learned Judicial Magistrate First Class has rightly passed the order of
interim compensation in favour of the respondent and has not committed
any irregularity or illegality in passing such order. The learned
11th Additional Sessions Judge has also not committed any irregularity or
illegality in rejecting the revision filed by the petitioner, which warrants
any interference by this Court.
 Therefore, the interim compensation has to be granted to the complainant as the
Hon'ble High Court has interpreted the provisions of Section 143A to be
mandatory in nature.

16. That the case for the grant of interim compensation to the complainant under
Section 143A has been made out and is supported by the judgements of Hon'ble
Supreme Court and Hon'ble High Court(s).

17. That the interim compensation under Section 143A of the Negotiable
Instruments Act, 1881 is statutory right of the complainant and statutory
obligation of the Accused(s).

18. That the above-captioned criminal complaint case has been filed in respect of
Cheque No. XXXXX dated XXXXX amounting XXXXX, therefore the
statutory interim compensation calculated under provisions of Section 143A of
the Negotiable Instruments Act, 1881 payable to the Complainant by the
Accused(s) is Rs. XXXXX.

PRAYER

In view of the facts and circumstances mentioned hereinabove, it is most

respectfully prayed that this Hon'ble Court be pleased to:-

A. ALLOW this application under Section 143A of the Negotiable Instruments Act,
1881 and grant the interim compensation of Rs. XXXXXXX.

AND

B. DIRECT the Accused(s) to pay the interim compensation of Rs. XXXXX within
15 days and in no case later than 60 days which is the statutory upper-limit of
the time allowed to the Accused to pay the interim compensation.

AND/OR

C. PASS any other relief in the favour of the Complainant and against the
Accused(s) which this Hon'ble Court deems fit and proper under the facts and
circumstances of the present case.