RESEARCH PROPOSITION – ASSIGNMENT 3

“ Whether an order under sec 143A of NI Act is interlocutory or

intermediate?”

The Negotiable Instruments (Amendment) Act, 2018 introduces a

new provision, Section 143A, to the Act of 1881. Section 143A

empowers the Court to order the drawer of the cheque to pay

Interim Compensation to the complainant:

(a)In case of a summary trial or a summons case, where the drawer

pleads not guilty to the allegations made in the complaint, and

(b)In any other case, upon framing of the charges.

Quantum of Compensation – The compensation amount shall not

exceed 20% of the amount of the Cheque.

On Acquittal – In case where the drawer is acquitted then the payee

may be directed to refund the entire amount of interim

compensation along with the RBI’s Prevailing interest rate, to the

drawer.
Sec 397 of CrPC provides that the powers of revision conferred by

this section shall not be exercised in relation to any interlocutory

order passed in any appeal, inquiry, trial or other proceeding. So the

main issue that arises regarding sec 143A is whether it is an

interlocutory order or not. The same has been discussed in;

Sanjay P S vs Abhishek M CRIMINAL PETITION No.5944

OF 2023

Court : Karnataka High court

Date : 28th July 2023

Bench: M.Nagaprasanna

Facts : The petitioner was the accused and the respondent was the

complainant and the two had a transaction of Rs. 37,50,000/- in

total. The transaction led to issuing of certain cheques by the

petitioner in favour of the respondent. The cheques when presented,

were dishonoured, on the score that instruction to the bankers was

‘stop payment’. The dishonouring of cheques led to the complainant

taking steps under the NI Act by causing legal notice upon the

petitioner. The Magistrate took cognizance upon the complaint and

registered a criminal case for offences punishable under Section 138

of the Act.

During the pendency of proceedings, the respondent filed an

application under Section 143A of the Act seeking interim

compensation of 20% of cheque amount to which the petitioner

objected. The Magistrate rejected the said application aggrieved by

which the complainant approached the Sessions Judge. Hence, the

revision petition was allowed and the Sessions Judge directed

payment of 10% of the cheque amount to the respondent. The

petitioner/accused was therefore before the High Court.

Observation of the court : The High Court referred to judgements

of the Apex court and would hold that Section 143A of the

Negotiable Instruments Act, 1881 is an intermediate order, not an

interlocutory order. Therefore, a revision before the Sessions Court

under Section 397 of the Criminal Procedure Code is maintainable.

He stated that as application is filed and closed under the said

provision, and it is a final determination of the rights and liabilities

of the parties involved. As such, it should not be considered an

interlocutory order, but rather an intermediate order. Therefore, It

determined that a revision before the Sessions Court under Section

397 of the Criminal Procedure Code is maintainable.

Consequently, the High Court dismissed the criminal petition

brought by the petitioner.

https://lawtrend.in/under-sec-397-crpc-revision-against-an-order-u-

sec-143a-of-ni-act-is-maintainable-before-sessions-court-karnataka-

hc/#:~:text=The%20Karnataka%20High%20Court%20has,Criminal

%20Procedure%20Code%20is%20maintainable.

Relevant Judgements on Sec 143A of NI Act :

1. Vilcon Rubber Industries vs. M/s. Krishna Bearing Company

Citation ; Crl. Revision No. 184/202

Court ; Delhi District Court

Bench ; SH. SANJAY SHARMA

Date ; 10 January, 2022

Page12/19

An order allowing or dismissing an application under sec 143A NI

Act decides right or liability of the complainant or the respondent

for interim compensation. Such an order cannot be termed as a pure

or simple interlocutory order. Such an order is not passed in aid of

the proceedings. An order under sec 143A NI Act cannot be termed

as an interlocutory order. An order under sec 143A NI Act is an

intermediary order. A criminal revision petition under sec 397 of the

Cr.P.C. is maintainable against an order dismissing the application

under sec 143A NI Act.

Full document:

https://indiankanoon.org/doc/90614333/

2. Girish Bhatia vs Prama Bhandari

Court ; Delhi District Court

Date ; 23 February, 2021

Bench ; MS NEENA BANSAL KRISHNA

Section 143A NI Act granting interim compensation is a stand

alone liability which impacts the substantive rights of the parties and

is in the nature of punishment and the compensation can be

recovered as find under Section 421 Cr.P.C. Section 143A(1) NI

Act is therefore an intermediate order and not an interlocutory order.

Hence, the present revision is therefore, maintainable.

Full document ;

https://indiankanoon.org/doc/127076211/

3. Hitendra v. Shankar

Citation ; Criminal Writ Petition No. 1848 of 2019

Court ; Bombay High Court

Bench ; MRS. JUSTICE VIBHA KANKANWADI

Date ; 11 December 2019

The High Court restated that an order would be “interlocutory

order”, it will have to be seen as to whether the rights of a person

are affected. High Court held that, “Magistrate applied that

provision of law which was not all applicable to the case in hand

before him, therefore, definitely it had affected the right of the

accused. Consequently, it cannot be said that, the order which was

passed by the learned Magistrate was purely “interlocutory order” as

contemplated under Section 397(2) CrPC.”

Full document;

https://www.scconline.com/blog/post/2019/12/21/bom-hc-s-143-a-

ni-act-not-available-where-complaint-filed-before-the-provision-

came-into-force-restated/
4. K. Ganesh vs Puli Shiva Kumar Goud

Court ; Telangana High Court

Bench ; G.Anupama Chakravarthy

Date ; 20 January, 2023

Interlocutory applications where the orders might result in

culmination of proceedings shall be treated as intermediate orders

against which a revision application under Section 397(2) of the

Cr.P.C. is maintainable.

Full document;

https://indiankanoon.org/doc/5843629/

5. Madhu Limaye vs The State Of Maharashtra

Citation ; 1978 SCR (1) 749

Court ; Supreme Court of India

Bench ; Untwalia, N.L.

Date ; 31 October, 1977

The strict test for interpreting the. words 'Interlocutory Order'

cannot be applied while interpreting it as appearing in section

397(2).. The interpretation that what is not a final order must be an

interlocutory order is neither warranted nor justified. There may be

an order passed during the course of a proceeding which may be not

final but yet it may not be interlocutory order pure or simple. Some

kinds of orders may fall in between the two. The bar of section

397(2) is not meant to be attracted to such kind of intermediate

orders.

Full document ;

https://indiankanoon.org/doc/646292/

Thus, it has been made clear that sec 143A of negotiable instrument

act is not interlocutory but intermediate in nature as it affects the

substantive rights and liabilities of the parties.