High Court Quashes Orders on Interim Compensation in Cheque Bounce Case: Misuse of Discretionary Power

In a significant ruling, the Punjab and Haryana High Court has set aside two orders pertaining to the deposit of interim compensation in a cheque bounce case under Section 138 of the Negotiable Instruments Act. The bench headed by Hon’ble Mr. Justice N.S. Shekhawat delivered the judgment, emphasizing the importance of judicial discretion and adherence to the principles of natural justice.

The case involved petitioner Raman Kumar Arora challenging the orders dated 06.09.2021 and 27.09.2022 passed by the Court of JMFC, SAS Nagar, and the Court of Additional District and Sessions Judge, SAS Nagar, respectively. These orders mandated the petitioner to deposit 20% of the cheque amount as interim compensation to the complainant.+.

Justice Shekhawat observed, “The trial Court had granted the interim compensation under Section 143-A of the Act in a very casual and routine manner. Even, it is clear that there was no application of judicial mind by the trial Court.” This statement underscores the High Court’s concern over the arbitrary application of judicial discretion.

The Court’s decision emphasized the proper application of law, stating, “The Court had wide discretion to grant the interim maintenance, which could vary from 1% to 20% and the discretion had been exercised in a manner, which is alien to law and such arbitrary order is liable to be quashed.”

In its judgment, the High Court also referred to similar cases, including CRM M-29424-2022 titled “Vikas Vs. Jai Shree Balaji Electrical,” to highlight the importance of proper application of Section 143A of the Act and the exercise of judicial discretion.

The petitioner’s counsel, Mr. Karan Suneja, welcomed the judgment, stating that it reinforced the legal principles of fairness and judicious application of law. On the other hand, the respondent’s counsel, Mr. R.K. Chaudhary, expressed respect for the Court’s decision.

The High Court’s decision to quash the impugned orders and remand the matter back to the trial Court for reconsideration marks a significant step in ensuring that judicial discretion is exercised thoughtfully and in accordance with the law. This ruling is expected to have a considerable impact on similar cases involving the interpretation of Section 143-A of the Negotiable Instruments Act.

Date of Decision: 30.11.2023

Raman Kumar Arora VS Tanu Bathla