Compensation, Not Interim Compensation u/s 138 NI Acts Can Be Recovered From Deceased Accused Estate: Calcutta HC

In the latest judgement, Hon’ble Calcutta High Court stated that interim compensation given under section 143A of the NI Act cannot be recovered from the estate of the accused who dies before the final judgement is announced. However, further, the court propounded that compensation granted under section 138 of the pertinent act, can be recovered from the estate of a deceased accused.

In the given case of Indranil Mukherjee v the State of West Bengal and others , an appeal was filed against a dismissed application filed under Section 421 of the Code of Criminal Procedure, 1973, seeking recovery of the interim compensation awarded to the petitioner by an order dated March 4, 2020.
In the instant case, the petitioner filed a complaint under Sections 138/141 of the Negotiable Instruments Act, 1881, that the accused had dishonoured the cheque of Rs. 50 lakhs and claimed interim compensation should be provided for the same before the Metropolitan Magistrate .Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (“NI Act”) provides that where any cheque is drawn by any person on an account maintained by him with a banker and if it is returned back by the banker due to insufficient balance to honour the cheque or the cheque value exceeds the amount arranged for payment from the account, such person is deemed to have committed an offence and is punishable with an imprisonment or fine or with both.

Subsequently, the concerned Magistrate on 4 March 2020 had allowed the application and made the accused pay interim compensation to petitioner amounting to twenty per cent of the total cheque according to Section 143A of the Act within sixty days from the date of order.

A revisional application was filed against the order passed on 4 March 2020 in concerned Session Court by the respondent. The order dated March 4, 2020, was upheld by the concerned Sessions Court on 2 December 2020 as the accused succumbed to death during the trial of the case leaving behind a widowed wife and 2 children. 
The petitioner claimed that an interim compensation is to be recovered from the estate of the deceased accused as liability prevails even after death of the accused and referred to the judgements, Sri Jeyaram Educational Trust v. A.G. Syed Mohideen 2 SCC 513 (2010) and NEPC Micon Ltd. v. Magma Leasing Ltd.  4 SCC 253 (1999), given by Hon’ble Supreme Court where it was held that the liability to pay interim compensation from the estate of the accused is not absolved on death of the accused. 

On the other hand, the respondent submitted that the compensation passed under Section 143A is interim in nature and the same is refundable if the accused is proven innocent. In the event of the death of an accused during the trial, the innocence of the accused cannot be proved and hence the amount of compensation directed to be paid in terms of Section 143A is irrecoverable. Respondent had relied upon the judgments rendered in Madhu v. State of Kerala  SCC OnLine Ker 2353 (2020) , Smt. Girija v. K. Vinay SCC OnLine Kar 434 (2003), and M. Abbas Haji v. T.N. Channakeshava 9 SCC 606 (2019) and hence alleged that proceeding under Section 138 of the Negotiable Instruments Act cannot continue against the legal representatives of the drawer of the cheque and abates upon his death.

The Calcutta HC affirmed that interim compensation awarded under section 143A of the NI Act cannot be recovered from the estate of the deceased accused. In Girija v. K. Vinay SCC OnLine kar 434 ( 2003),the Karnataka High Court had given the precedent that no proceedings can be initiated for an offence punishable under Section 138 of the Negotiable Instruments Act against the legal heirs of the deceased. As the accused died during the pendency of the trial, there is no finality in the decision of the court. The interim compensation ceased to exist and thus cannot be extracted from the accused’s estate. Hence, the Court concluded that the compensation to be provided will depend on the final verdict of the case.