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Kerala HC Emphasizes Speaking Order Requirement for Fixing Interim Compensation Under NI Act

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LI Network

Published on: November 29, 2023 at 14:02 IST

The Kerala High Court has reiterated that courts must provide a speaking order when determining the quantum of interim compensation under the Negotiable Instruments Act.

In a case involving Section 143A(2) of the Act, which allows the court to order interim compensation ranging from 1% to 20% of the cheque amount, Justice P.V. Kunhikrishnan emphasized the duty of the court to provide reasons for the decision.

Analyzing the provision, the court noted that if the court decides to order the maximum 20% interim compensation, it must justify the decision. Similarly, if the interim compensation is below 20%, the court should also provide reasons.

The court emphasized that discretion granted to the magistrate should be judiciously exercised, especially when ordering the maximum limit of 20% under Section 143A(2) of the Act.

The case involved a petitioner accused of dishonoring cheques related to a property transaction. The magistrate had directed the petitioner to pay 20% interim compensation without providing reasons.

The petitioner argued that the magistrate did not consider the matter thoroughly. The court agreed, setting aside the order and instructing the magistrate to reconsider the matter with proper reasons.

Case Title: Faizal Abdul Samad v. A.N. Sasidharan & Anr.