The single-Judge Bench of Chhatisgarh High Court comprising of Justice Narendra Kumar Vyas has settled whether Interim Compensation under Sec.143A of NI Act is Mandatory or Discretionary.

Brief Facts of Case:

The complainant/ respondent has filed complaint against the petitioner under Section 138 of the Negotiable Instrument Act, 1881 contending that the petitioner had given a cheque amounting to ₹6,50,000/- to the complainant. The said cheque got dishonoured and returned due to insufficient fund.

The Complainant had then sent a legal notice to the petitioner and thereafter filed an application under Section 143A of the Act, 1881 contending that the charges have already been framed wherein he has denied the charges levelled against him. It was further contended by the the complainant that as per the provisions of Section 143A of the Act, 1881, if charges have been framed against the accused, the interim compensation can be ordered by the Court to the extent of 20% of the cheque amount, therefore, he prayed for grant of 20% of the amount as interim compensation.

The Magistrate's Court then ordered that the petitioner-accussed to pay 20% of the cheque amount as compensation, failing which proceeding under sub-section (v) of Section 143A will be initiated against petitioner considering the amended provisions of the Act.

Aggrieved by the order, the petitioner-accused approached the Sessions Court to file Criminal Revision petition. The Court then dismissed the plea after stating that there is no illegality and irregularity in the order same is inconformity with the amended provisions of Section 143A of the Act, 1881.

The petitioner had challenged both these orders in the present petition.

Submission of Petitioner:

Counsel for the petitioner submitted that as per amended provision of Section 143A of the Act, 1881, grant of interim compensation isn't mandatory and its discretionary, therefore, its not necessary in every case to grant 20% of cheque amount as interim compensation. He further submitted that since the legislature has used the word 'may', as such, it is discretionary and that trial court shouldn't  HAD granted 20% of cheque amount as interim compensation. He thus stated that both the orders were not just and proper and were liable to be quashed.

Observation of Court:

Throwing light on the objective of amendment, the Court stated:

"From perusal of Section 143A of the Act, 1881, it is quite evident that the act has been amended by granting interim measures ensuring that interest of complainant is upheld in the interim period before the charges are proven against the drawer. The intent behind this provision is to provide aid to the complainant during the pendency of proceedings under Section 138 of the Act, where he is already suffering doubleedged sword of loss of receivables by dishonor of the cheque and the subsequent legal costs in pursuing claim and offence. These amendments would reduce pendency in courts because of the deterrent effect on the masses along ensuring certainty of process that was very much lacking in the past, especially enforced at key stages of the proceedings under the Act. The changes brought forth by way of the 2018 amendment to the Negotiable Instruments Act, 1881 are substantial in nature and focus heavily on upholding the interests of the complainants in such proceedings."

 Interpreting the meaning of 'may', the Court further held:

"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"

 Cases Cited

The Court relied on SC judgement in case of Bachahan Devi & another Vs. Nagar Nigam, Gorakhpur & another, 2008 Latest Caselaw 120 SC which reads as under:-

“18. It is well-settled that the use of word “may” in a statutory provision would not by itself show that the provision is directory in nature. In some cases, the legislature may use the word 'may' as a matter of pure conventional courtesy and yet intend a mandatory force. In order, therefore, to interpret the legal import of the word “may”, the court has to consider various factors, namely, the object and the scheme of the Act, the context and the background against which the words have been used, the purpose and the advantages sought to be achieved by the use of this word, and the like. It is equally well-settled that where the word 'may' involves a discretion coupled with an obligation or where it confers a positive benefit to a general class of subjects in a utility Act, or where the court advances a remedy and suppresses the mischief, or where giving the words directory significance would defeat the very object of the Act, the word 'may' should be interpreted to convey a mandatory force. As a general rule, the word “may” is permissive and operative to confer discretion and especially so, where it is used in juxtaposition to the word “shall”, which ordinarily is imperative as it imposes a duty. Cases however, are not wanting where the words “may” “shall”, and “must” are used interchangeably. In order to find out whether these words are being used in a directory or in a mandatory sense, the intent of the legislature should be looked into along with the pertinent circumstances.
19. “17. The distinction of mandatory compliance or directory effect of the language depends upon the language couched in the statute under consideration and its object, purpose and effect. The distinction reflected in 2 (2008) 12 SCC 372 Page 8 of 12 the use of the word `shall' or 'may' depends on conferment of power. Depending upon the context, 'may' does not always mean may. 'May' is a must for enabling compliance of provision but there are cases in which, for various reasons, as soon as a person who is within the statute is entrusted with the power, it becomes [his] duty to exercise [that power]. Where the language of statute creates a duty, the special remedy is prescribed for non-performance of the duty.”
20. If it appears to be the settled intention of the legislature to convey the sense of compulsion, as where an obligation is created, the use of the word “may” will not prevent the court from giving it the effect of Compulsion or obligation. Where the statute was passed purely in public interest and that rights of private citizens have been considerably modified and curtailed in the interests of the general development of an area or in the interests or removal of slums and unsanitary areas. Though the power is conferred upon the statutory body by the use of the word “may” that power must be construed as a statutory duty. Conversely, the use of the term 'shall' may indicate the use in optional or permissive sense. Although in general sense 'may' is enabling or discretional and “shall is obligatory, the connotation is not inelastic and inviolate." Where to interpret the word “may” as directory would render the very object of the Act as nugatory, the word “may must mean 'shall'.
21. The ultimate rule in construing auxiliary verbs like “may and “shall” is to discover the legislative intent; and the use of words `may' and 'shall' is not decisive of its discretion or mandates. The use of the words “may” and `shall' may help the courts in ascertaining the legislative intent without giving to either a controlling or a determinating effect. The courts have further to consider the subject matter, the purpose of the provisions, the object intended to be secured by the statute which is of prime importance, as also the actual words employed.”

The Court also relied on SC Judgement in Surinder Singh Deswal alias Colonel S.S. Deswal & others Vs. Virender Gandhi, 2020 Latest Caselaw 20 SC in which it was held that Section 148 of the Act, 1881 is mandatory provision.

Further, the Court mentioned the SC Judgement in G.J. Raja Vs. Tejraj Surana, 2019 Latest Caselaw 605 SC which examined the amended Section 143A of the NI Act, 1881 and held that it is prospective effect and not retrospective effect.

Conclusion of Case

The High Court concluded that the word “may” be treated as “shall” and is not discretionary, but of directory in nature. It upheld the interim compensation passed by the Judicial Magistrate First Class in favour of the complainant.

It held that the Sessions Court was also right in rejecting the revision petition and the present case by petitioner was deviod of merits. It thus dismissed the plea accordingly.

Read Order Here:

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