Mr. Ashwin Ashokrao Karokar vs Mr. Laxmikant Govind Joshi
2022 Latest Caselaw 6408 Bom

                                                     CRI WP 48 of 2022.odt
                                     1


           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                     NAGPUR BENCH AT NAGPUR

               CRIMINAL WRIT PETITION NO.48/2022


PETITIONER :                   Mr. Ashwin Ashokrao Karokar,
(Accused)                      aged about 35 years, Occu - business,
                               r/o Dwara Ashwin Kirana Stores,
                               Karokar Square, Ward No.12, Saoner,
                               Tahsil-Saoner, District - Nagpur.
                               ...VERSUS...
RESPONDENT :                   Mr. Laxmikant Govind Joshi
(Complainant)                  aged 63 years, Occu- Retired,
                               r/o Civil Lines, Saoner,
                               Tahsil Saoner, District - Nagpur.
                                  WITH
               CRIMINAL WRIT PETITION NO.71/2022
PETITIONER :                   Mr. Ashwin Ashokrao Karokar,
(Accused)                      aged about 35 years, Occu - business,
                               r/o Dwara Ashwin Kirana Stores,
                               Karokar Square, Ward No.12, Saoner,
                               Tahsil-Saoner, District - Nagpur.
                               ...VERSUS...
RESPONDENT :                   Mr. Laxmikant Govind Joshi
(Complainant)                  aged 63 years, Occu- Retired,
                               r/o Civil Lines, Saoner,
                               Tahsil Saoner, District - Nagpur.
Mr. Madhur A. Deo, Advocate for petitioner
Mr. Bhushan Mohta, Advocate for respondent



                            CORAM : AVINASH G. GHAROTE, J.

Judgment reserved on                  : 06/05/2022
Judgment pronounced on                : 07/07/2022
                                                     CRI WP 48 of 2022.odt
                                   2

JUDGMENT

1. Heard Mr. Madhur Deo, learned Counsel for the

petitioner and Mr. Bhushan Mohta, learned Counsel for the

respondent. Rule. Rule made returnable forthwith. Heard finally

with the consent of the learned Counsel for the rival parties.

2. The petitions raise two interesting questions :

(i) Whether the provisions of Section 143-A of the Negotiable Instruments Act, 1881, which empower the Court to direct payment of interim compensation are mandatory or directory and

(ii) In case it is held that the same is directory, whether the Court has to record reasons for determining the quantum of interim compensation to be awarded as contemplated by Section 143-A (2) of the Negotiable Instruments Act, 1881 ?

3. The facts in the instant matter, indicate that the

respondent/Complainant filed proceedings under Section 138 of the

Negotiable Instruments Act, 1881 (hereinafter to be referred as the

"N.I. Act"), in respect of two cheques one for Rs.15,00,000/- and the CRI WP 48 of 2022.odt

other for Rs.5,00,000/- issued by the petitioner in favour of the

respondent which when presented were dishonoured for insufficient

funds in the account of the petitioner resulting in the above

proceedings, in which, an application under Section 143-A of the

N.I. Act came to be filed. The learned Judicial Magistrate First Class

(JMFC), Saoner by two impugned orders both dated 26/11/2021,

granted the applications and directed the petitioner/accused to pay

20% of the cheque amount to the complainant as an interim

compensation within 60 days from the date of the said order.

4. Mr. Deo, learned counsel for the petitioner/accused

contends, on the facts of the matter that the learned JMFC

misconstrued the provision of Section 143-A of the N.I. Act, to be

mandatory in nature, which according to him it is not, and therefore,

erred in passing the impugned orders. He contends, that

Section 143-A of the N.I. Act, is not mandatory and is directory,

considering that Section 143-A(1) of the N.I. Act uses the word 'may'

in the matter of directing an interim compensation to be paid. It is

further contended, that use of the word "shall", as occurring in

Section 143-A(2) of the N.I. Act, is also directory as it merely CRI WP 48 of 2022.odt

indicates the limits, within which the interim compensation can be

awarded by the Court, 20% of the cheque amount being the outer

limit. It is also contended, that though the presumption under

Section 139 of the N.I. Act, is attracted in a proceeding under

Section 138 of the N.I. Act, however, that by itself, cannot be

construed to indicate that the provisions of Section 143-A of the N.I.

Act are mandatory in nature, for the reason that there would arise

cases where the Court, even on a prima facie reading of the

complaint may come to a conclusion that the presumption stood

rebutted and in such cases, the question of directing interim

compensation would not arise at all. He therefore submits, that in a

given case, it would be permissible for the Court to even reject the

application under Section 143-A of the N.I. Act for interim

compensation.

4.1. Reliance for the above proposition is placed on L.G.R.

Enterprises Vs. P. Anbazhagan, AIR Online 2019 Mad 801 (para 6

and 8), which holds that the word "may", as occurring in Section

143-A(1) of the N.I. Act is discretionary. Reliance is also placed on

Ajay Vinodchandra Shah Vs. State of Maharashtra and another, CRI WP 48 of 2022.odt

2019 (4) Mh.L.J. 705, in which it is held that Section 143-A(1) of

the N.I. Act leaves it to the discretion of the Court to pass an order of

interim compensation upto the ceiling limit of 20% of the cheque

amount.

4.2. Further reliance is placed upon K. Ranjithkumar Vs. K.

Mathivanan, AIR Online 2021 Mad 2542, which reiterates the

position in L.G.R. Enterprises (supra). Reliance is also placed upon

JSB Cargo and Freight Forwarder Pvt. Ltd. and Others Vs. State and

Another, 2021 SCC Online Del 5425, wherein a learned Single Judge

after considering Surinder Singh Deswal Alias Colonel S.S. Deswal

and Others Vs. Virender Gandhi and another, (2020) 2 SCC 514,

L.G.R. Enterprises (supra) and Ajay Vinodchandra Shah (supra),

held that the provisions of Section 143-A(1) of the N.I. Act, were

directory and not mandatory (para 62). Further reliance is also

placed upon Mr. D.L. Sadashiva Reddy S/o Late Lakshmana Reddy D

Vs. Mr. V.G. Kona Reddy s/o Govinda Reddy Konareddy, Criminal

Petition No.3904/2021, decided by the Karnataka High Court on

01.06.2021 and the consequent SLP No.10151/2021 decided on

07.01.2022, which holds that the power under Section 143-A(1) of CRI WP 48 of 2022.odt

the N.I. Act is discretionary. Reliance is also placed upon G. J. Raja

Vs. Tejraj Surana, 2019 (19) SCC 469 to contend that the provisions

of Section 143-A are directory.

4.3. In so far as the meaning of the words 'may' and 'shall',

reliance is also placed upon The Official Liquidator Vs. Dharti Dhan

(P) Ltd., AIR 1977 SC 740, (paras 7 and 8), and State of Uttar

Pradesh Vs. Jogendra Singh, AIR 1963 SC 1618 (para 8).

4.4. In so far as the reading of the provision is concerned,

reliance is placed upon Bhavnagar University Vs. Palitana Sugar Mill

(P) Ltd. and others, 2003 (2) SCC 111; on Haryana Financial

Corporation and another Vs. Jagdamba Oil Mills and another, 2002

(3) SCC 496; Mrs. Aparna A. Shah Vs. M/s Sheth Developers Pvt.

Ltd. and others, AIR 2013 SC 3210; B. Premanand and Ors Vs.

Mohan Koikal and Ors, AIR 2011 SC 1925 ; and Gwalior Rayons Silk

Mfg. (Wvg.) Co. Ltd., Vs. Custodian of Vested Forests, Palghat and

another, AIR 1990 SC 1747 ; Harbhajan Singh Vs. Press Council of

India and others, AIR 2002 SC 1351 (para 9) ; Padma Sundara Rao

(Dead) and others Vs. State of T.N. and others, 2002 (3) SCC 533, CRI WP 48 of 2022.odt

(para 12); Commissioner of Income-tax, Orissa Vs. M/s. N. C.

Budharaja and Company and another, 1993 AIR SCW 3317 , (para

13); D. Saibaba Vs. Bar Council of India and another, AIR 2003 SC

2502, (para 17) ; S.S. Bola and others Vs. B. D. Sardana and others,

AIR 1977 SC 3127 (para 178); (viii) Mardia Chemicals Ltd. and

others Vs. Union of India and others, 2004 (4) SCC 311 (paras 55 to

64) and (ix) Kunhayammed and Others Vs State of Kerala and

Another, (2000) 6 SCC 359 (para 45).

5. Mr. Bhushan Mohta, learned counsel for the respondent

opposes the petitions and submits, that the amendment to the

provisions to the N. I. Act was effected on 2 nd August 2018, by way

of a Notification published in the official gazette and it came into

effect on 1st September, 2018. Inviting my attention to the statement

of object and reasons, he submits that the purpose for enacting the

Section 143-A and 148 of the N.I. Act, was to obviate, the delay as

occasioned in the decision of the matters of Section 138 of the N.I.

Act. He submits that use of the word 'may', does not mean that the

provision is discretionary by relying upon Bachahan Devi and

another Vs. Nagar Nigam, Gorakhpur and another, 2008 (12) SCC CRI WP 48 of 2022.odt

372 (paras 31 to 33) ;Dilip K. Basu Vs. State of West Bengal and

Ors, 2015 (8) SCC 744 (para 9); Surinder Singh Deswal @ Col. S.

S. Deswal and others Vs. Virender Gandhi and another, 2019 (11)

SCC 341.

5.1. Further reliance is placed upon, (i) Rajesh Soni s/o Shri

P. R. Soni Vs. Mukesh Verma s/o Late Shri J. P. Verma, CRMP

No.562 of 2021, decided on 30/06/2021 by the learned Single

Judge of Chhattisgarh High Court, holding that Section 143-A(1) is

mandatory in nature (para 19) and Modi Cements Vs. Kuchil Kumar

Nandi, 1988 (3) SCC 249, which dilates upon the reasons and

objects and the purpose behind enacting Section 138 of the N. I. Act;

(ii) Deewan Singh and others Vs. Rajendra PD. Ardevi and others,

2007 (10) SCC 528 (paras 32 to 35, 43 and 44) ; (iii) State of Uttar

Pradesh Vs. Jogendra Singh, AIR 1963 SC 1618, (para 8) ; (iv) State

(Delhi Admn.) Vs. I. K. Nangia and another, 1980 (1) SCC 258 (para

15); State of Uttar Pradesh and others Vs. Babu Ram Upadhya, AIR

1961 SC 751 (para 28 and 29); (v) Municipal Corporation of Delhi

Vs. Gurnam Kaur, 1989 (1) SCC 101, (paras 11 and 12); (vi) Hyder

Consulting (UK) Limited Vs. Governor State of Orissa , (paras 46 and CRI WP 48 of 2022.odt

50); (vii) State of U.P. and another Vs. Synthetics and Chemicals Ltd.

and another, 1991 (4) SCC 139, (paras 39 to 41) and (viii) Frederic

Guilder Julius Vs. The Right Rev. the Lord Bishop of Oxford 1880

(V) AC 214.

5.2. It is contended that Ajay Vinodchandra Shah Vs. State

of Maharashtra and another, 2019 (4) Mh.L.J. 705 (also relied by

Mr. Deo, learned counsel), does not consider whether Section 143-A

is mandatory or directory not does not dilate upon the expression

"may" and "shall", and therefore, is of no assistance in deciding the

issue in question. (this judgment has been considered by the Delhi

High Court in JSB Cargo and Freight Forwarder Pvt. Ltd. (supra)

page no.59 paras 39 to 43).

5.3. Mr. Bhushan Mohta, learned Counsel for the

respondent, therefore contends that the use of expression 'may', in

Section 143 (A) of the N.I. Act since it is coupled with an obligation

upon the Court to award interim compensation, necessarily makes it

mandatory and not directory. In the written notes of arguments CRI WP 48 of 2022.odt

placed by him on record, a tabular chart has been given, which it

would be appropriate to reproduce as under :-

1. Things empowered to be done. Advance compensation under Section 143 A of Negotiable Instrument Act, 1881.

2. Something in object for which it Object of insertion of is to be done. Section 143A to strengthen the credibility of cheque and help trade and commerce, speedily disposal of matter.

3. Something in condition under The accused should plead which it is to be done. not guilty or upon framing of charge.

4. Something in the title of person The complainant of or persons for whose benefit the Section 138 proceeding. power is to be exercised.

5.4. Surinder Singh Deswal (supra), according to the

learned Counsel Mr. Bhushan Mohta, while interpreting the

provisions of Section 148 of the N.I. Act, therefore, has held that the

word "may" as occurring therein has to be read as "shall"

considering that the said provision made it a duty of the Court to

direct deposit of such sum which shall be minimum of 25% of the

fine or compensation awarded by the Trial Court in an appeal filed CRI WP 48 of 2022.odt

by the drawer against conviction under Section 138 of the N.I. Act

and not to so direct would be an exception for which reasons will

have to be recorded.

5.5. Learned Counsel Mr. Mohta, also submits that JSB

Cargo and Freight Forwarder Pvt. Ltd. (supra) upon which reliance

is placed by Mr. Deo, learned Counsel for the petitioner, according to

Mr. Mohata, does not consider Frederic Guilder Julius; Bachan Devi

and D.K. Basu (supra) and therefore, cannot be considered to be

laying down the correct position.

5.6. He further submits that the impugned order indicates

the application of mind by the learned Trial Court, to the provisions

of Section 143-A of the N.I. Act and the judgment of the Hon'ble

Apex Court in Surinder Singh Deswal (supra) and has rightly been

passed.

5.7. Further reliance is placed upon Anant H. Ulahalkar and

another Vs. Chief Election Commissioner and others, 2017 (1)

Mh.L.J. 431, in which, while interpreting Section 9 (1) - A of the CRI WP 48 of 2022.odt

Maharashtra Municipal Councils, Nagar Panchayats and Industrial

Townships Act, 1965, rules of interpretation have been laid down

(paras 30, 36, 37 and 38).

6. In rebuttal, Mr. Madhur Deo, learned Counsel for the

petitioner submits that though JSB Cargo and Freight Forwarder Pvt.

Ltd. (supra) does not consider Frederic Guilder Julius; Bachan Devi

and D.K. Basu (supra), it however considers Mohan Singh and

others Vs. International Airport Authority of India and others,

(1997) 9 SCC 132 and State of U.P. Vs. Baburam Upadhya, AIR 1967

SC 151, both of which dilate upon the use of the word "shall" or

"may".

6.1. He further places reliance upon Section 357 of the

Cr. P.C., which empowers the Court to pass an order to pay

compensation in addition to imposing sentence of fine or sentence,

for which reliance has been placed on Ankush Shivaji Gaikwad Vs.

State of Maharashtra (2013) 6 SCC 770 (paras 45 to 66), to contend

that where there is a duty cast upon the Court to apply its mind only

then in that contingency the provision could be said to be mandatory CRI WP 48 of 2022.odt

and not otherwise. It is contended that Section 143-A of the N.I. Act

does not cast any such duty upon the Court and therefore, cannot be

held to be mandatory in nature. The only requirement cast by

Section 143-A is to consider whether there is requirement as spelt

out from the facts of each case for grant of compensation and not to

order award of deposit in each and every case.

6.2. He further contends that non-compliance of any order

which may be made under Section 143-A (1) of the N.I. Act does not

visit the accused with any penal consequences except for what is

enumerated in Sub Section 5 of Section 143-A of the N.I. Act, which

is merely a form of execution of the order and nothing else,

otherwise the legislature would have provided for consequence for

non-compliance with the order, such as cancellation of bail or any

such consequences.

6.3. It is further contended that the impugned order does

not disclose any application of mind but has been passed merely

considering that it was the duty of the Court to do so and therefore

cannot be sustained.

CRI WP 48 of 2022.odt

6.4. Reliance is also placed upon Smt. Vijaya w/o

Shiddalingayya Hiremath (Vijaya d/o Shadaksharappa) Vs.

Shekharappa s/o Shivappa Madinur, Criminal Petition

No.100261/2022, decided on 17/2/2022, by a learned Single Judge

of the Karnataka High Court, holding Section 143-A of the N.I. Act to

be directory.

7. The principles of interpretation as are spelt out from the

various judicial precedents relied upon by the learned Counsels are

as follows :

(i). In S.S. Bola and others (supra) it was held that the

objects and reasons of a statute are to be looked into as an extrinsic

aid to find out legislative intent, only when the meaning of the

statute by its ordinary language is obscure or ambiguous.

(ii). Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. (supra) holds

that Judicial interpretation of given words in one statute cannot

extend to same words in another statute and the Court should listen

attentively towards what the legislature does not say.

(iii). In Commissioner of Income-tax, Orissa (supra) it was

held that it is not the job of the Court to rewrite a section or CRI WP 48 of 2022.odt

substitute words for actual words used in the name of giving effect

to supposed underlying object.

(iv). In Padma Sundara Rao (Dead) and others (supra) it

was held that Courts cannot read into a statutory provision which is

clear and ambiguous.

(v). Harbhajan Singh (supra) holds that intention of

legislature has to be gathered from the word used.

(vi). Haryana Financial Corporation and another (supra)

holds that judgments of the Court cannot be read as statutes;

(vii). In Bhavnagar University (supra) it was held that a

decision is an authority for which it is decides and not what can

logically be deduced therefrom.

(viii). D. Saibaba (supra) holds that the Court should bear in

mind the consequences of alternative construction.

(ix). B. Premanand and Ors. (supra) holds that literal

construction is the thumb rule and it is only in case where a literal

interpretation would lead to absurdity then only any other mode of

interpretation, including a purposive one, can be resorted to;

CRI WP 48 of 2022.odt

(x). Mrs. Aparna A. Shah (supra) holds that a penal

provision has to be interpreted strictly;

(xi). Ankush Shivaji Gaikwad (supra) holds that where there

is a duty cast upon the Court to apply its mind only then in that

contingency the provision could be said to be mandatory and not

otherwise.

(xii). Modi Cements (supra) dilates upon the reasons and

objects and the purpose behind enacting Section 138 of the N.I. Act,

which is to promote the efficacy of banking operations and to ensure

credibility in transacting business through cheques.

(xiii). Hyder Consulting (UK) Ltd. (supra) in respect of the

subsidiary rules of interpretation, holds that the same words

appearing in same section of the same statute must be given same

meaning unless there is anything to indicate contrary, which

principle may be rebutted by making reference to context in which

words which are used and word may be understood in different

sense, if context so requires.

(xiv). Gurnam Kaur (supra) by the Hon'ble Apex Court dilates

on what is a ratio decidendi and obiter in a judgment and when a

judgment can be considered as per incuriam or sub silentio, while CRI WP 48 of 2022.odt

Synthetics and Chemicals Ltd. (supra) dilates on the point that a

decision which is not express and is not founded on reasons nor it

proceeds on consideration of issue cannot be deemed to be a law

declared to have a binding effect as is contemplated by Article 141

of the Constitution.

(xv). Synthetics and Chemicals Ltd. (supra) dilates upon

what could be considered as a binding precedent.

7.1. In so far as the interpretation of the word 'may', is

concerned, the following judgments dilate upon the same :

(i). Frederic Guilder Julius (supra) is on the expression "it

shall be lawful" (pg. 222) and though it is held that the expression

being according to their natural meaning permissive or enabling

words only, however, if the words are coupled with a duty which

requires the person in whom the power is reposed in case there may

be something in the nature of the thing empowered to be done,

something in the object for which it is to be done, something in the

conditions under which it is to be done, something in the title of the

person or persons for whose benefit the power is to be exercised, the

same, shall become obligatory and mandatory.

CRI WP 48 of 2022.odt

(ii). Jogendra Singh (supra), dilates on the issue as to when

"may" can be construed as "shall" and holds that there is no doubt

that the word "may" generally does not mean "must" or "shall", but

the word "may" is capable of meaning "must" or "shall" in the light

of the context and where a discretion is conferred upon a public

authority coupled with an obligation, the word "may" which denotes

discretion should be construed to mean a command.

(iii) Dharti Dhan (P) Ltd. (supra) holds that "may" would

mean 'shall" if there is power coupled with duty to exercise power

and where the power is wide enough to cover both acceptance and

refusal, the power is discretionary.

(iv) I. K. Nangia (supra) holds that where the statute

provides for a contingency of non-compliance with the provisions,

that is one of the factors which has to be considered in construing

whether the provision is mandatory or directory and interpretation

which would sub-serve the object and purpose of the enactment has

to be allotted.

(v) Mohan Singh (supra) holds that use of the word 'shall',

or 'may', is not always decisive and depends on conferment of power.

CRI WP 48 of 2022.odt

(vi) Deewan Singh (supra) holds that where power is

conferred upon a public authority coupled with discretion the word

"may" which denotes discretion should be construed to mean a

command.

(vii) Dilip K. Basu (supra) holds that the use of the word

"may" by itself is not determinative of the true nature of the power

or the obligation conferred or created under the provision and in a

given case, it could be construed as 'shall' thereby meaning

mandatory nature of the provision.

(viii) Anant H. Ulahalkar (supra) while interpreting Section 9

(1) - A of the Maharashtra Municipal Councils, Nagar Panchayats

and Industrial Townships Act, 1965, lays down rules of

interpretation regarding the use of the words 'may' and 'shall'.

(ix) Kunhayammed (supra) speaks about the doctrine of

merger, and lays down principles as to when the dismissal of a

petition for special leave by the Hon'ble Apex Court would result in

the judgment of the High Court being merged in its order/judgment

and when it would not.

CRI WP 48 of 2022.odt

7.3. In the context of the word 'may', as used in Section

143-A(1) of the N.I. Act, there are diverse opinions expressed by the

Courts in various judicial pronouncements.

The judgments which hold the word 'may', as occurring

in Section 143-A(1) of the N.I. Act to be directory are as under :

(i). In L.G.R. Enterprises (supra) (para 6 & 8), the word "may",

as occurring in Section 143-A(1) of the N.I. Act is held to empower

the Court with a discretion to direct interim compensation and holds

that it is not necessary that in all cases the Trial Court must

necessarily direct the interim compensation to be paid and such

direction should be given only on a case to case basis based upon the

facts of each case.

(ii). In Ajay Vinodchandra Shah (supra), it has been held that

Section 143-A(1) of the N.I. Act leaves it to the discretion of the

Court to pass an order of interim compensation upto the ceiling limit

of 20% of the cheque amount and a difference is found between the

provisions of Section 143-A(1) and 148 of the N.I. Act (para 19).

(iii). K. Ranjithkumar (supra) reiterates the position in L.G.R.

Enterprises (supra).

CRI WP 48 of 2022.odt

(iv). JSB Cargo and Freight Forwarder Pvt. Ltd (supra), wherein a

learned Single Judge after considering Surinder Singh Deswal

(supra); L.G.R. Enterprises (supra) and Ajay Vinodchandra Shah

(supra), holds that the provisions of Section 143-A(1) of the N.I. Act,

were directory and not mandatory (para 62).

(v). Mr. D.L. Sadashiva Reddy (supra) which holds that the power

under Section 143-A(1) of the N.I. Act is discretionary. [SLP No.

10151/2021 decided on 07.01.2022, has been dismissed]

(vi). Vijaya Hiremath (supra) which holds the provision to be

discretionary.

The judgments which hold the word 'may', as occurring

in Section143-A(1) of the N.I. Act to be mandatory are as under :

Rajesh Soni (supra) by the learned Single Judge of

Chhattisgarh High Court, holding that Section 143-A(1) of the N.I.

Act is mandatory in nature (para 19).

8. An independent analysis of the legal position and the

relevant provisions disclose the following position :-

CRI WP 48 of 2022.odt

8.1. By the amending Act No.20 of 2018, the N.I. Act, was

amended by inserting Section 143-A and 148 therein. The purpose

for the amendments, as reflected from what has been stated in the

objects and reasons in the amending Act, is as under :

"The Negotiable Instruments Act, 1881 (the Act) was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The said Act has been amended from time to time so as to provide, inter alia, speedy disposal of cases relating to the offence of dishonour of cheques. However, the Central Government has been receiving several representations from the public including trading community relating to pendency of cheque dishonour cases. This is because of delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings. As a result of this, injustice is caused to the payee of a dishonoured cheque who has to spend considerable time and resources in court proceedings to realise the value of the cheque. Such delays compromise the sanctity of cheque transactions.

2. It is proposed to amend the said Act with a view to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money. The proposed amendments will strengthen the credibility of cheques and help trade and commerce in general by allowing lending institutions, including banks, to continue to extend financing to the productive sectors of the economy.

CRI WP 48 of 2022.odt

3. It is, therefore, proposed to introduce the Negotiable Instruments (Amendment) Bill, 2017 to provide, inter alia, for the following, namely--

(i) to insert a new section 143-A in the said Act to provide that the Court trying an offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant, in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and in any other case, upon framing of charge. The interim compensation so payable shall be such sum not exceeding twenty per cent of the amount of the cheque; and

(ii) to insert a new section 148 in the said Act so as to provide that in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial court.

4. The Bill seeks to achieve the above objectives."

The basic purpose for enacting Section 143-A of the N.I. Act

thus appears to be to address the delay in decision of cheque

dishonour cases and to discourage frivolous and unnecessary

litigation.

8.2. To consider the nature, scope and ambit of Section

143-A of the N.I. Act, it is necessary to consider its language, for

which the same is reproduced as under :

CRI WP 48 of 2022.odt

"143-A. Power to direct interim compensation.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under section 138, may order the drawer of the cheque to pay interim compensation to the complainant-

(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and

(b) in any other case, upon framing of charge.

(2) The interim compensation under sub-section (1) shall not exceed twenty percent of the amount of the cheque.

(3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.

(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974).

(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be CRI WP 48 of 2022.odt

reduced by the amount paid or recovered as interim compensation under this section."

8.3. In Bachahan Devi (supra) after considering the earlier

judicial precedents on the point as to how the words 'may' and

'shall', occurring in a statute are to be interpreted and so also upon

considering Fredric Guilder Julius (supra), it has been held that

mere use of word 'may' or 'shall' is not conclusive. The question

whether a particular provision of a statute is directory or mandatory

cannot be resolved by laying down any general rule of universal

application. Such controversy has to be decided by ascertaining the

intention of the legislature and not by looking at the language in

which the provision is clothed and for finding out the legislative

intent, the Court must examine the scheme of the Act, purpose and

object underlying the provision, consequences likely to ensue or

inconvenience likely to result if the provision is read one way or the

other and many more considerations relevant to the issue. It has also

been held that where several statutes confer power on authorities

and officers to be exercised by them at their discretion, though the

power is in permissive language, such as, 'it may be lawful', 'it may

be permissible', 'it may be open to do', etc. in certain circumstances, CRI WP 48 of 2022.odt

however, if such power is 'coupled with duty' which must be

exercised, the same therefor must be held to be mandatory. It has

been held that the ultimate rule in construing auxiliary verbs like

"may" and "shall" is to discover the legislative intent; and the use of

the words "may" and "shall" is not decisive of its discretion or

mandate. 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, and where the legislature uses

two words 'may' and 'shall' in two different parts of the same

provision prima facie it would appear that the legislature manifested

its intention to make one part directory and another mandatory. But

that by itself is not decisive. The power of Court to find out whether

the provision is directory or mandatory remains unimpaired. The

following paragraphs may be usefully quoted :

"14. "36. ... mere use of word 'may' or 'shall' is not conclusive. The question whether a particular provision of a statute is directory or mandatory cannot be resolved by laying down any general rule of universal application. Such controversy has to be decided by ascertaining the intention of the legislature and not by looking at the language in which the provision is clothed. And for CRI WP 48 of 2022.odt

finding out the legislative intent, the court must examine the scheme of the Act, purpose and object underlying the provision, consequences likely to ensue or inconvenience likely to result if the provision is read one way or the other and many more considerations relevant to the issue.

37. Several statutes confer power on authorities and officers to be exercised by them at their discretion. The power is in permissive language, such as, 'it may be lawful', 'it may be permissible', 'it may be open to do', etc. In certain circumstances, however, such power is 'coupled with duty' and must be exercised.

-----------"

It is thus obvious that 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 background

against which the words have been used, the purpose and the

advantages sought to be achieved by the use of this word. The

same proposition has been laid down in Dilip K. Basu (supra).

8.4. In Anant H. Ulahalkar (supra) the Full bench of the Bombay

High Court [after considering Babu Ram Upadhya (supra) ] has laid

down the following tests for determining whether a provision is

directory or mandatory :

"36. Some of the well known tests to determine whether a provision is mandatory or directory are as follows:

CRI WP 48 of 2022.odt

(i) The use of expressions like "shall" or "may" are not conclusive and regard must he had to the true intent of the legislation. However, use of expressions like "shall" or "should" or "must' by the legislature at least prima facie, indicates mandatory nature. Similarly, the use of expressions like "may" or "as nearly as may be" by the legislature, at least prima facie indicates directory nature.

State of U.P. vs. B.R. Upadhya, AIR 1961 SC 751;

(ii) The circumstance that the statute itself provides consequences of breach or noncompliance, normally suggests a mandatory nature; Maqbool Ahmad v. Onkar Pratap Narain Singh, AIR 1935 PC 85, p. 88, Manilal Shah v. Sardar Mahmad, AIR 1954 SC 349;

(iii) A provision couched in negative form, generally suggests mandatory nature; Affirmative words, simplicitor, generally suggest directory nature; M. Pentiah v. Muddla, AIR 1961 SC 1107; Dharamdeo Rai v. Ramnagina Rai, (1972) 1 SCC 460;

(iv) A procedural rule, should ordinarily, not be construed as mandatory, If a provision relates to performance of any public duty and the invalidation of any act done in disregard of that provision causes serious prejudice to those for whose benefit it is enacted and at the same time, who have no control over the performance of the duty, such provision should be treated as directory; Dattatraya Moreshwar (supra);

(v) If a statute confers a concession or privilege and prescribes a mode of acquiring it, the mode so prescribed must be adopted as even affirmative words in such cases are construed imperative; Edward Ramia Ltd. v. African Woods Ltd., 1960 (1) ALL ER 627;

(vi) Where a provision prescribes that a certain act has to be done in a particular manner by a person in order to acquire a right and it is coupled with another provision which confers an immunity on another when such act is not done in that manner, the former has to be regarded as mandatory one;

CRI WP 48 of 2022.odt

(vii) Provisions which impose private duties or obligations upon private parties are ordinarily to be regarded as mandatory; Kedamath Jute Mfg, Co. Ltd. v. Commercial Tax Officer, AIR 1966 SC 12;

(viii) If exceptions, exemptions or concessions are granted by a statute subject to fulfillment of certain conditions, then such conditions must be mandatorily fulfilled. Subject to fulfillment of conditions, the provision may be liberally construed;

(ix) The nature, design and consequences which would follow from construing the provision as "mandatory" or "directory". Where construction of a provision as directory will render the provision or significant parts otiose, redundant or a surplusage. The principle is that the legislature does not use words in vain; and

(x) Where the construction of a provision as mandatory would result in absurdity, which could never have been intended by the legislature, the provision can be construed as directory."

8.5. In Surinder Singh Deswal (supra), while considering the

provisions of Section 148 of the N.I. Act, in light of the above aims

and objects, for its enactment, and whether the said provision was

prospective or retrospective, it was held that Section 148 of the N.I.

Act as amended, shall be applicable in respect of the appeals against

the order of conviction and sentence for the offence under

Section 138 of the N.I. Act, even in a case where the criminal

complaints for the offence under Section 138 of the N.I. Act were

filed prior to Amendment Act 20 of 2018 i.e. prior to 1/9/2018.

CRI WP 48 of 2022.odt

Insofar as the issue as to whether the same was mandatory or

directory, considering the use of the word 'may', as occurring therein

the Hon'ble Apex Court, held as under :

"8. Now so far as the submission on behalf of the appellants that even considering the language used in Section 148 of the NI Act as amended, the appellate court "may" order the appellant to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial court and the word used is not "shall" and therefore the discretion is vested with the first appellate court to direct the appellant- accused to deposit such sum and the appellate court has construed it as mandatory, which according to the learned Senior Advocate for the appellants would be contrary to the provisions of Section 148 of the NI Act as amended is concerned, considering the amended Section 148 of the NI Act as a whole to be read with the Statement of Objects and Reasons of the amending Section 148 of the NI Act, though it is true that in the amended Section 148 of the NI Act, the word used is "may", it is generally to be construed as a "rule" or "shall" and not to direct to deposit by the appellate court is an exception for which special reasons are to be assigned. Therefore amended Section 148 of the NI Act confers power upon the appellate court to pass an order pending appeal to direct the appellant-accused to deposit the sum which shall not be less than 20% of the fine or compensation either on an application filed by the original complainant or even on the application filed by the appellant-accused under Section 389 CrPC to suspend the sentence. The aforesaid is required to be construed considering the fact that as per the amended Section 148 of the NI Act, a minimum of 20% of the fine or compensation awarded by the trial court is directed to be deposited and that such amount is to be CRI WP 48 of 2022.odt

deposited within a period of 60 days from the date of the order, or within such further period not exceeding 30 days as may be directed by the appellate court for sufficient cause shown by the appellant. Therefore, if amended Section 148 of the NI Act is purposively interpreted in such a manner it would serve the Objects and Reasons of not only amendment in Section 148 of the NI Act, but also Section 138 of the NI Act. The Negotiable Instruments Act has been amended from time to time so as to provide, inter alia, speedy disposal of cases relating to the offence of the dishonour of cheques. So as to see that due to delay tactics by the unscrupulous drawers of the dishonoured cheques due to easy filing of the appeals and obtaining stay in the proceedings, an injustice was caused to the payee of a dishonoured cheque who has to spend considerable time and resources in the court proceedings to realise the value of the cheque and having observed that such delay has compromised the sanctity of the cheque transactions, Parliament has thought it fit to amend Section 148 of the NI Act. Therefore, such a purposive interpretation would be in furtherance of the Objects and Reasons of the amendment in Section 148 of the NI Act and also Section 138 of the NI Act."

8.6. In G. J. Raja (supra), the Hon'ble Apex Court, while

considering the issue as to whether Section 143-A of the N.I. Act,

was retrospective or prospective, by applying the principles as culled

out in Hitendra Vishnu Thakur Vs. State of Maharashtra (1994) 4

SCC 602 which are as under :

"(i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary CRI WP 48 of 2022.odt

intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits.

(ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature.

(iii) Every litigant has a vested right in substantive law but no such right exists in procedural law.

(iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.

(v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication."

held that fourth and fifth principles were apposite to the situation, and found as under :

"17. The provisions contained in Section 143-A have two dimensions. First, the Section creates a liability in that an accused can be ordered to pay over up to 20% of the cheque amount to the complainant. Such an order can be passed while the complaint is not yet adjudicated upon and the guilt of the accused has not yet been determined. Secondly, it makes available the machinery for recovery, as if the interim compensation CRI WP 48 of 2022.odt

were arrears of land revenue. Thus, it not only creates a new disability or an obligation but also exposes the accused to coercive methods of recovery of such interim compensation through the machinery of the State as if the interim compensation represented arrears of land revenue. The coercive methods could also, as is evident from provision like Section 183 of the Maharashtra Land Revenue Code, in some cases result in arrest and detention of the accused.

19. It must be stated that prior to the insertion of Section 143-A in the Act there was no provision on the statute book whereunder even before the pronouncement of the guilt of an accused, or even before his conviction for the offence in question, he could be made to pay or deposit interim compensation. The imposition and consequential recovery of fine or compensation either through the modality of Section 421 of the Code or Section 357 of the Code could also arise only after the person was found guilty of an offence. That was the status of law which was sought to be changed by the introduction of Section 143-A in the Act. It now imposes a liability that even before the pronouncement of his guilt or order of conviction, the accused may, with the aid of State machinery for recovery of the money as arrears of land revenue, be forced to pay interim compensation. The person would, therefore, be subjected to a new disability or obligation. The situation is thus completely different from the one which arose for consideration in ESI Corpn. Case [ESI Corpn. v. Dwarka Nath Bhargwa, (1997) 7 SCC 131 : 1997 SCC (L&S) 1680] .

21. In our view, the applicability of Section 143-A of the Act must, therefore, be held to be prospective in nature and confined to cases where offences were committed after the introduction of Section 143-A, in CRI WP 48 of 2022.odt

order to force an accused to pay such interim compensation."

While considering Surinder Singh Deswal (supra) it held as under :

"22. We must, however, advert to a decision of this Court in Surinder Singh Deswal v. Virender Gandhi [Surinder Singh Deswal v. Virender Gandhi, (2019) 11 SCC 341 : (2019) 3 SCC (Cri) 461 : (2019) 3 SCC (Civ) 765 : (2019) 8 Scale 445] where Section 148 of the Act which was also introduced by the same Amendment Act 20 of 2018 from 1-9-2018 was held by this Court to be retrospective in operation. As against Section 143-A of the Act which applies at the trial stage that is even before the pronouncement of guilt or order of conviction, Section 148 of the Act applies at the appellate stage where the accused is already found guilty of the offence under Section 138 of the Act. It may be stated that there is no provision in Section 148 of the Act which is similar to sub- section (5) of Section 143-A of the Act. However, as a matter of fact, no such provision akin to sub-section (5) of Section 143-A was required as Sections 421 and 357 of the Code, which apply post-conviction, are adequate to take care of such requirements. In that sense said Section 148 depends upon the existing machinery and principles already in existence and does not create any fresh disability of the nature similar to that created by Section 143-A of the Act. Therefore, the decision of this Court in Surinder Singh Deswal [Surinder Singh Deswal v. Virender Gandhi, (2019) 11 SCC 341 : (2019) 3 SCC (Cri) 461 : (2019) 3 SCC (Civ) 765 : (2019) 8 Scale 445] stands on a different footing."

CRI WP 48 of 2022.odt

9. Thus, in view of what has been held in G. J. Raja

(supra) the following points of distinction between the provisions of

Section 148 and Section 143-A of the N.I. Act, can be culled out as

under :

Sr.                Section 148                     Section 143-A
No
1.        Applies at the appellate stage,      Applies at the trial stage,
          where the accused is already       i.e.   even     before    the
          found guilty of the offence        pronouncement of guilt or
          under Section 138 - i.e. post      order of conviction
          conviction.
2.        Does not create any new            Creates a new disability or

disability/obligation/ liability obligation/liability for the to pay compensation. Liability first time to pay interim is already created due to compensation. conviction by the Trial Court.

3. Such liability is post Such disability or obligation / conviction, where the accused liability is during the course is already held guilty of the of Trial- i.e. pre-conviction, offence. where the complaint is not yet adjudicated and guilt of the accused is yet to be determined.

4. Merely permits the Appellate Permits the Trial Court to Court to order deposit of award interim compensation sums of 20% and above of upto 20% of the Cheque the fine or compensation amount, without determina-

          awarded by the Trial Court as      tion of the guilt of the
          the guilt stands already           accused.
          determined due to conviction.
5.        Such     compensation/fine         Introduces Section143-A(5),
          could be recoverable under         making      the     interim
                                                CRI WP 48 of 2022.odt


     Sections 421 and 357 of the    compensation, recoverable,
     Code, which apply post-        as if it were a fine under

conviction, and are adequate Section 421 Cr. P.C. thereby to take care of such exposing the accused to requirements. coercive methods of recovery of such interim compensation through the machinery of the State as if the interim compensation represented arrears of land revenue. The coercive methods could also, as is evident from provision like Section 183 of the Maharashtra Land Revenue Code, which in some cases may result in arrest and detention of the accused, as under Section 183 of the Maharashtra Land Revenue Code, 1966, in case there be a default in payment of land revenue, the person con-

cerned could be arrested and detained in custody for 10 days in the office of the Collector or of a Tahsildar unless the arrears of revenue which were due, were paid along with the penalty or interest and the cost of arrest and of the notice of demand as also the cost of his subsistence during detention.

6. Does not create any fresh Creates a fresh disability.

disability as in view of CRI WP 48 of 2022.odt

Section 357 and 421 of Cr.P.C.

       Section 148 depends upon
       the    existing     machinery
       already in existence.

The difference was also noticed in Ajay Vinodchandra Shah (supra).

9.1. Taking into consideration the legal position as flowing

from the judicial precedents, as stated above, it would thus be

apparent that there are inherent differences between the provisions

of Section148 and Section 143-A of the N.I. Act, due to which what

has been held in respect of the word 'may', as occurring in Section

148 of the N.I. Act in Surinder Singh Deswal (supra), may not be

true in respect of the word 'may', as occurring in Section 143-A(1) of

the N.I. Act, specifically so when both these provisions operate in

different arenas. The applicability of Section 148 of the N.I. Act is at

the appellate stage, where right to the compensation/fine, if

awarded by the Trial/Special Court, stands crystallized in favour of

the complainant and thus there arises a duty in the Appellate Court

to order the deposit of twenty percent of the fine or compensation

awarded, whereas in proceedings under Section 138 of the N.I. Act,

since the Court is still 'trying the offence', no right is crystallized in CRI WP 48 of 2022.odt

favour of the complainant for any compensation/fine as in a given

case, based upon the evidence which may come on record the Trial

Court may dismiss the complaint itself or may do so even at an

earlier stage, and thus there is no duty cast upon the Court trying

the offence, to direct deposit upto 20% of the cheque amount,

rather, what is conferred, would be a discretion, to be exercised by

the Court trying the offence, based upon the fact position prevailing

in each case and therefore in my considered opinion, there is no

'duty to act', upon the Court, spelt out by the provisions of Section

143-A of the N.I. Act, considering which Frederic Guilder Julius

(supra); Jogendra Singh (supra), Deewan Singh (supra) and

judgments taking a similar view would clearly not be applicable.

9.2. This is supplemented by the fact that from a plain

reading of Section 143-A of the N.I. Act, it is clear that it is a

provision enacted as an interim measure, during the pendency of the

trial, when the guilt of the accused is still to be determined. The

word 'may', thus used in Section 143-A (1) of the N.I. Act, has to be

construed in light of the fact that the direction to award

compensation, is at the trial stage and as an interim measure. The CRI WP 48 of 2022.odt

fact that even in cases under Section 138 of the N.I. Act, the

presumption under Section 139 of the N.I. Act, is not absolute, but is

rebuttable, also has to be borne in mind. That apart, in a particular

case, given the requirement of Section 138 of the N.I. Act, it may so

happen that the complaint itself may not be maintainable, for the

cheque not having been presented during the period of its validity;

the notice not having been issued in the stipulated time; the

complaint not having been filed within the time stipulated therefor;

the debt may not be a legally enforceable debt or liability; the

memo/advice regarding dishonor not having been placed on record

etc. These are only some of the instances and do not cover the entire

plethora of causes, which may make the complaint itself not

maintainable. To direct the grant of interim compensation, in such

cases, merely because of the existence of a cheque, by holding that

doing so is mandatory, would not be justifiable.

9.3. It is further material to note that the power to direct

interim compensation under Section 143-A of the N.I. Act, can be

equated with the provisions as contained in Order XXXVIII Rule 5 of

the C.P.C., which confers a power upon the Court to direct the CRI WP 48 of 2022.odt

defendant to furnish security in such sum as may be specified,

during the pendency of the suit, which provision is directory in

nature and the use of the power is discretionary.

9.4. Section 143-A of the N.I. Act, though enacted with an

intent to ensure speedy disposal of the proceeding pending under

Section 138 of the N.I. Act, the said intent, insofar as Section143-A

of the N.I. Act is concerned, does not make the provision mandatory,

as what is conferred upon the Court by virtue of the said provision is

a discretion to direct interim compensation and no right is created in

the complainant under it, to demand the entitlement to

compensation. Grant of interim compensation, would be at the

discretion of the Court, based upon consideration of various factors,

such as (a) whether the requirements of Section 138 of the N.I. Act,

were fulfilled (b) whether the pleadings disclose the drawing of the

presumption (c) whether the proceedings were within limitation

and (d) whether prima facie a legal debt or liability was disclosed

from the complaint or the notice of demand preceding it, and factors

as such [see : B.R. Upadhya and Anant H. Ulahalkar (supra)].

CRI WP 48 of 2022.odt

9.5. In a general sense word "may" is enabling or

discretionary. In order to construe it as mandatory it has to be

coupled with a duty to act [see: Federic Guilder Julius (supra)]. In

juxtaposition to the language of Section 148 of the N.I. Act, which in

view of the fact, that it is applicable at the appellate stage after the

liability, regarding compensation/fine has been crystallized, in which

context, the provision directs the Appellate Court, to order deposit of

such sum which shall be a minimum of 20% of the fine or

compensation, as awarded by the Trial Court, Section 143-A of the

N.I. Act, on the other hand, does not cast any such duty or obligation

upon the Court trying the offence to, in all cases, order deposit of an

amount upto 20% of the cheque amount in the Court, as Section

143-A (2) of the N.I. Act, confers a discretion upon the Court to

direct the deposit of the sum not exceeding 20% of the cheque

amount as an interim compensation.

9.6. Whereas Section 148 (1) of the NI Act, uses the

expression "-- such sum which shall be a minimum of twenty per

cent of the fine or compensation awarded by the trial Court --",

which indicates that the total sum, of which 20% is to be awarded, CRI WP 48 of 2022.odt

already stands prejudged, there is no such prejudging at the stage of

invocation/applicability of Section 143-A of the N.I. Act, as the trial

is yet to be over, considering the use of the expression occurring in

Section 143-A(1) of the N.I. Act " - the Court trying the offence --"

and the language of Clause (a) and (b) of Section 143-A(1) of the

N.I. Act, which indicates the stages at which such power could be

exercised, viz: (a) in a summary trial or a summons case, when the

accused pleads not guilty and (b) in any other case on framing of

charge.

9.7. The word 'may' as used in Section 143-A (1) of the N.I.

Act, cannot be read, in the contextual background of its user in

Section 148 of the N.I. Act, as they are two different provisions,

which operate in two totally different situations and at two different

stages as discussed earlier and therefore what has been held in

Hyder Consulting (UK) Ltd. (supra) would clearly not be applicable.

9.8. The word 'interim', by its very nature denotes something

which is not final, impermanent; temporary; meanwhile; meantime;

and would thus govern a situation, which considering the facts CRI WP 48 of 2022.odt

prevailing and given the existence of the relevant factors, and the

power to award interim compensation, would require the exercise of

the discretion by the Court to ensure grant of some relief, if the

circumstances so warrant, considering which, again it will have to be

held that the power under Section 143-A of the N.I. Act, is

discretionary.

9.9. It is further material to note that the legislature was

aware of the provisions of Sections 138 to 147 of the N.I. Act, the

purpose for which they were enacted, the delays which were being

caused in the disposal of the proceedings, which is evident from the

aims and object of the amending Act 20 of 2018, it was thus open

for the legislature to have used an express language that in all cases

under Section 138 of the N.I. Act, which were pending trial, the

complainant was entitled to compensation upto 25% of the cheque

amount. However, such express words, have not been used, though

it was open for the Legislature to do so, which again indicates that

the use of the word 'may', as occurring in Section 143-A(1) of the

N.I. Act, was not mandatory but was directory and a discretion was

conferred upon the Court, to either grant or not to grant interim CRI WP 48 of 2022.odt

compensation. The fact that a discretion was conferred upon the

Court is further evident from the use of the expression 'shall not

exceed' as occurring in Section 143-A(2) of the N.I. Act which again

confers a discretion upon the Court 'trying the offence', to direct the

grant of interim compensation anywhere between the range of 0

(zero) to 20 (twenty) % of the cheque amount, indicating that in a

given case, it would be permissible for the Court, to even decline

awarding of any interim compensation, of course, for reasons to be

recorded. Thus, when the power is wide enough to cover both the

grant and refusal to grant, the power would be discretionary [see

Dharti Dhan (P) Ltd. (supra)], as no absolute right has been

conferred upon the complainant to claim interim compensation, but

a discretion has been conferred upon the Court to so direct, the

exercise of which discretion will depend upon the Court holding in

favour of the complainant, depending upon whether a case was

made out for the same or not, based upon the facts availing on

record, in each case.

9.10. In the above context, it is equally material to note what

has been held in Mardia Chemicals Ltd. (supra) wherein while CRI WP 48 of 2022.odt

considering the condition of deposit of 75 % of the amount of

demand notice before a proceeding could be entertained by the

tribunal, while considering the power of the tribunal to waive or

reduce the amount under the proviso to Section 17(2) of the

Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 ("the SARFAESI Act", for

short hereinafter) it has been held that since the proceedings under

Section 17 of the SARFAESI Act are akin to proceedings like a suit in

a Court of first instance, the condition of pre-deposit was bad

rendering the remedy illusory and also for the reason that there was

as yet at that stage no determination of the amount due. The

proceedings before the Magistrate under Section 138 of the N.I. Act,

are also proceedings in the Court of first instance, and thus the

direction to deposit 20% of the cheque amount ought to be held as

directory, as at that stage, there is as yet determination of the

liability of the person issuing the cheque.

9.11. Even if Section 143-A (3) of the N.I. Act provides for a

time limit of 60 days to pay the interim compensation extendable by

30 days, fixing a time limit for payment of interim compensation CRI WP 48 of 2022.odt

would not render Section 143-A of the N.I. Act mandatory for in case

the Special Court, chooses to exercise its discretion to award interim

compensation, it cannot be said that the interim compensation

would be payable at any time, at the choice of the accused, for

which reason time restraints have been incorporated, otherwise the

provision would have been ineffective.

9.12. Though Section 143-A (4) of the N.I. Act provides for

repayment of the amount of interim compensation, upon acquittal of

the accused, the said provision is in the nature of restitution, as once

the complaint is dismissed by the acquittal of the accused or

otherwise, for any other reason, the complainant becomes

dis-entitled to the interim compensation awarded and thus there has

to be a restitution. The provision for restitution as contained in

Section 143-A(4) of the N.I. Act, does not add to the plea of the

provision being of a mandatory nature. In fact the provision does not

specify as to what would be the effect if the restitution is not made

by the complainant within the time frame as stipulated therein and

is silent as to what steps would have to be taken by the accused in

that contingency or what remedy would be available to him, in such CRI WP 48 of 2022.odt

a case, so that the amount of interim compensation could be

restored back to the accused/s. In this respect, it may need a revisit

by the legislature.

9.13. The provision of Section 143-A (5) of the N.I. Act,

which permits recovery of the interim compensation as a fine, under

Section 421 of Cr.P.C., by itself would not make Section 143-A of the

N.I. Act mandatory, as the same will come into picture only if interim

compensation is awarded, and merely prescribes, what would be the

mode of recovery in case, interim compensation is awarded. Even

otherwise, the mode of recovery of any fine awarded in criminal

proceedings has been prescribed in Section 421 of Cr.P.C. and what

Section 143-A (5) of the N.I. Act does is merely make Section 421 of

Cr.P.C. applicable which in any case, would have been applicable.

9.14. The use of the expression 'shall not exceed twenty per

cent of the amount of the cheque", as occurring in Section 143-A (2)

of the N.I. Act, also does not make the provision mandatory, as the

use of the word 'shall' in Section 143-A (2) has to be viewed in the

background of the word 'may' as used in Section 143-A (1), which CRI WP 48 of 2022.odt

colors the content of the entire provision. The expression "shall not

exceed twenty per cent" in Section 143-A (1) merely caps the limit

of the discretion which the Special Court is permitted to exercise in

the matter and nothing else. The word "shall" as used in the above

expression does not transcend beyond the limits of discretion of the

Special Court, in the matter of awarding interim compensation,

which as already discussed above could be anywhere between 0% to

20% of the cheque amount.

9.15. The language of Section 143-A (1) of the N.I. Act is

neither obscure, nor unambiguous as would reflect from a plain

reading of the same and the intent of the legislature to make the

provision directory is clearly reflected therefrom, which intent also

serves the purpose for which it was enacted i.e. to avoid delays.

10. In my considered opinion, in view of the discussion

above, it has to be held that Section 143-A of the N.I. Act, is

discretionary and not mandatory and the view taken in L.G.R.

Enterprises (supra) holding that the word "may", as occurring in

Section 143-A(1) of the N.I. Act empowers the Court with a CRI WP 48 of 2022.odt

discretion to direct interim compensation and it is not necessary that

in all cases the trial Court must necessarily direct the interim

compensation to be paid and such direction should be given only on

a case to case basis based upon the facts of each case, which is

followed in K. Ranjithkumar (supra); in Ajay Vinodchandra Shah

(supra) to the extent holding that Section 143-A(1) of the N.I. Act

leaves it to the discretion of the Court to pass an order of interim

compensation upto the ceiling limit of 20% of the cheque amount

and a difference is found between the provisions of Section 143-A(1)

and 148 of the N.I. Act, though Ajay Vinodchandra Shah (supra), it

has been declared not to be a good law, in Surinder Singh Deswal

(supra) only insofar as consequences of non-compliance of condition

of suspension of sentence is concerned, as noticed in JSB Cargo and

Freight Forwarder Pvt. Ltd (supra) and thus what is held therein

would hold good, except to the extent as indicated in Surinder Singh

Deswal (supra); JSB Cargo and Freight Forwarder Pvt. Ltd (supra)

which holds that the provisions of Section 143-A(1) of the N.I. Act,

are directory and not mandatory; G.K. Construction Company,

Through its Owner Govind Katariya Vs. Balaji Makan Samagri

Stores, Through its Proprietor Mallaram [S.B. Criminal Misc. (Pet.) CRI WP 48 of 2022.odt

No.189/2022] decided on 04/03/2022 by a learned Single Judge of

the Rajasthan High Court at Jodhpur and D.L. Sadashiva Reddy

(supra) which holds that the power under Section 143-A(1) of the

N.I. Act is discretionary lay down the correct position. It is also

material to note that D.L. Sadashiva Reddy (supra) was carried to

the Hon'ble Apex Court vide S.L.P. No.10151/2021 wherein while

dismissing the same on 07/01/2022, it has been held as under :

"Though the power under Section 143A of the Negotiable Instruments Act is discretionary power, we, having considered the matter on merits, find that the direction to deposit 20% of the amount is perfectly justified. As such, in the facts and circumstances of the case, we do not find any ground to interfere with the order impugned in this petition. Accordingly, the special leave petition stands dismissed."

10.1. With great humility, I am unable to agree with what has

been held in Rajesh Soni (supra) by the learned Single Judge of

Chhattisgarh High Court, holding that Section 143-A(1) is

mandatory in nature (para 19) for the reason that the distinction

between the intent and purpose of Section 143-A and Section 148 of CRI WP 48 of 2022.odt

the N.I. Act as spelt from their language, has not been noticed by the

learned Court.

11. The exercise of any discretion conferred upon a Court,

must be for reasons to be spelt out, indicating application of mind by

the Court to the facts available before it in the application of the law

to such facts. There are multitude of judicial pronouncements in this

regard, which indicate the necessity for spelling out reasons in

orders/judgments, which need not quote here. This is more so for

the reason that reasons are the heart of an order/judgment and

unless reasons are spelt out in the order/judgment, neither the

litigant nor the Court before whom a challenge is laid to the exercise

of such discretion, would be able to fathom what weighed with the

Court passing the order/judgment to hold one way or another, and

thus make the exercise of discretion, to be struck down for non-

application of mind and thus any order exercising or refusing to

exercise discretion to award interim compensation will have to spell

out the reasons for exercise of such exercise.

CRI WP 48 of 2022.odt

12. Thus, my answers to the above two questions are as under :

(i) Whether the provisions of Section The provisions of Section 143-A of the Negotiable Instruments Act, 143-A of the N.I. Act are 1881, which empower the Court to direct directory and not mandatory.

payment of interim compensation are mandatory or directory and

(ii) In case it is held that the same is The Court has to record directory, whether the Court has to reasons for determining record reasons for determining the the quantum of interim compensation, if it comes quantum of interim compensation to be to the conclusion based awarded as contemplated by Section upon the fact position 143-A (2) of the Negotiable Instruments availing, that it is a case Act, 1881 ? which deserves award of interim compensation, which can be anywhere upto 20% of the cheque amount.

13. In view of the above, the impugned orders are hereby

quashed and set aside and the matters are remanded back to the

learned Special Court to decide the applications under Section 143-A

of the N.I. Act afresh, in light of what has been held above.

14. Rule is made absolute in the above terms.

Digitally signed bySHAILENDRA SUKHADEORAO WADKAR Signing Date:07.07.2022 18:03 (AVINASH G. GHAROTE, J.)

Wadkar