#485

IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 741 OF 2024
RAKESH RANJAN SHRIVASTAVA … APPELLANT
VERSUS
THE STATE OF JHARKHAND & ANR. … RESPONDENTS
J U D G M E N T
ABHAY S. OKA, J.

The Supreme Court on Friday (March 15) observed that mere filing
of the cheque dishonor complaint under the Negotiable Instruments
Act would not grant a right to a complainant to seek interim
compensation under Section 143A (1) of the N.I. Act, as the power
of the court to grant interim compensation, isn't mandatory but
discretionary and needs to be decided after prima facie evaluating
the merits of the case.
Setting aside the findings of the High Court and Trial Court, the
Bench Comprising Justices Abhay S. Oka and Ujjal Bhuyan
observed that the power to grant interim compensation to the
complainant by the courts shouldn't be exercised at the threshold Moreover, if the word 'may' in Section 143A (1) NI Act is interpreted
as 'shall', then will have a drastic consequence leading to a
scenario whereby in every complaint under Section 138, the
accused will have to pay interim compensation up to 20 percent of
the cheque amount.
“Considering the drastic consequences of exercising the power
under Section 143A and that also before the finding of the guilt is
recorded in the trial, the word “may” used in the provision cannot be
construed as “shall”. The provision will have to be held as a
directory and not mandatory. Hence, we have no manner of doubt
that the word “may” used in Section 143A, cannot be construed or
interpreted as “shall”. Therefore, the power under sub-section (1) of
Section 143A is discretionary.”, the Judgment authored by Justice
Abhay S. Oka said.
Section 143A of N.I. Act provides a power to the court to direct
interim compensation to the complainant. The provision was
inserted through an amendment to address the issue of undue
delay in the final resolution of the cheque dishonor cases. In the
statement of objects and reasons, it was stated that unscrupulous
drawers of the cheques prolong the proceedings of a complaint
under Section 138 by filing appeals and obtaining a stay. Therefore,
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.The broad parameters for exercising the discretion under
Section 143A
The Court laid down the following parameters :
i. The Court will have to prima facie evaluate the merits of the case
made out by the complainant and the merits of the defence pleaded
by the accused in the reply to the application. The financial distress
of the accused can also be a consideration.
ii. A direction to pay interim compensation can be issued, only if the
complainant makes out a prima facie case.
iii. If the defence of the accused is found to be prima facie
plausible, the Court may exercise discretion in refusing to grant
interim compensation.
iv. If the Court concludes that a case is madeout to grant interim
compensation, it will also have to apply its mind to the quantum of
interim compensation to be granted. While doing so, the Court will
have to consider several factors such as the nature of the
transaction, the relationship, if any, between the accused and the
complainant, etc.
v. There could be several other relevant factors in the peculiar facts
of a given case, which cannot be exhaustively stated. The
parameters stated above are not exhaustive.
The gist of the dispute was that the complainant/respondent No. 2had registered a complaint under Section 138 N.I. Act against the
Appellant/Accused after a cheque amounting to Rs. 2,20,00,000/-
was dishonored by the bank. During the pendency of the
proceedings, the complainant moved an application under Section
143A (1) of N.I. Act seeking direction against the accused to pay
20% of the cheque amount as compensation.
The trial court allowed the application and directed the Accused to
pay Rs. 10,00,000/- to the respondent no.2/complainant as interim
compensation. The decision of the trial court was upheld by the
High Court.
Aggrieved by the High Court's decision, the appellant/accused
preferred a criminal appeal before the Supreme Court.
Before the Supreme Court, it was contended by the accused that
both the High Court and Trial Court erred in allowing the application
of the complainant directing him to pay interim compensation to the
complainant. According to the accused, the order directing the
accused to pay interim compensation was passed mechanically
without stating any reasons thereof. The accused pleaded that the
mere filing of the complaint under the NI Act doesn't empower the
court to direct the accused to pay interim compensation to the
complainant, as the word 'may' used in Section 143A (1) shouldn't
be construed as 'shall', and the decision regarding paying
compensation should be based on the facts and circumstances of each case.