'Interim Compensation Under S.143A Of Negotiable Instruments Act Is Directory Not Discretionary': Chhattisgarh High Court

The Chhattisgarh High Court held that Section 143A of the Negotiable Instruments Act, 1881 for compensation is a directory and not discretionary.

A single-judge bench of Justice Narendra Kumar Vyas observed that the amendment to Section 143A of the NIA Act upheld the decision of the Judicial Magistrate, which granted compensation of 20% of the cheque amount.

The facts are that a complaint was filed against the petitioner under Section 138 of the Act alleging dishonoring a cheque due to insufficient funds. The complainant filed an application under Section 143A of the NI Act for interim compensation. It was argued that if charges have been framed, interim compensation c to the extent of 20% of the cheque amount can be ordered. The Judicial Magistrate granted the prayed compensation in favor of the complainant.

The petitioner then challenged the decision in a revision petition which was dismissed and later confirmed by the Judicial Magistrate. The petitioner submitted that the amended provision of Section 143A of the 1881 Act for grant of compensation does not mandate interim compensation; it is discretionary as the word 'may' has been used. The petitioner's contention relied on LGR Enterprises & Anr v. Abbazhagan where the Madras HC held the discretionary power vested with the trial Court in ordering for interim compensation must be supported by reasons.

The Court placed firm reliance on the aims and objects of the amended Section 143A of the 1881 Act to hold that,

"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 a double-edged sword of loss of receivables by the dishonor of the cheque and the subsequent legal costs in pursuing the claim and offence."

The Court held that the use of the word 'may' may be treated as 'shall'; to be used for the benefit of the complainant as he is aggrieved. The Court observed that it is in the interest of the complainant and the accused if 20% of the cheque amount is paid by the accused. It was observed that,

"He (the accused) may be able to utilize the same for his purpose, whereas the accused will be on the 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 the lower side."

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