The Supreme Court observed that granting Interim Compensation in Cheque Dishonour Cases is a directory, not mandatory. The Supreme Court bench comprising Justices Abhay S. Oka and Ujjal Bhuyan held that the Interim Compensation in Cheque Dishonour Cases is a directory, not mandatory.
The Apex Court outlined factors for courts to consider when exercising discretion under Section 143A(1) of the Negotiable Instruments Act, 1881, including the merits of the complainant's case, the accused's defence, and the financial status of the accused. Given the significant impacts of using Section 143A's power before the trial determines guilt, the term "may" in the provision cannot be interpreted as "shall." Therefore, the provision should be considered a directory, not mandatory. It is clear that "may" in Section 143A indicates discretionary power. The presumption under Section 139 of the Act is rebuttable and cannot be the sole basis for ordering interim compensation.
The Supreme Court, in a criminal appeal, deliberated on the nature of Section 143A(1) of the Negotiable Instruments Act, 1881 (N.I. Act), which deals with the grant of interim compensation, and the factors to be considered while exercising powers under this provision. The case stemmed from a complaint under Section 138 of the N.I. Act filed by the respondent against the appellant for failure to honour a cheque.
The appellant argued that Section 143A(1) should be seen as discretionary, requiring the court to assess factors like the prima facie case and the quantum of compensation before issuing any orders. On the other hand, the respondent contended for a mandatory interpretation, asserting that such an approach was crucial to fulfilling the provision's purpose effectively.
In its analysis, the Court noted that Section 143A was introduced to address delays in resolving cheque dishonour cases, which often occurred due to the accused filing appeals and obtaining stays. The Court highlighted that while the word "may" ordinarily implies discretion, its interpretation could vary based on legislative intent, the nature of the power conferred, and the context in which it is used.
The Court ultimately held that Section 143A(1) should be construed as directory and not mandatory. It emphasized that the provision's exercise of power, which includes ordering interim compensation, should involve a careful evaluation of various factors. These factors include the merits of the complainant's case, the accused's defence, the financial status of the accused, and the nature of the transaction. The Court also noted that the presumption under Section 139 of the N.I. Act, which presumes the cheque was issued for discharge of debt, is rebuttable and cannot be the sole basis for ordering interim compensation.
The Court set aside previous orders in the case and directed the Trial Court to reconsider the application for interim compensation, with the appellant's deposited amount to remain invested until the decision. The Court's decision clarified the discretionary nature of Section 143A(1) and provided guidance on the factors to be considered while exercising powers under this provision.
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