The main issue which was dealt with regards to Section 143A (1) of Negotiable Instruments Act for the grant of interim compensation whether the said provision is directory or mandatory. If it is held to be a directory provision, the question that arises is, what are factors to be considered while exercising powers under sub-section (1) of Section 143A of the N.I. Act.
Section 143A (1) of Negotiable Instruments Act
The provision of grant of interim maintenance under Section 143A (1) of Negotiable Instruments Act 1881 is a directory provision. The said provision deals with the Power to direct interim compensation under section 143 A of N.I. Act
“ 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 per cent of the cheque amount.
Rakesh Ranjan Shrivastava versus The State of Jharkhand & Anr [2024] 3 S.C.R. 438
The Hon’ble Supreme Court in RAKESH RANJAN SHRIVASTAVA VERSUS THE STATE OF JHARKHAND & ANR in CRIMINAL APPEAL NO. 741 OF 2024 citation [2024] 3 S.C.R. 438 Provided factors to be considered while exercising discretion as the provision clearly provides the word “May ” shall not be construed as “shall”. Also held that Requirement of Prima Facie case is vital in exercising discretion in such matters. The Judgment can also be viewed here
The Hon’ble Supreme court in Rakesh Ranjan (supra) in para 16 of its judgment has held that has held that “When the court deals with an application under Section 143A of the N.I. Act, 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 under sub-section (1) of Section 143A. The presumption under Section 139 of the N.I. Act, by itself, is no ground to direct the payment of interim compensation. The reason is that the presumption is rebuttable. The question of applying the presumption will arise at the trial. Only if the complainant makes out a prima facie case, a direction can be issued to pay interim compensation.”
Para 19 of the Judgment concludes with the following observations
- Subject to what is held earlier, the main conclusions can be summarised as follows:
a. The exercise of power under sub-section (1) of Section 143A is discretionary. The provision is directory and not mandatory. The word “may” used in the provision cannot be construed as “shall.”b. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors. c. The broad parameters for exercising the discretion under Section 143A are as follows: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 made out 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.
Conclusion for Section 143A (1) of Negotiable Instruments Act
As stated above and the observations made by the Hon’ble Supreme Court it is clear that the said provision under Section 143A (1) of Negotiable Instruments Act for grant of interim compensation shall consider whether after the court dealing with such an application will have to evaluate the merits of the case and also the merits of the defence pleaded by the accused in the reply to the application under sub-section (1) of Section 143A. also held that ” The presumption under Section 139 of the N.I. Act, by itself, is no ground to direct the payment of interim compensation. The reason is that the presumption is rebuttable. The question of applying the presumption will arise at the trial. Only if the complainant makes out a prima facie case, a direction can be issued to pay interim compensation. At this stage, the fact that the accused is in financial distress can also be a consideration. Even if the Court concludes that a case is made out for grant of interim compensation, the Court will have to apply its mind to the quantum of interim compensation to be granted. Even at this stage, the Court will have to consider various factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant and the paying capacity of the accused. ” . The Hon’ble Supreme Court has given kind consideration to the financial capacity of the accused . For more information kindly click here .
