2021 (7) TMI 386 - HC - Indian Laws

Interim Compensation Order Upheld Under Negotiable Instrument Act

Rajesh Soni, Versus Mukesh Verma,

The court upheld the order directing the petitioner to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable ... Dishonor of Cheque - insufficiency of funds - case of complainant is that the charges have already been framed wherein he has denied the charges levelled against him - seeking grant of 20% of the amount as interim compensation - Section 143A of the Act, 1881 - interpretation of statute - the word “may” be treated as “shall”, is discretionary or directory? - HELD THAT:- From perusal of the Act, 1881 as well as amended Section 143A of the Act, 1881, it is clear that the Act, 1881 has played a substantial role in the Indian commercial landscape and has given rightful sanction against defaulters of the due process of trade who engage in disingenuous activities that causes unlawful losses to rightful recipients through cheque dishonour. Thereafter, the legislature has amended Act, 1881, which came into force on 01.09.2018 with the aim to secure the interest of the complainant along with increasing the efficacy and expediency of proceedings under Section 138 of the Act, 1881 - 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 doubleedged sword of loss of receivables by dishonor of the cheque and the subsequent legal costs in pursuing claim and offence. These amendments would reduce pendency in courts because of the deterrent effect on the masses along ensuring certainty of process that was very much lacking in the past, especially enforced at key stages of the proceedings under the Act. From perusal of the amended provision of Section 143A of the Act, 1881, it is clear that the word 'may' used is beneficial for the complainant because the complainant has already suffered for mass deed committed by the accused by not paying the amount, therefore, it is in the interest of the complainant as well the accused if the 20% of the cheque amount is to be paid by the accused, he may be able to utilize the same for his own purpose, whereas the accused will be in safer side as the amount is already deposited in pursuance of the order passed under Section 143A of the Act, 1881 - The Hon'ble Supreme Court, while examining 'may' used 'shall' and have effect of directory in nature in case of SMT. BACHAHAN DEVI & ANR VERSUS NAGAR NIGAM, GORAKHPUR & ANR [2008 (2) TMI 869 - SUPREME COURT] where it was held that ultimate rule in construing auxiliary verbs like “may and “shall” is to discover the legislative intent; and the use of words `may' and 'shall' is not decisive of its discretion or mandates. 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. Therefore, the word “may” be treated as “shall” and is not discretionary, but of directory in nature, therefore, the learned Judicial Magistrate First Class has rightly passed the interim compensation in favour of the complainant. From perusal of provisions of the Act, 1881 considering the aims behind object of the Act, 1881, it is concluded that the amendment in Section 143A of the Act, 1881 is mandatory in nature, therefore, the learned Judicial Magistrate First Class has rightly passed the order of interim compensation in favour of the respondent and has not committed any irregularity or illegality in passing such order. Petition dismissed. Issues Involved:1. Legality of the order directing the petitioner to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instrument Act, 1881.2. Interpretation of the word 'may' in Section 143A of the Act, 1881 as mandatory or discretionary.3. Requirement for a reasoned order when directing interim compensation.4. Prospective or retrospective application of Section 143A of the Act, 1881.Detailed Analysis:1. Legality of the order directing the petitioner to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instrument Act, 1881:The petitioner challenged the order dated 24.12.2019 by the Judicial Magistrate First Class, Raipur, directing the petitioner to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable Instrument Act, 1881. The trial court's decision was upheld by the 11th Additional Sessions Judge, Raipur, on 06.03.2021, who found no illegality or irregularity in the order. The petitioner argued that the grant of interim compensation under Section 143A is discretionary and not mandatory.2. Interpretation of the word 'may' in Section 143A of the Act, 1881 as mandatory or discretionary:The petitioner contended that the word 'may' in Section 143A indicates discretion and not compulsion. However, the court examined the legislative intent and the purpose behind the amendment, which aims to address undue delays in cheque dishonour cases and to provide relief to the complainant. The court cited the Supreme Court's ruling in Bachahan Devi & another Vs. Nagar Nigam, Gorakhpur & another (2008) 12 SCC 372, which held that the word 'may' can be interpreted as 'shall' if the legislative intent indicates a mandatory provision. The court concluded that Section 143A should be treated as mandatory to serve the purpose of the amendment.3. Requirement for a reasoned order when directing interim compensation:The petitioner relied on the judgment of the Madras High Court in L.G.R. Enterprises & another Vs. P. Anbazhagan AIR Online 2019 Mad 801, which emphasized that the trial court must provide reasons for directing interim compensation. The court acknowledged this requirement but clarified that the necessity for reasons does not imply that the grant of interim compensation is discretionary. The court found that the Judicial Magistrate First Class had provided sufficient reasoning for the order, considering the amended provisions and the objectives of the Act.4. Prospective or retrospective application of Section 143A of the Act, 1881:The court referred to the Supreme Court's judgment in G.J. Raja Vs. Tejraj Surana (2019) 19 SCC 469, which held that Section 143A has a prospective effect and applies only to cases where the offence under Section 138 of the Act was committed after the introduction of Section 143A. The court determined that the present case fell within the scope of the amended provision, as the offence was committed after the amendment came into force on 01.09.2018.Conclusion:The court dismissed the petition, concluding that the amendment to Section 143A of the Negotiable Instrument Act, 1881, is mandatory and not discretionary. The Judicial Magistrate First Class and the 11th Additional Sessions Judge had not committed any irregularity or illegality in their respective orders. The requirement for a reasoned order was acknowledged, but it did not alter the mandatory nature of the provision. The petition was devoid of merits and was dismissed with no order as to costs.