2021 (7) TMI 386 - HC - Indian Laws

Interim Compensation Order Upheld Under Negotiable Instrument Act

The court upheld the order directing the petitioner to pay 20% of the cheque amount as interim compensation under Section 143A of the Negotiable ... Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Interpretation of 'may' as directory/mandatory - Requirement of reasoned order when directing interim compensation - Prospective operation of amended penal provisionsInterpretation of 'may' as directory/mandatory - Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Whether the word 'may' in Section 143A(1) of the Negotiable Instruments Act confers mere discretion or must be construed as imposing a mandatory/directory obligation to order interim compensation up to twenty per cent. - HELD THAT: - Having regard to the object and scheme of the Act, the parliamentary purpose behind the 2018 amendment and binding precedents construing auxiliary verbs in statutory provisions, the court held that the use of the word 'may' in Section 143A must be read in the context of the amendment's remedial purpose to protect complainants and curb delay tactics. The court relied on principles that where construing 'may' as directory is necessary to effectuate the statute's object, it may be given mandatory effect. Applying this principle to Section 143A, the court concluded that the provision was enacted to secure interim relief to complainants and to strengthen speedy disposal of cheque dishonour cases; accordingly 'may' in Section 143A operates as a directory/mandatory provision in that context and supports ordering interim compensation up to twenty per cent of the cheque amount. [Paras 11, 12, 16]The amended Section 143A is to be construed as having directory/mandatory effect insofar as securing interim compensation in appropriate cases.Requirement of reasoned order when directing interim compensation - Power to direct interim compensation under Section 143A of the Negotiable Instruments Act - Whether the impugned orders directing the drawer to pay 20% interim compensation were illegal or required interference by this Court for want of reasons or otherwise. - HELD THAT: - The court noted authorities emphasising that an exercise of discretionary power under Section 143A, when invoked, should be accompanied by reasons; such reasons enable appellate scrutiny. However, having construed Section 143A as mandatory in effect to achieve its object, the court examined the orders under challenge and found no illegality or irregularity in directing interim compensation. While the Madras High Court decision was relied upon to underline that reasons should ordinarily be recorded, that ratio did not lead to the conclusion that grant of compensation under Section 143A is discretionary. On the facts as projected in the impugned proceedings and in view of the purposive construction adopted, the trial court's direction for interim compensation and the Sessions Judge's refusal to interfere were held to be justified. [Paras 17, 18, 19]The orders of the trial court and the revisional court directing/confirming payment of 20% interim compensation do not suffer from illegality or infirmity warranting interference.Final Conclusion: The petition is dismissed; the interim compensation order under Section 143A and the revisional court's order upholding it are held not to be illegal or irregular. 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.