TaxTMI 
TaxTMI 
2022 (7) TMI 415
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....ings under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter to be referred as the "N.I. Act"), in respect of two cheques one for Rs.15,00,000/- and the other for Rs.5,00,000/- issued by the petitioner in favour of the respondent which when presented were dishonoured for insufficient funds in the account of the petitioner resulting in the above proceedings, in which, an application under Section 143-A of the N.I. Act came to be filed. The learned Judicial Magistrate First Class (JMFC), Saoner by two impugned orders both dated 26/11/2021, granted the applications and directed the petitioner/accused to pay 20% of the cheque amount to the complainant as an interim compensation within 60 days from the date of the said order. 4. Mr. Deo, learned counsel for the petitioner/accused contends, on the facts of the matter that the learned JMFC misconstrued the provision of Section 143-A of the N.I. Act, to be mandatory in nature, which according to him it is not, and therefore, erred in passing the impugned orders. He contends, that Section 143-A of the N.I. Act, is not mandatory and is directory, considering that Section 143-A(1) of the N.I. Act uses the word 'may' in the mat....
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.... Court on 01.06.2021 and the consequent SLP No.10151/2021 decided on 07.01.2022, which holds that the power under Section 143-A(1) of the N.I. Act is discretionary. Reliance is also placed upon G. J. Raja Vs. Tejraj Surana, 2019 (19) SCC 469 to contend that the provisions of Section 143-A are directory. 4.3. In so far as the meaning of the words 'may' and 'shall', reliance is also placed upon The Official Liquidator Vs. Dharti Dhan (P) Ltd., AIR 1977 SC 740, (paras 7 and 8), and State of Uttar Pradesh Vs. Jogendra Singh, AIR 1963 SC 1618 (para 8). 4.4. In so far as the reading of the provision is concerned, reliance is placed upon Bhavnagar University Vs. Palitana Sugar Mill (P) Ltd. and others, 2003 (2) SCC 111; on Haryana Financial Corporation and another Vs. Jagdamba Oil Mills and another, 2002 (3) SCC 496; Mrs. Aparna A. Shah Vs. M/s Sheth Developers Pvt. Ltd. and others, AIR 2013 SC 3210; B. Premanand and Ors Vs. Mohan Koikal and Ors, AIR 2011 SC 1925; and Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd., Vs. Custodian of Vested Forests, Palghat and another, AIR 1990 SC 1747 ; Harbhajan Singh Vs. Press Council of India and others, AIR 2002 SC 1351 (para 9) ; Padma Sundara Rao (Dead)....
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.... (UK) Limited Vs. Governor State of Orissa, (paras 46 and 50); (vii) State of U.P. and another Vs. Synthetics and Chemicals Ltd. and another, 1991 (4) SCC 139, (paras 39 to 41) and (viii) Frederic Guilder Julius Vs. The Right Rev. the Lord Bishop of Oxford 1880 (V) AC 214. 5.2. It is contended that Ajay Vinodchandra Shah Vs. State of Maharashtra and another, 2019 (4) Mh.L.J. 705 (also relied by Mr. Deo, learned counsel), does not consider whether Section 143-A is mandatory or directory not does not dilate upon the expression "may" and "shall", and therefore, is of no assistance in deciding the issue in question. (this judgment has been considered by the Delhi High Court in JSB Cargo and Freight Forwarder Pvt. Ltd. (supra) page no.59 paras 39 to 43). 5.3. Mr. Bhushan Mohta, learned Counsel for the respondent, therefore contends that the use of expression 'may', in Section 143 (A) of the N.I. Act since it is coupled with an obligation upon the Court to award interim compensation, necessarily makes it mandatory and not directory. In the written notes of arguments placed by him on record, a tabular chart has been given, which it would be appropriate to reproduce as under :- 1.....
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....national Airport Authority of India and others, (1997) 9 SCC 132 and State of U.P. Vs. Baburam Upadhya, AIR 1967 SC 151, both of which dilate upon the use of the word "shall" or "may". 6.1. He further places reliance upon Section 357 of the Cr. P.C., which empowers the Court to pass an order to pay compensation in addition to imposing sentence of fine or sentence, for which reliance has been placed on Ankush Shivaji Gaikwad Vs. State of Maharashtra (2013) 6 SCC 770 (paras 45 to 66), to contend that where there is a duty cast upon the Court to apply its mind only then in that contingency the provision could be said to be mandatory and not otherwise. It is contended that Section 143-A of the N.I. Act does not cast any such duty upon the Court and therefore, cannot be held to be mandatory in nature. The only requirement cast by Section 143-A is to consider whether there is requirement as spelt out from the facts of each case for grant of compensation and not to order award of deposit in each and every case. 6.2. He further contends that non-compliance of any order which may be made under Section 143-A (1) of the N.I. Act does not visit the accused with any penal consequences except ....
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....uction is the thumb rule and it is only in case where a literal interpretation would lead to absurdity then only any other mode of interpretation, including a purposive one, can be resorted to; (x). Mrs. Aparna A. Shah (supra) holds that a penal provision has to be interpreted strictly; (xi). Ankush Shivaji Gaikwad (supra) holds that where there is a duty cast upon the Court to apply its mind only then in that contingency the provision could be said to be mandatory and not otherwise. (xii). Modi Cements (supra) dilates upon the reasons and objects and the purpose behind enacting Section 138 of the N.I. Act, which is to promote the efficacy of banking operations and to ensure credibility in transacting business through cheques. (xiii). Hyder Consulting (UK) Ltd. (supra) in respect of the subsidiary rules of interpretation, holds that the same words appearing in same section of the same statute must be given same meaning unless there is anything to indicate contrary, which principle may be rebutted by making reference to context in which words which are used and word may be understood in different sense, if context so requires. (xiv). Gurnam Kaur (supra) by the Hon'ble Apex....
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....ways decisive and depends on conferment of power. (vi) Deewan Singh (supra) holds that where power is conferred upon a public authority coupled with discretion the word "may" which denotes discretion should be construed to mean a command. (vii) Dilip K. Basu (supra) holds that the use of the word "may" by itself is not determinative of the true nature of the power or the obligation conferred or created under the provision and in a given case, it could be construed as 'shall' thereby meaning mandatory nature of the provision. (viii) Anant H. Ulahalkar (supra) while interpreting Section 9 (1) - A of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965, lays down rules of interpretation regarding the use of the words 'may' and 'shall'. (ix) Kunhayammed (supra) speaks about the doctrine of merger, and lays down principles as to when the dismissal of a petition for special leave by the Hon'ble Apex Court would result in the judgment of the High Court being merged in its order/judgment and when it would not. 7.3. In the context of the word 'may', as used in Section 143-A(1) of the N.I. Act, there are diverse opinions expressed by the Courts in va....
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.... time so as to provide, inter alia, speedy disposal of cases relating to the offence of dishonour of cheques. However, the Central Government has been receiving several representations from the public including trading community relating to pendency of cheque dishonour cases. This is because of delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings. As a result of this, injustice is caused to the payee of a dishonoured cheque who has to spend considerable time and resources in court proceedings to realise the value of the cheque. Such delays compromise the sanctity of cheque transactions. 2. It is proposed to amend the said Act with a view to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money. The proposed amendments will strengthen the credibility of cheques and help trade and commerce in general by allowing lending institutions, including banks, to continue to extend financing to the productive sectors of the economy. 3. It is, therefore,....
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....within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant. (5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974). (6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this section." 8.3. In Bachahan Devi (supra) after considering the earlier judicial precedents on the point as to how the words 'may' and 'shall', occurring in a statute are to be interpreted and so also upon considering Fredric Guilder Julius (supra), it has been held that mere use of word 'may' or 'shall' is not conclusive. The question whether a particular provision of a statute is directory or mandatory cannot be resolved by laying down any general rule of universal application. Such controversy has to be decided by ascertaining the intention of the legislature and not by looking at the language ....
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....nt to the issue. 37. Several statutes confer power on authorities and officers to be exercised by them at their discretion. The power is in permissive language, such as, 'it may be lawful', 'it may be permissible', 'it may be open to do', etc. In certain circumstances, however, such power is 'coupled with duty' and must be exercised. -----------" It is thus obvious that to interpret the legal import of the word 'may', the Court has to consider various factors, namely, the object and the scheme of the Act, the context and background against which the words have been used, the purpose and the advantages sought to be achieved by the use of this word. The same proposition has been laid down in Dilip K. Basu (supra). 8.4. In Anant H. Ulahalkar (supra) the Full bench of the Bombay High Court [after considering Babu Ram Upadhya (supra) ] has laid down the following tests for determining whether a provision is directory or mandatory : "36. Some of the well known tests to determine whether a provision is mandatory or directory are as follows: (i) The use of expressions like "shall" or "may" are not conclusive and regard must he had to the true intent of the legislation. However, u....
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....ry will render the provision or significant parts otiose, redundant or a surplusage. The principle is that the legislature does not use words in vain; and (x) Where the construction of a provision as mandatory would result in absurdity, which could never have been intended by the legislature, the provision can be construed as directory." 8.5. In Surinder Singh Deswal (supra), while considering the provisions of Section 148 of the N.I. Act, in light of the above aims and objects, for its enactment, and whether the said provision was prospective or retrospective, it was held that Section 148 of the N.I. Act as amended, shall be applicable in respect of the appeals against the order of conviction and sentence for the offence under Section 138 of the N.I. Act, even in a case where the criminal complaints for the offence under Section 138 of the N.I. Act were filed prior to Amendment Act 20 of 2018 i.e. prior to 1/9/2018. Insofar as the issue as to whether the same was mandatory or directory, considering the use of the word 'may', as occurring therein the Hon'ble Apex Court, held as under : "8. Now so far as the submission on behalf of the appellants that even considering the langu....
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.... caused to the payee of a dishonoured cheque who has to spend considerable time and resources in the court proceedings to realise the value of the cheque and having observed that such delay has compromised the sanctity of the cheque transactions, Parliament has thought it fit to amend Section 148 of the NI Act. Therefore, such a purposive interpretation would be in furtherance of the Objects and Reasons of the amendment in Section 148 of the NI Act and also Section 138 of the NI Act." 8.6. In G. J. Raja (supra), the Hon'ble Apex Court, while considering the issue as to whether Section 143-A of the N.I. Act, was retrospective or prospective, by applying the principles as culled out in Hitendra Vishnu Thakur Vs. State of Maharashtra (1994) 4 SCC 602 which are as under : "(i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits....
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....uncement of his guilt or order of conviction, the accused may, with the aid of State machinery for recovery of the money as arrears of land revenue, be forced to pay interim compensation. The person would, therefore, be subjected to a new disability or obligation. The situation is thus completely different from the one which arose for consideration in ESI Corpn. Case [ESI Corpn. v. Dwarka Nath Bhargwa, (1997) 7 SCC 131 : 1997 SCC (L&S) 1680]. 21. In our view, the applicability of Section 143-A of the Act must, therefore, be held to be prospective in nature and confined to cases where offences were committed after the introduction of Section 143-A, in order to force an accused to pay such interim compensation." While considering Surinder Singh Deswal (supra) it held as under : "22. We must, however, advert to a decision of this Court in Surinder Singh Deswal v. Virender Gandhi [Surinder Singh Deswal v. Virender Gandhi, (2019) 11 SCC 341 : (2019) 3 SCC (Cri) 461 : (2019) 3 SCC (Civ) 765 : (2019) 8 Scale 445] where Section 148 of the Act which was also introduced by the same Amendment Act 20 of 2018 from 1-9-2018 was held by this Court to be retrospective in operation. As against....
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.... Such compensation/fine could be recoverable under Sections 421 and 357 of the Code, which apply postconviction, and are adequate to take care of such requirements. Introduces Section143-A(5), making the interim compensation, recoverable, as if it were a fine under Section 421 Cr. P.C. thereby exposing the accused to coercive methods of recovery of such interim compensation through the machinery of the State as if the interim compensation represented arrears of land revenue. The coercive methods could also, as is evident from provision like Section 183 of the Maharashtra Land Revenue Code, which in some cases may result in arrest and detention of the accused, as under Section 183 of the Maharashtra Land Revenue Code, 1966, in case there be a default in payment of land revenue, the person concerned could be arrested and detained in custody for 10 days in the office of the Collector or of a Tahsildar unless the arrears of revenue which were due, were paid along with the penalty or interest and the cost of arrest and of the notice of demand as also the cost of his subsistence during detention. 6. Does not create any fresh disability as in view of Section 357 and 421 of Cr.P.C. Sec....
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....nterim measure. The fact that even in cases under Section 138 of the N.I. Act, the presumption under Section 139 of the N.I. Act, is not absolute, but is rebuttable, also has to be borne in mind. That apart, in a particular case, given the requirement of Section 138 of the N.I. Act, it may so happen that the complaint itself may not be maintainable, for the cheque not having been presented during the period of its validity; the notice not having been issued in the stipulated time; the complaint not having been filed within the time stipulated therefor; the debt may not be a legally enforceable debt or liability; the memo/advice regarding dishonor not having been placed on record etc. These are only some of the instances and do not cover the entire plethora of causes, which may make the complaint itself not maintainable. To direct the grant of interim compensation, in such cases, merely because of the existence of a cheque, by holding that doing so is mandatory, would not be justifiable. 9.3. It is further material to note that the power to direct interim compensation under Section 143-A of the N.I. Act, can be equated with the provisions as contained in Order XXXVIII Rule 5 of the....
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....hat the total sum, of which 20% is to be awarded, already stands prejudged, there is no such prejudging at the stage of invocation/applicability of Section 143-A of the N.I. Act, as the trial is yet to be over, considering the use of the expression occurring in Section 143-A(1) of the N.I. Act " - the Court trying the offence --" and the language of Clause (a) and (b) of Section 143-A(1) of the N.I. Act, which indicates the stages at which such power could be exercised, viz: (a) in a summary trial or a summons case, when the accused pleads not guilty and (b) in any other case on framing of charge. 9.7. The word 'may' as used in Section 143-A (1) of the N.I. Act, cannot be read, in the contextual background of its user in Section 148 of the N.I. Act, as they are two different provisions, which operate in two totally different situations and at two different stages as discussed earlier and therefore what has been held in Hyder Consulting (UK) Ltd. (supra) would clearly not be applicable. 9.8. The word 'interim', by its very nature denotes something which is not final, impermanent; temporary; meanwhile; meantime; and would thus govern a situation, which considering the facts pre....
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....e considering the condition of deposit of 75 % of the amount of demand notice before a proceeding could be entertained by the tribunal, while considering the power of the tribunal to waive or reduce the amount under the proviso to Section 17(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("the SARFAESI Act", for short hereinafter) it has been held that since the proceedings under Section 17 of the SARFAESI Act are akin to proceedings like a suit in a Court of first instance, the condition of pre-deposit was bad rendering the remedy illusory and also for the reason that there was as yet at that stage no determination of the amount due. The proceedings before the Magistrate under Section 138 of the N.I. Act, are also proceedings in the Court of first instance, and thus the direction to deposit 20% of the cheque amount ought to be held as directory, as at that stage, there is as yet determination of the liability of the person issuing the cheque. 9.11. Even if Section 143-A (3) of the N.I. Act provides for a time limit of 60 days to pay the interim compensation extendable by 30 days, fixing a time limit for payment of in....
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....h colors the content of the entire provision. The expression "shall not exceed twenty per cent" in Section 143-A (1) merely caps the limit of the discretion which the Special Court is permitted to exercise in the matter and nothing else. The word "shall" as used in the above expression does not transcend beyond the limits of discretion of the Special Court, in the matter of awarding interim compensation, which as already discussed above could be anywhere between 0% to 20% of the cheque amount. 9.15. The language of Section 143-A (1) of the N.I. Act is neither obscure, nor unambiguous as would reflect from a plain reading of the same and the intent of the legislature to make the provision directory is clearly reflected therefrom, which intent also serves the purpose for which it was enacted i.e. to avoid delays. 10. In my considered opinion, in view of the discussion above, it has to be held that Section 143-A of the N.I. Act, is discretionary and not mandatory and the view taken in L.G.R. Enterprises (supra) holding that the word "may", as occurring in Section 143-A(1) of the N.I. Act empowers the Court with a discretion to direct interim compensation and it is not necessary that....