The provisions of Section 143-A of the N.I. Act are directory and not mandatory.

JUDGMENT :

1. Heard Mr. Madhur Deo, learned Counsel for the petitioner and Mr. Bhushan Mohta, learned Counsel for the respondent. Rule. Rule made returnable forthwith. Heard finally with the consent of the learned Counsel for the rival parties.

2. The petitions raise two interesting questions :

(i) Whether the provisions of Section 143-A of the Negotiable Instruments Act, 1881, which empower the Court to direct payment of interim compensation are mandatory or directory and

(ii) In case it is held that the same is directory, whether the Court has to record reasons for determining the quantum of interim compensation to be awarded as contemplated by Section 143-A(2) of the Negotiable Instruments Act, 1881 ?

3. The facts in the instant matter, indicate that the respondent/Complainant filed proceedings 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 matter of directing an interim compensation to be paid. It is further contended, that use of the word “shall”, as occurring in Section 143-A(2) of the N.I. Act, is also directory as it merely indicates the limits, within which the interim compensation can be awarded by the Court, 20% of the cheque amount being the outer limit. It is also contended, that though the presumption under Section 139 of the N.I. Act, is attracted in a proceeding under Section 138 of the N.I. Act, however, that by itself, cannot be construed to indicate that the provisions of Section 143-A of the N.I. Act are mandatory in nature, for the reason that there would arise cases where the Court, even on a prima facie reading of the complaint may come to a conclusion that the presumption stood rebutted and in such cases, the question of directing interim compensation would not arise at all. He therefore submits, that in a given case, it would be permissible for the Court to even reject the application under Section 143-A of the N.I. Act for interim compensation.

4.1. Reliance for the above proposition is placed on L.G.R. Enterprises Vs. P. Anbazhagan, AIR Online 2019 Mad 801 (para 6 and 8), which holds that the word “may”, as occurring in Section 143-A(1) of the N.I. Act is discretionary. Reliance is also placed on Ajay Vinodchandra Shah Vs. State of Maharashtra and another, 2019 (4) Mh.L.J. 705, in which it is held that Section 143-A(1) of the N.I. Act leaves it to the discretion of the Court to pass an order of interim compensation upto the ceiling limit of 20% of the cheque amount.

4.2. Further reliance is placed upon K. Ranjithkumar Vs. K. Mathivanan, AIR Online 2021 Mad 2542, which reiterates the position in L.G.R. Enterprises (supra). Reliance is also placed upon JSB Cargo and Freight Forwarder Pvt. Ltd. and Others Vs. State and Another, 2021 SCC Online Del 5425, wherein a learned Single Judge after