Negotiable Instruments Act, 1881 – s.143A(1) – Grant of interim compensation – Directory or mandatory:

Held: Power under sub-section (1) of s.143 A is discretionary and not mandatory – Sub-section (1) of s.143A provides for passing a drastic order for payment of interim compensation against the accused in a complaint u/s.138, even before any adjudication is made on the guilt of the accused – The power can be exercised at the threshold even before the evidence is recorded – If the word ‘may’ is interpreted as ‘shall’, it will have drastic consequences as in every complaint u/s.138, the accused will have to pay interim compensation up to 20 per cent of the cheque amount – Such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice – If such an interpretation is made, the provision may expose itself to the vice of manifest arbitrariness and can be held to be violative of Article 14 of the Constitution – Considering the drastic consequences of exercising the power u/s.143A before the finding of the guilt is recorded in the trial, the word “may” used in the provision cannot be construed as “shall” - In the present case, the Trial Court mechanically passed the order of deposit of Rs.10,00,000/- without considering the issue of prima facie case and other relevant factors – It is true that the sum of Rs.10,00,000/- represents less than 5 per cent of the cheque amount, but the direction was issued to pay the amount without application of mind – Even the High Court did not apply its mind – Impugned orders set aside – Trial Court to consider the application for grant of interim compensation afresh. [Paras 19, 14, 17 and 18]

Negotiable Instruments Act, 1881 – s.143A(1) – Exercise of powers under – Factors to be considered – While deciding the prayer made u/s.143A, the Court must record brief reasons indicating consideration of all relevant factors – Broad parameters for exercising the discretion u/s.143A:

Held: 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 presumption u/s.139 of the N.I. Act, by itself, is no ground to direct the payment of interim compensation as the presumption is rebuttable – The financial distress of the accused can also be a consideration – A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case – If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation – 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, it will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc. – There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated – The parameters stated are not exhaustive. [Paras 19, 16]

Negotiable Instruments Act, 1881 – ss. 143A, 138 – Code of Criminal Procedure, 1973 – ss. 2(w), (x), 259, 262-265:

Held: Power u/s.143A(1) is to direct the payment of interim compensation in a summary trial or a summons case upon the recording of the plea of the accused that he was not guilty and, in other cases, upon framing of charge – As the maximum punishment u/s.138 of the N.I. Act is of imprisonment up to 2 years, in view of clause (w) r/w clause (x) of s.2, Cr.PC, the cases u/s.138 of the N.I. Act are triable as summons cases – However, sub-section (1) of s.143 provides that notwithstanding anything contained in the Cr.PC, the Magistrate shall try the complaint by adopting a summary procedure under Sections 262 to 265 of the Cr.PC – However, when at the commencement of the trial or during the course of a summary trial, it appears to the Court that a sentence of imprisonment for a term exceeding one year may have to be passed or for any other reason it is undesirable to try the case summarily, the case shall be tried in the manner provided by the CrPC – Therefore, the complaint u/s.138 becomes a summons case in such a contingency – Further, u/s.259 of the Cr.PC, subject to what is provided in the said Section, the Magistrate has the discretion to convert a summons case into a warrant case – Only in a warrant case, there is a question of framing charge – Therefore, clause (b) of sub-section (1) of s.143A will apply only when the case is being tried as a warrant case – In the case of a summary or summons trial, the power under sub-section (1) of s.143A can be exercised after the plea of the accused is recorded. [Para 10]

Negotiable Instruments Act, 1881 – s.143A – Code of Criminal Procedure, 1973 – s.421 – Recovery of interim compensation:

Held: Under s.143A(5), it is provided that the amount of interim compensation can be recovered as if it were a fine u/s.421 of the Cr.PC – Therefore, by a legal fiction, the interim compensation is treated as a fine for the purposes of its recovery – s.421 deals with the recovery of the fine imposed by a criminal court while passing the sentence – Thus, recourse can be taken to s.421 of the Cr.PC. for recovery of interim compensation. [Para 11]

Negotiable Instruments Act, 1881 – s.143A – Object – Discussed. Negotiable Instruments Act, 1881 – s.143A – Non-payment of interim compensation – Consequences:

Held:Non-payment of interim compensation fixed u/s.143A has drastic consequences – To recover the same, the accused may be deprived of his immovable and movable property – If acquitted, he may get back the money along with the interest as provided in s.143A(4) from the complainant – But, if his movable or immovable property has been sold for recovery of interim compensation, even if he is acquitted, he will not get back his property – Though, the N.I. Act does not prescribe any mode of recovery of the compensation amount from the complainant together with interest as provided in s.143A(4), as sub-section (4) provides for refund of interim compensation by the complainant to the accused and as sub-section (5) provides for mode of recovery of the interim compensation, obviously for recovery of interim compensation from the complainant, the mode of recovery will be as provided in s.421 of the CrPC – It may be a long-drawn process involved for the recovery of the amount from the complainant – If the complainant has no assets, the recovery will be impossible. [Para 12]

Negotiable Instruments Act, 1881 – ss. 148, 143A – Tests applicable for the exercise of jurisdiction u/s.148(1) not to apply u/s.143A(1):

Held: Sub-section (1) of s.148 confers on the Appellate Court a power to direct the appellant/accused to deposit 20 per cent of the compensation amount – It operates at a different level as the power thereunder can be exercised only after the appellant/accused is convicted after a full trial – In the case of s.143A, the power can be exercised even before the accused is held guilty – s.143A can be invoked before the conviction of the accused, and therefore, the word “may” used therein can never be construed as “shall” – The tests applicable for the exercise of jurisdiction u/sub-section (1) of s.148 can never apply to the exercise of jurisdiction u/sub-section (1) of s.143A of the N.I. Act. [Paras 13, 15.1]

Words and expressions – ‘may’ – Interpretation:

Held: The word “may” ordinarily does not mean “must” – Ordinarily, “may” will not be construed as “shall” – But this is not an inflexible rule – The use of the word “may” in certain legislations can be construed as “shall”, and the word “shall” can be construed as “may” – It all depends on the nature of the power conferred by the relevant provision of the statute and the effect of the exercise of the power – The legislative intent also plays a role in the interpretation of such provisions – Even the context in which the word “may” has been used is also relevant. [Para 9]