{"id":319088,"date":"2024-04-01T16:30:11","date_gmt":"2024-04-01T11:00:11","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=319088"},"modified":"2024-04-03T11:30:35","modified_gmt":"2024-04-03T06:00:35","slug":"factors-laid-by-sc-for-discretion-on-payment-of-interim-compensation-u-143-a-legal-news","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/04\/01\/factors-laid-by-sc-for-discretion-on-payment-of-interim-compensation-u-143-a-legal-news\/","title":{"rendered":"S. 143-A NI Act| Factors laid down by SC for exercising discretion in payment of interim compensation in cheque dishonour cases"},"content":{"rendered":"
\n

Supreme Court:<\/span> In a criminal appeal against Jharkhand High Court’s order dismissing the challenge to the Trial Court and Sessions Court’s decision for payment of interim compensation of Rs. 10,00,000\/- to the respondent under Section 143-A<\/a> of the Negotiable Instruments Act, 1881<\/a>, the Division Bench of Abhay S. Oka and Ujjal Bhuyan, JJ. set aside the impugned judgments for non-application of mind. The Court laid down several factors which must be considered by the Courts while exercising discretionary power under Section 143-A<\/a> of the Negotiable Instruments Act, 1881<\/a> (‘N.I. Act’).<\/p>\n

The respondent moved an application under Section 143-A of the N.I. Act seeking a direction to the accused to pay 20 per cent of the cheque amount as compensation. The Trial Court vide order dated 07-03-2020 allowed the application and directed the accused to pay an interim compensation of Rs. 10,00,000\/- to the respondent within a period of 60 days. The Sessions Court affirmed the order in a revision application. The Jharkhand High Court dismissed the challenge against the Trial Court’s and Sessions Court’s order by the impugned judgment. Hence, the present criminal appeal.<\/p>\n

The object of Section 143-A<\/p>\n

The Court noted that Section 143-A was brought in by Act No.20 of 2018 with effect from 1-09-2018 to address the issue of undue delay in the final resolution of the dishonour of cheque cases. The Court noted that Section 148 was inserted in the N.I. Act with the same amendment. Section 148 provides that in an appeal preferred by the drawer of the cheque against conviction under Section 138, the Appellate Court may order the appellant to deposit such a sum which shall be a minimum 20 per cent of the fine or compensation awarded by the Trial Court. The Court on perusal of Section 148(1) said that it clarifies that the amount payable under Section 148(1) is in addition to interim compensation paid by the appellant\/accused under Section 143-A.<\/p>\n

Whether Section 143-A(1)<\/a> of the N.I Act<\/a>, which provides for the grant of interim compensation, is directory or mandatory?<\/p>\n

The Court explained that the use of the word “may” in certain legislations can be construed as “shall”, and the word “shall” can be construed as “may”, depending on the nature of the power conferred by the relevant provision of the statute and the effect of the exercise of the power. The Court said that non-payment of interim compensation by the accused does not take away his right to defend and the interim compensation amount can be recovered from him treating it as fine. Explaining the ways to recover the interim compensation amount, the Court said that the Trial Court by issuing a warrant for attachment and sale of the movable property of the accused can recover the same, or the Court is vested with the power to issue a warrant to the District Collector authorising him to realise the interim compensation amount as arrears of land revenue from the movable or immovable property, or both, belonging to the accused. Therefore, the Court said that non-payment of interim compensation fixed under Section 143-A has drastic consequences.<\/p>\n

Further, the Court said that if the movable or immovable property of the accused has been sold for recovery of interim compensation, even if he is acquitted, he will not get back his property. The Court explained that the N.I. Act<\/a> does not prescribe any mode for recovery of the compensation amount from the complainant together with interest as provided in Section 143-A(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 Section 421 of the CrPC, which is a long-drawn process and if the complainant has no assets, the recovery will be impossible.<\/p>\n

The Court perused Section 148 which provides for Appellate Court’s power to direct the accused to deposit 20 per cent of the compensation amount. The Court said this power can only be exercised after the accused was convicted after a full trial. Whereas the power under Section 143-A can be exercised even before the accused is held guilty. The Court termed the order under Section 143-A (1) as a drastic order for payment of interim compensation against the accused in a complaint under Section 138, even before any adjudication is made on the guilt of the accused. Hence, the Court said that if the word ‘may’ is read as ‘shall’, it will have drastic consequences, as in every complaint under Section 138, the accused will have to pay interim compensation up to 20 per cent of the cheque amount and such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice, exposing the provision to the vice of manifest arbitrariness.<\/span> Therefore, the Court held that the power under Section 143-A (1) is discretionary and not mandatory.<\/p>\n

Factors to be considered by the Court while exercising discretion<\/p>\n

    \n
  1. \n

    Prima facie evaluation: The Court said that while dealing with an application under Section 143-A<\/a> of the N.I. Act<\/a>, 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 under Section 143-A(1). The presumption under Section 139<\/a> of the N.I. Act<\/a>, by itself, is no ground to direct the payment of interim compensation. The reason is that the presumption is rebuttable. A direction to pay interim compensation can be issued, only if the complainant makes a prima facie case.<\/span><\/p>\n<\/li>\n

  2. \n

    Financial distress of the accused: The fact that the accused is in financial distress can also be considered. The Court said that if the Court concludes that a case is made out for grant of interim compensation, the Court will have to apply its mind to the quantum of interim compensation to be granted and consider various factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant and the paying capacity of the accused.<\/p>\n<\/li>\n

  3. \n

    Plausible Defence: The Court said that if the defence of the accused is prima facie a plausible, the Court may exercise discretion in refusing to grant interim compensation.<\/p>\n<\/li>\n<\/ol>\n

    The Court said that the factors provided above that are required to be considered are not exhaustive and there could be several other factors in the facts of a given case, such as, the pendency of a civil suit, etc. The Court also said that while deciding the prayer made under Section 143-A, the Court must record brief reasons indicating consideration of all the relevant factors.<\/p>\n

    In the matter at hand, the Court noted that the direction to deposit Rs.10,00,000\/- was without considering the issue of prima facie case and other relevant factors and said that it was without application of mind. Thus, the Court directed the Trial Court to consider the application for grant of interim compensation afresh and the amount of Rs. 10,00,000\/- deposited by the accused will continue to remain deposited with the Trial Court. The Court set aside the impugned judgments.<\/p>\n

    [Rakesh Ranjan Shrivastava v. State of Jharkhand, 2024 SCC OnLine SC 309<\/a>, Decided on: 15-03-2024<\/span>]<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    “If the word ‘may’ is read as ‘shall’, it will have drastic consequences, as in every complaint under Section 138, the accused will have to pay interim compensation up to 20 per cent of the cheque amount and such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice, exposing the provision to the vice of manifest arbitrariness.”<\/p>\n","protected":false},"author":67517,"featured_media":319100,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[29922,17041,30606,67061,44635,49058,5363],"class_list":["post-319088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-cheque-dishonour","tag-negotiable-instruments-act","tag-ni-act","tag-payment-of-interim-compensation","tag-sc","tag-section-143-a","tag-supreme-court"],"yoast_head":"\nFactors laid by SC for discretion on payment of interim compensation u\/s 143-A | SCC Times<\/title>\n<meta name=\"description\" content=\"S. 143-A NI Act| Supreme Court laid down factors for exercising discretion in payment of interim compensation in cases of cheque dishonour\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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It also highlights key judicial developments shaping the interpretation of these provisions.","rel":"","context":"In "Law made Easy"","block_context":{"text":"Law made Easy","link":"https:\/\/www.scconline.com\/blog\/post\/category\/law-made-easy\/"},"img":{"alt_text":"Section 138 NI Act","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/11\/Section-138-NI-Act.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/11\/Section-138-NI-Act.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/11\/Section-138-NI-Act.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/11\/Section-138-NI-Act.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":271149,"url":"https:\/\/www.scconline.com\/blog\/post\/2022\/08\/04\/section143a-ni-act-section-138-interim-compenation-failure-to-deposit-punishment-denial-of-right-to-cross-examination-dishonour-cheque-supreme-court-legal-updates-research-news\/","url_meta":{"origin":319088,"position":2},"title":"Right to cross-examination cannot be denied as a punishment for failure to deposit interim compensation under Section 143A NI Act: Supreme Court\u00a0","author":"Prachi Bhardwaj","date":"August 4, 2022","format":false,"excerpt":"Supreme Court: In a case where an offender under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) was denied the right to cross-examine a witness upon failure to deposit the interim compensation under Section 143A of NI Act, the bench of UU Lalit*, S. Ravindra Bhat and Sudhanshu\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/08\/MicrosoftTeams-image-43.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/08\/MicrosoftTeams-image-43.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/08\/MicrosoftTeams-image-43.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/08\/MicrosoftTeams-image-43.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/08\/MicrosoftTeams-image-43.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":258919,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/12\/23\/dishonour-of-cheque-7\/","url_meta":{"origin":319088,"position":3},"title":"Dishonour of Cheque | Is it mandatory for trial court to award interim compensation under S. 143-A NI Act on mere invocation thereof? Del HC decides whether S. 143-A is directory or mandatory?","author":"Bhumika Indulia","date":"December 23, 2021","format":false,"excerpt":"Delhi High Court: Anu Malhotra, J., held that the provision of Section 143A of the NI Act, 1881 is directory in nature and not mandatory. Petitioners were stated to be the directors as per the complaints i.e. CC NI Act 12-20 and CC NI Act 100-20 filed by the respondent\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":370991,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/12\/26\/hc-roving-enquiry-debt-liability-quashing-section-138-ni-act-complaint-supreme-court-section-482-crpc\/","url_meta":{"origin":319088,"position":4},"title":"High Court Cannot Conduct Roving Enquiry into Debt or Liability While Quashing Section 138 NI Act Complaint: Supreme Court","author":"Prachi Bhardwaj","date":"December 26, 2025","format":false,"excerpt":"\u201cUnder Section 139 of the NI Act, there is a presumption that the holder of a cheque received the cheque of the nature referred to in Section 138 NI Act for the discharge, in whole or in part, of any debt or other liability. This presumption can be rebutted by\u2026","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Enquiry into Debt or Liability","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/12\/Enquiry-into-Debt-or-Liability.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/12\/Enquiry-into-Debt-or-Liability.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/12\/Enquiry-into-Debt-or-Liability.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/12\/Enquiry-into-Debt-or-Liability.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":312627,"url":"https:\/\/www.scconline.com\/blog\/post\/2024\/02\/01\/supreme-court-rejection-of-application-for-handwriting-expert-opinion-in-cheque-dishonour-case-section-138-ni-act-legal-updates\/","url_meta":{"origin":319088,"position":5},"title":"When can an application for Handwriting Expert\u2019s Opinion in Cheque Dishonour Case be rejected? Supreme Court explains","author":"Prachi Bhardwaj","date":"February 1, 2024","format":false,"excerpt":"The Supreme Court was called upon to decide whether the appellant Court was right in rejecting the application of the accused seeking opinion of the handwriting expert in Cheque Dishonour case.","rel":"","context":"In "Case Briefs"","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Cheque Dishonour","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Cheque-Dishonour.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Cheque-Dishonour.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Cheque-Dishonour.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/02\/Cheque-Dishonour.webp?resize=700%2C400&ssl=1 2x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/319088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/67517"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=319088"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/319088\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/319100"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=319088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=319088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=319088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}