Libertatem Magazine

Section 143 A of Negotiable Instruments Act Not Discretionary but Directory: Chhattisgarh High Court

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The Chhattisgarh High Court has held that Section 143A of the Negotiable Instruments Act, 1881 for compensation is a directory and not discretionary. 


According to the facts of the case, the petitioner was charged with the alleged dishonoring of a check due to insufficient funds under Section 138 of the Act. The complainant applied for interim compensation under Section 143A of the NI Act. It was argued that if charges have been framed, interim compensation to the extent of 20% of the cheque amount can be ordered. The Judicial Magistrate favoring the complainant had granted the said compensation. 

This led to the Petitioner challenging the decision in a revision petition that was at first dismissed and then confirmed by the Judicial Magistrate. 

Arguments before the Court

The petitioner argued that the amended compensation provision of Section 143A of the 1881 Act does not make interim compensation mandatory. The use of the word “may” makes it discretionary. For proving the same, the Petitioner relied on the judgment in LGR Enterprises & Anr v. Abbazhagan where the Madras High Court had held that in ordering interim compensation, the power of the trial court was discretionary and must be back by reasons. 

Court’s Observation

A single-judge bench of Justice Narendra Kumar Vyas observed that the amendment to Section 143A of the NI Act upheld the decision of the Judicial Magistrate that granted compensation of 20% of the cheque amount.

The Court further scrutinized the aims and objective of the amended Section 143A of the NI Act of 1881. It observed:

“From the perusal of Section 143A of the Act, 1881, it is quite evident that the act has been amended by granting interim measures ensuring that interest of complainant is upheld in the interim period before the charges are proven against the drawer. The intent behind this provision is to provide aid to the complainant during the pendency of proceedings under Section 138 of the Act, where he is already suffering a double-edged sword of loss of receivables by the dishonor of the cheque and the subsequent legal costs in pursuing the claim and offense.”

The Court also observed that in the interest of the complainant and the accused if 20% of the cheque amount is paid by the accused. 

Court’s Decision

The Court thus held that the use of the word “may” may be used in the context of the word “shall” to benefit the aggrieved, i.e., the complainant. The Court stated that the complainant in this way will be able to utilize the cheque amount for his benefit while the accused will be on the safer side as the amount in this way is will already be deposited according to the order passed by Section 143A of the Act. Once the final judgment is passed and if it is against the accused, he will have to pay the allowances on the lower side.

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