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Section 143A of the negotiable instruments act directs the offender to pay an interim compensation of 20% of the total value of the cheque. Such a compensation is mandatory and is not discretionary since the aim and objection behind the act is to provide relief. This was decreed by the court in Hon’ble Shri Justice Narendra Kumar Vyas in Rajesh Soni vs. Mukesh Verma [CRMP No. 562 of 2021] on the 30^th of June 2021.

The brief facts of the case are, the petitioner gave a cheque amounting Rs. 6,50,000/- on 26.11.2018 in favour of the defendant. When the defendant deposited such a cheque in the bank, the cheque was dishonoured due to insufficient fund. On 17.12.2018, the petitioner sent a legal notice with respect to the cheque bounce but no response was received. A complaint under Section 143A of the Act was filed against the petitioner contending that the charges have already been framed wherein he has denied the charges levelled against him. The judicial magistrate issued an order on 24.12.2019, directing the petitioner to pay 20% interim compensation asper the provisions of Section 143A. Aggrieved by this, the petitioner filed a criminal revision petition. This petition was dismissed by the additional sessions judge. This is challenged by the petitioner in the present case before the Hon’ble High Court. The counsel for the petitioner contended that the order by the judicial magistrate and the additional sessions judge was perverse since the provisions of section 143A use the word ‘may’. Such a use of the word implies that the interim compensation of 20% is discretionary by the findings of the court and is not a blanket rule.

After listening to the contentions of both the parties, the court held that Section 143A of the act was amended with the aim to secure the interest of the complainant along with increasing the efficacy and expediency of proceedings under Section 138 of the Act, 1881. To support this, the court relied on Bachahan Devi & another Vs. Nagar Nigam, Gorakhpur & another, (2008) 12 SCC 372, wherein the word ‘may’ was interpreted as, “If it appears to be the settled intention of the legislature to convey the sense of compulsion, as where an obligation is created, the use of the word “may” will not prevent the court from giving it the effect of Compulsion or obligation. Where the statute was passed purely in public interest and that rights of private citizens have been considerably modified and curtailed in the interests of the general development of an area or in the interests or removal of slums and unsanitary areas. Though the power is conferred upon the statutory body by the use of the word “may” that power must be construed as a statutory duty. Conversely, the use of the term ‘shall’ may indicate the use in optional or permissive sense. Although in general sense ‘may’ is enabling or discretional and “shall is obligatory, the connotation is not inelastic and inviolate.” Where to interpret the word “may” as directory would render the very object of the Act as nugatory, the word “may must mean ‘shall’.”

Applying the above-mentioned rationale in this particular case, the court analyzed that 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 double- edged sword of loss of receivables by dishonor of the cheque and the subsequent legal costs in pursuing claim and offence. The court decreed, “Therefore, the word “may” be treated as “shall” and is not discretionary, but of directory in nature, therefore, the learned Judicial Magistrate First Class has rightly passed the interim compensation in favour of the complainant”, and thus dismissed the petition and directed the petitioner to pay the interim compensation of 20%.

click here to read the judgement.