Chhattisgarh HC Holds On To Interim Compensation Under S.143A Of NI Act Being A Directory

Coverage of this Article

Key Takeaways

-Respondent has filed a complaint in contradiction to the petitioner under Section 138 of the Act, 1881 that a cheque had been deposited in the Central Bank of India, but the cheque was held to be dishonored and had to be returned due to inadequate funds.

Introduction

-The petitioner had paid the cheque of Rs. 6,50,000/- to the complainant but due to insufficient funds, it was dishonored and returned to him. 

Further Steps and Discussions

-When the disputation of the complainant was heard, the accused was asked to pay 20% of the cheque amount as interim compensation.

Conclusion

-It is well established that the use of the word “may” in a legislative provision would not by itself show that the provision can be directory in nature.

Key Takeaways

• The case in discussion is of Rajesh Soni Vs Mukesh Verma. [CRMP No. 562 of 2021; ICL 2021 (6) Chh. 10].
• Respondent has filed a complaint in contradiction to the petitioner under Section 138 of the Act, 1881 that a cheque had been deposited in the Central Bank of India, but the cheque was held to be dishonored and had to be returned due to inadequate funds.
• Interim conjunction of 20% was asked to be paid.
• Furthermore, it was made clear by Hon’ble Justice Narendra Kumar Vyas that the word “may” can be noticed as “shall” and the S 143A for interim conjunction was directory and not discretionary.

Introduction

The petitioner had paid the cheque of Rs. 6,50,000/- to the complainant but due to insufficient funds, it was dishonored and returned to him. The complainant sent a legal notice on the point that the amount was not paid before. Elucidated under Section 138 of the Act, 1881, a crime was committed by the petitioner. On added notice, the complainant in front of the Judicial Magistrate filed that under Section of 143 A of the Act, 1881, wherein the petitioner denied the charges which were already framed against him.

Further Steps and Discussions

When the disputation of the complainant was heard, the accused was asked to pay 20% of the cheque amount as interim compensation. After learning this, the learned Judicial Magistrate, vide its order dated 24.12.2019, keeping the amended provisions of Section 143A of the Act, 1881, in everyone’s eyes, directed the accused to pay 20% of the cheque amount as compensation, in which failing would lead to proceedings under Sub-Section (v) of Section 143A.

The counsel submitted that under the provision of this S. 143A of the Act, 1881, the grant for the interim compensation was not mandatory instead they called it out as discretionary, which means that it was as per the disposition or option to pay that amount, stating that it was therefore not necessary to grant 20% of cheque amount to every case as interim compensation.

He tried to bring to the Court’s notice the amended provision of Section 143A of the Act, 1881 which states that the interim compensation under Sub-Section 1 shall not exceed twenty per cent of the amount of the cheque. The interim compensation shall be paid within sixty days from the date of the order within such further period not exceeding thirty days as may be directed by the Court on sufficient and prima facie cause found by the Court.

This provision is directory and not discretionary in view of the amendment made in Section 143 A of the NI Act, 1881.

Whether the provision of Section 143 A of the NI Act is retrospective or not was an issue considered by the Apex Court in G.J Raja Vs. Tejraj Surana, after considering the case decided by the Apex court in Commissioner of Income Tax v. Vatika Township Private Limited [(2015) 1 SCC 1] and Hitendra Vishnu Thakur and Others. v. State of Maharashtra and Others. [(1994) 4 SCC 602], held that the amended provision of section 143 A is to be considered prospective and have no retrospective consideration otherwise it would create new problems and legal consequences in pending issues. The Apex Court further held that the grant of 20% compensation is proper and in case of failure of the plaintiff the machinery for recovery of the amount is also available in the Section itself.

So far as if we look into electricity theft case for example, the recovery of amount is challenged by the plaintiff by way of first appeal, if theft of electricity is prima facie and seems genuine to the Court, and if the compensation comprises of a decree, against which the defaulter or the plaintiff is dissatisfied and intends to file an appeal, he cannot file an appeal without depositing the amount as prescribed by various courts. In furtherance to his appeal maintainable to the Court, such mandatory requirement keeps the balance between the plaintiff and the respondents who have come to the Court with clean hands.

Even in many of the income tax appellate appeals, provisions of a certain percent of the amount of penalty is required to be deposited with the authority along with the filing of appeals. So, such provisions are not discretionary but mandatory to show prima facie the chances of winning of the suit as the plaintiff is found genuine.

Conclusion

It is well established that the use of the word “may” in a legislative provision would not by itself show that the provision can be directory in nature. The legislature is found to be using the word ‘may’ as a matter of pure traditional courtesy and yet intend an obligatory force. Therefore, in order to interpret the legal ingress of the word “may”, the Court has or should as of now, consider various factors like the object and the outline of the Act, the background and the circumstantial regions against which the words have been used. It is correspondingly well-settled that where the word ‘may’ comprise a discretion tied with a compulsion or where it discusses some positive benefit to a general class of subjects in a utility Act. As a general rule, the word “may” is non-judgmental and operational to consult options and especially so, where it is used in collocation to the word “shall”, which ordinarily is imperative as it imposes a duty. The aim of the legislation, as well as the relevant circumstances, should be investigated in order to determine whether these words are being employed in a directory or required sense.

The distinction amid compulsory submission and directory impact of language is determined by the phrasing used in the statute in question, as well as the statute's intent, purpose, and effect. The contrast between the words 'shall' and 'may' is based on the delegation of power. ‘May' does not always mean ‘can’ and it heavily depends on the context and therefore the word ‘may' is required for compliance with the requirement and henceforth the decision made by Hon’ble J Narendra Vyas, suits well with the portrayal of “shall” to be read instead of “will” and the Section 143 A becoming directory and not discretionary.