Interim Compensation Not Mandatory under Section 143A of Negotiable Instruments Act, 1881

The Supreme Court's recent ruling in the case of Rakesh Ranjan Shrivastava vs. The State of Jharkhand & Anr. reported as INSC 205 on cheque dishonor complaints under the Negotiable Instruments Act emphasizes the discretionary nature of granting interim compensation under Section 143A. Justices Abhay S. Oka and Ujjal Bhuyan set aside previous findings, noting that courts should not automatically award interim compensation upon the filing of a complaint. Instead, they must evaluate the case's merits before deciding on interim compensation.

Section 143A was introduced to address delays in resolving cheque dishonor cases, aiming to provide relief to complainants facing prolonged legal battles. However, the Supreme Court cautioned against mechanical application, stressing the need for a thorough assessment of each case's circumstances.

The Court outlined key factors to consider when deciding on interim compensation, including evaluating the complainant's case, the accused's defense, and the financial situation of the accused. It emphasized that the presumption under Section 139 of the N.I. Act is not sufficient grounds for interim compensation, as it is rebuttable and subject to trial proceedings. The broad parameters laid down by the Supreme Court for exercising the discretion under Section 143A are as follows:

i. 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 financial distress of the accused can also be a consideration.

ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case.

iii. If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation.

iv. 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, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc.

v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated. The parameters stated above are not exhaustive.

In conclusion, the Supreme Court directed the subordinate Courts to exercise discretion when granting interim compensation, ensuring that all relevant factors are considered and brief reasons are provided for the decision. The ruling serves as a reminder of the importance of fairness and justice in legal proceedings.

Therefore, it is evident that interpreting the word 'may' as 'shall' in the Act would undermine the principles of fairness in trial proceedings. The grant of interim compensation must be a judicially considered decision, taking into account various factors such as the merits of the complainant's case, the accused's response to the Section 143A application, and the financial circumstances of the accused. If a prima facie case favors the complainant, the court should then determine the appropriate amount of interim compensation. These considerations are not exhaustive and will vary depending on the specifics of each case.

Moving forward, the decision provides clarity on the application of Section 143A, promoting a balanced approach that upholds the rights of both complainants and accused parties in cheque dishonor cases.