Section 143A of Negotiable Instruments Act ‘directory’ not ‘mandatory’: Delhi High Court

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The Delhi High Court has held that Section 143A of the Negotiable Instruments Act, 1881 (NI Act) is a directory provision and not ‘mandatory’ [M/S JSB Cargo And Freight Forwarder Pvt Ltd v State and Anr].

The observation was made by Justice Anu Malhotra while setting aside an order of the trial court which had, in exercise of powers under Section 143A(4) of the NI Act granted an interim compensation of over ₹26 lakh for dishonour of cheque.

Section 143A lays down the power of the court hearing a cheque bounce case, to order the drawer of cheque to pay interim compensation to the complainant under Section 138 of NI Act.

In the instant case, the trial court had observed that based on the objects and reasons behind the introduction of the provision, it seemed to have a ‘mandatory effect’. The trial court had further added that even if the provision of providing interim compensation is discretionary, the Court is still clothed with these powers after recording sufficient reasons.

The accused persons before the trial court, however, moved the High Court arguing that the order was against the law and the provision vests the Metropolitan Magistrate with discretion, therefore the grant of interim compensation is not mandatory.

It was further argued that the trial court did not give any reason on the merits of the case but justified the award of interim compensation and therefore, it was a non-speaking order.

The respondents, however, contended that no discretion is vested in the trial court in view of Section 143A and therefore, the order for interim compensation does not suffer from any infirmity.

Justice Malhotra cited judgments by the Supreme Court as well as the Bombay High Court and the High Court of Punjab & Haryana to say that it is apparent that the provision of Section 143A is ‘directory’ as far as its effect on the trial court to award interim compensation is concerned.

“It becomes apparent that the provision of Section 143A of the NI Act, 1881 has essentially to be held to be ‘directory’ and cannot be termed to be ‘mandatory’ to the effect that the Trial Court has mandatorily to award the interim compensation under Section 143A of the NI Act, 1881 in all proceedings tried under Section 138 of the NI Act, 1881 on the mere invocation thereof by a complainant and thereby order in terms of Section 143A(2) thereof, the interim compensation to the tune of 20% of the amount of the cheque invoked,” the judgment said.

The Court, therefore, set aside the order and remanded the matter to the trial court to dispose of the application under Section 143A of the Act, after invoking Section 294 of the CrPC and considering the submissions made by the petitioner in response to the application.

The High Court directed the trial court to decide the application after taking into account the fact that Section 143A is directory in nature and not mandatory.

It also directed the Registrar General to circulate the judgment to all the subordinate criminal courts functioning in the national capital.

While advocates Bharat Gupta and Gunjan Arora appeared for the petitioners in the case, the State was represented by Additional Public Prosecutor Aashaa Tiwari. Advocate Ashok Mahipal appeared for the private respondents.

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