Unravelling Discretionary Powers U/s 143-A of the Negotiable Instruments Act for Interim Compensation in Cheque Dishonour Cases: Supreme Court


The Supreme Court, in the case of ‘Rakesh Ranjan Shrivastava Vs. The State of Jharkhand’ addressed the discretionary power conferred upon courts under Section 143-A of the Negotiable Instruments Act, 1881 (N.I. Act), specifically regarding the grant of interim compensation. The Court underscored the importance of a judicious exercise of discretion, emphasizing the need for a prima facie evaluation of the case, consideration of the accused’s financial situation, and the plausibility of their defence. The judgment sets out various factors to be taken into account by courts while deciding on applications for interim compensation under Section 143-A.



The case of ‘Rakesh Ranjan Shrivastava Vs. The State of Jharkhand’ pertains to a criminal appeal against the decision of the Jharkhand High Court, which upheld the Trial Court’s order directing payment of interim compensation of Rs. 10,00,000/- to the respondent under Section 143-A of the Negotiable Instruments Act, 1881. The Supreme Court bench, comprising of Justice Abhay S. Oka and Justice Ujjal Bhuyan, set aside the impugned judgments, emphasizing the necessity for courts to exercise discretion judiciously while granting interim compensation under Section 143-A.


The object of Section 143-A:

The Court noted that Section 143-A was introduced by Act No. 20 of 2018 to address delays in resolving dishonoured cheque cases. This provision allows courts to grant interim compensation to complainants. Additionally, the Court observed that Section 148 of the N.I. Act supplements Section 143-A by enabling appellate courts to order the appellant to deposit a portion of the fine or compensation awarded by the Trial Court. The Court clarified that the amount payable under Section 148 is separate from interim compensation under Section 143-A.


Discretionary Nature of Section 143-A (1):

The Court deliberated on whether Section 143-A (1) is mandatory or discretionary. It elucidated that the use of “may” in legislation can sometimes be construed as “shall” or vice versa, depending on the context. The Court determined that nonpayment of interim compensation does not deprive the accused of their right to defence, and the amount can be recovered akin to a fine. Various methods of recovery were outlined, including attachment of movable property or realization as arrears of land revenue. The Court emphasized the significant consequences of non-payment, even if the accused is acquitted.


Factors for the Court’s Discretion:

The Court enumerated several factors to be considered by courts while exercising discretion under Section 143-A:

    • Prima facie evaluation: Courts must assess the merits of both the complainant’s case and the accused’s defence. The presumption under Section 139 of the N.I. Act alone does not warrant interim compensation.

    • Financial distress of the accused: The financial situation of the accused should be taken into account.

    • Plausible Defense: If the accused presents a prima facie plausible defence, the court may decline to grant interim compensation.

The Supreme Court emphasized that these factors are not exhaustive, and courts must tailor their analysis based on the specific circumstances of each case.



In the present case, the Court found that the Trial Court’s direction to deposit Rs. 10,00,000/- lacked consideration of the prima facie case and other relevant factors, indicating a failure to apply mind. Consequently, the Court directed the Trial Court to reconsider the application for interim compensation afresh. It was stipulated that the deposited amount shall remain with the Trial Court. The impugned judgments were set aside.

This judgment underscores the need for a balanced approach in exercising discretion under Section 143-A of the N.I. Act, ensuring fairness to both complainants and accused parties involved in dishonored cheque cases.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. The content may not reflect the most current legal developments and is not guaranteed to be accurate, complete, or up-to-date. Readers should consult a qualified legal professional before taking any action based on the information provided. The authors and publishers disclaim any liability for any loss or damage incurred as a result of reliance on this article. This article does not create an attorney-client relationship.

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