“Interim compensation under Article 143A of the Tradable Instruments Act is not discretionary”: High Court of Chhattisgarh


The High Court of Chhattisgarh has ruled that Section 143A of the Negotiable Instruments Act, 1881 for compensation is a directory and not discretionary.

A single judge bench of Judge Narendra Kumar Vyas observed that the amendment to Article 143A of the NIA Law upheld the decision of the judicial magistrate, who awarded compensation of 20% of the amount of the check.

The facts are that a complaint was filed against the applicant under section 138 of the Act, alleging refusal to honor a check due to insufficient funds. The complainant filed a claim for interim compensation under section 143A of the NI Act. It has been argued that if charges have been framed, interim compensation c up to 20% of the amount of the check may be ordered. The judicial magistrate granted the compensation requested in favor of the plaintiff.

The applicant then challenged the decision in a petition for review which was rejected and later confirmed by the judicial magistrate. The petitioner argued that the amended provision of section 143A of the 1881 law relating to the award of compensation does not impose interim compensation; it is discretionary because the word “may” has been used. The applicant’s assertion was based on LGR Enterprises & Anr v. Abbazhagan where the Madras HC held the discretion conferred on the trial court to order interim compensation must be supported by reasons.

The Court relied firmly on the purposes and objects of amended section 143A of the 1881 Act to conclude that,

“From reading section 143A of the 1881 Act, it is quite evident that the law has been amended by granting interim measures ensuring that the interest of the plaintiff is respected in the interim period before the charges are laid. are proven against the shooter. The intention behind this provision is to provide assistance to the plaintiff during the duration of the proceedings under section 138 of the law, where he is already suffering from a double-edged sword of loss of debts by the refusal of the check. and subsequent legal costs in pursuing the claim and infringement. ”

The Court held that the use of the word “may” can be considered as “shall”; be used for the benefit of the complainant when aggrieved. The Court observed that it is in the interests of the complainant and the accused that 20% of the amount of the check be paid by the accused. It has been observed that,

“He (the accused) may be able to use the same for his purpose, while the accused will be on the safer side as the amount is already deposited in accordance with the order passed under Section 143A of the law of 1881. When the last judgment rendered against him, he must pay compensation for the lower part. “

Click here to download / read the order


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