RAKESH RANJAN SHRIVASTAVA versus THE STATE OF JHARKHAND & ANR.

Citation: [2024] 3 S.C.R. 438 · Decided: 15-03-2024 · Supreme Court of India · Bench: ABHAY S. OKA · Disposal: Case Partly allowed

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Judgment (excerpt)

* Author
[2024] 3 S.C.R. 438 : 2024 INSC 205
Rakesh Ranjan Shrivastava 
v. 
The State of Jharkhand & Anr.
(Criminal Appeal No. 741 of 2024)
15 March 2024
[Abhay S. Oka* and Ujjal Bhuyan, JJ.]
Issue for Consideration
Whether the provision of sub-section (1) of s.143A, Negotiable 
Instruments Act, 1881, which provides for the grant of interim 
compensation, is directory or mandatory. If it is held to be a directory 
provision, what are factors to be considered while exercising powers 
under sub-section (1) of Section 143A of the N.I. Act.
Headnotes
Negotiable Instruments Act, 1881 – s.143A(1) – Grant of interim 
compensation – Directory or mandatory:
Held: Power under sub-section (1) of s.143A is discretionary and 
not mandatory – Sub-section (1) of s.143A provides for passing 
a drastic order for payment of interim compensation against the 
accused in a complaint u/s.138, even before any adjudication is 
made on the guilt of the accused – The power can be exercised at 
the threshold even before the evidence is recorded – If the word 
‘may’ is interpreted as ‘shall’, it will have drastic consequences as 
in every complaint u/s.138, the accused will have to pay interim 
compensation up to 20 per cent of the cheque amount – Such an 
interpretation will be unjust and contrary to the well-settled concept 
of fairness and justice – If such an interpretation is made, the 
provision may expose itself to the vice of manifest arbitrariness 
and can be held to be violative of Article 14 of the Constitution 
– Considering the drastic consequences of exercising the power 
u/s.143A before the finding of the guilt is recorded in the trial, the 
word “may” used in the provision cannot be construed as “shall” - 
In the present case, the Trial Court mechanically passed the order 
of deposit of Rs.10,00,000/- without considering the issue of prima 
facie case and other relevant factors – It is true that the sum of 
Rs.10,00,000/- represents less than 5 per cent of the cheque amount, 
but the direction was issued to pay the amount without application 
of mind – Even the High Court did not apply its mind – Impugned 
[2024] 3 S.C.R. 
439
Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.
orders set aside – Trial Court to consider the application for grant 
of interim compensation afresh. [Paras 19, 14, 17 and 18]
Negotiable Instruments Act, 1881 – s.143A(1) – Exercise of 
powers under – Factors to be considered – While deciding the 
prayer made u/s.143A, the Court must record brief reasons 
indicating consideration of all relevant factors – Broad 
parameters for exercising the discretion u/s.143A:
Held: 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 presumption u/s.139 of the N.I. Act, by itself, is no ground to 
direct the payment of interim compensation as the presumption 
is rebuttable – The financial distress of the accused can also be 
a consideration – A direction to pay interim compensation can be 
issued, only if the complainant makes out a prima facie case – If 
the defence of the accused is found to be prima facie plausible, 
the Court may exercise discretion in refusing to grant interim 
compensation – 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, it will have to consider several factors such as the nature of the 
transaction, the relationship, if any, between the accused and the 
complainant, etc. – There could be several other relevant factors 
in the peculiar facts of a given case, which cannot be exhaustively 
stated – The parameters stated are not exhaustive. [Paras 19, 16]
Negotiable Instruments Act, 1881 – ss.143A, 138 – Code of 
Criminal Procedure, 1973 – ss.2(w), (x), 259, 262-265:
Held: Power u/s.143A(1) is to direct the payment of interim 
compensation in a summary trial or a summons case upon the 
recording of the plea of the accused that he was not guilty and, in 
other cases, upon framing of charge – As the maximum punishment 
u/s.138 of the N.I. Act is of imprisonment up to 2 years, in view of 
clause (w) r/w clause (x) of s.2, Cr.PC, the cases u/s.138 of the 
N.I. Act are triable as summons cases – However, sub-section 
(1) of s.143 provides that notwithstanding anything contained in 
the Cr.PC, the Magistrate shall try the c

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