Holding

Sub‑section (1) of Section 143A is a discretionary, directory provision and may be exercised only after the court evaluates the prima facie case, the defence, and relevant circumstances.

Summary

The appellant was ordered by a Judicial Magistrate to deposit Rs.10,00,000 as interim compensation under s.143A(1) of the Negotiable Instruments Act in a complaint under s.138 for a dishonoured cheque. The appellant challenged the order, arguing that s.143A(1) uses the word "may" and is therefore discretionary, not mandatory. The Supreme Court examined the language of the provision, the legislative intent, and the potential for arbitrariness if the power were treated as mandatory. It held that the power to direct interim compensation is directory and must be exercised after a prima facie assessment of the complainant's case, the accused's defence, and other relevant factors. Consequently, the Court set aside the trial court's order and directed a fresh consideration of the application, while allowing the appeal in part.

Issues considered

Whether sub‑section (1) of Section 143A of the Negotiable Instruments Act, 1881 is a directory or a mandatory provision.
If the provision is directory, what factors must the court consider when exercising the discretion to grant interim compensation.

Legislation cited

Code of Criminal Procedure, 1973s. 259, s. 262, s. 263, s. 264, s. 265, s. 2(w), s. 2(x), s. 421
Negotiable Instruments Act, 1881s. 138, s. 139, s. 143A, s. 148, s. 357

Subjects

Interim compensationDirectory provisionMandatory provisionNegotiable Instruments ActCriminal Procedure CodeDiscretionary power

Judgment

[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
* Author
[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 complaint by adopting a
summary procedure under Sections 262 to 265 of the Cr.PC –
However, when at the commencement of the trial or during the
course of a summary trial, it appears to the Court that a sentence
of imprisonment for a term exceeding one year may have to be
440 [2024] 3 S.C.R.

Digital Supreme Court Reports

passed or for any other reason it is undesirable to try the case
summarily, the case shall be tried in the manner provided by the
CrPC – Therefore, the complaint u/s.138 becomes a summons
case in such a contingency – Further, u/s.259 of the Cr.PC, subject
to what is provided in the said Section, the Magistrate has the
discretion to convert a summons case into a warrant case – Only in
a warrant case, there is a question of framing charge – Therefore,
clause (b) of sub-section (1) of s.143A will apply only when the
case is being tried as a warrant case – In the case of a summary
or summons trial, the power under sub-section (1) of s.143A can
be exercised after the plea of the accused is recorded. [Para 10]
Negotiable Instruments Act, 1881 – s.143A – Code of Criminal
Procedure, 1973 – s.421 – Recovery of interim compensation:
Held: Under s.143A(5), it is provided that the amount of interim
compensation can be recovered as if it were a fine u/s.421 of the
Cr.PC – Therefore, by a legal fiction, the interim compensation is
treated as a fine for the purposes of its recovery – s.421 deals with
the recovery of the fine imposed by a criminal court while passing
the sentence – Thus, recourse can be taken to s.421 of the Cr.PC.
for recovery of interim compensation. [Para 11]
Negotiable Instruments Act, 1881 – s.143A – Object – Discussed.
Negotiable Instruments Act, 1881 – s.143A – Non-payment of
interim compensation – Consequences:
Held:Non-payment of interim compensation fixed u/s.143A has
drastic consequences – To recover the same, the accused may
be deprived of his immovable and movable property – If acquitted,
he may get back the money along with the interest as provided in
s.143A(4) from the complainant – But, if his movable or immovable
property has been sold for recovery of interim compensation,
even if he is acquitted, he will not get back his property – Though,
the N.I. Act does not prescribe any mode of recovery of the
compensation amount from the complainant together with interest
as provided in s.143A(4), as sub-section (4) provides for refund
of interim compensation by the complainant to the accused and
as sub-section (5) provides for mode of recovery of the interim
compensation, obviously for recovery of interim compensation from
the complainant, the mode of recovery will be as provided in s.421
of the CrPC – It may be a long-drawn process involved for the
recovery of the amount from the complainant – If the complainant
[2024] 3 S.C.R. 441

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

has no assets, the recovery will be impossible. [Para 12]
Negotiable Instruments Act, 1881 – ss.148, 143A – Tests
applicable for the exercise of jurisdiction u/s.148(1) not to
apply u/s.143A(1):
Held: Sub-section (1) of s.148 confers on the Appellate Court a
power to direct the appellant/accused to deposit 20 per cent of the
compensation amount – It operates at a different level as the power
thereunder can be exercised only after the appellant/accused is
convicted after a full trial – In the case of s.143A, the power can
be exercised even before the accused is held guilty – s.143A can
be invoked before the conviction of the accused, and therefore, the
word “may” used therein can never be construed as “shall” – The
tests applicable for the exercise of jurisdiction u/sub-section (1) of
s.148 can never apply to the exercise of jurisdiction u/sub-section
(1) of s.143A of the N.I. Act. [Paras 13, 15.1]
Words and expressions – ‘may’ – Interpretation:
Held: The word “may” ordinarily does not mean “must” – Ordinarily,
“may” will not be construed as “shall” – But this is not an inflexible
rule – The use of the word “may” in certain legislations can be
construed as “shall”, and the word “shall” can be construed as
“may” – It all depends on the nature of the power conferred by the
relevant provision of the statute and the effect of the exercise of the
power – The legislative intent also plays a role in the interpretation
of such provisions – Even the context in which the word “may”
has been used is also relevant. [Para 9]

Case Law Cited
Surinder Singh Deswal v. Virender Gandhi, [2019] 8 SCR
746 : (2019) 11 SCC 341; Jamboo Bhandari v. Madhya
Pradesh State Industrial Development Corporation
Limited & Ors., (2023) 10 SCC 446 – referred to.

List of Acts
Negotiable Instruments Act, 1881; Code of Criminal Procedure,
1973.

List of Keywords
Interim compensation; Directory or mandatory; Recovery of interim
compensation.
442 [2024] 3 S.C.R.

Digital Supreme Court Reports

Case Arising From
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.741
of 2024
From the Judgment and Order dated 03.01.2023 of the High Court
of Jharkhand at Ranchi in CRMP No.836 of 2021
Appearances for Parties
Shubham Bhalla, Rajnish Ranjan, Yajur Bhalla, Ms. Anchita Nayyar,
Ms. Ragini Sharma, Ms. Akansha Gulati, Ms. Nitya Maheshwari,
Ms. Gauri Bedi, Jaisurya Jain, Rohit Pandey, Alex Noel Dass, Vijay
Kumar Dwivedi, Advs. for the Appellant.
Prateek Yadav, Mohd. Shahrukh, Yogesh Yadav, Pati Raj Yadav,
Ms. Pratima Yadav, Ranbir Singh Yadav, Vishnu Sharma, Ms.
Madhusmita Bora, Dipankar Singh, Mrs. Anupama Sharma, Advs.
for the Respondents.
Judgment / Order of the Supreme Court

Judgment
Abhay S. Oka, J.
1. The issue involved in this criminal appeal is whether the provision
of sub-section (1) of Section 143A of the Negotiable Instruments
Act, 1881 (for short, ‘the N.I. Act’), which provides for the grant of
interim compensation, is directory or mandatory. If it is held to be
a directory provision, the question that arises is, what are factors
to be considered while exercising powers under sub-section (1) of
Section 143A of the N.I. Act.
FACTUAL ASPECTS
The case of the 2nd respondent in the Complaint
2. The 2nd respondent (hereinafter referred as ‘the respondent’) is the
complainant in a complaint under Section 138 of the N.I. Act. The
complaint was filed in the Court of the Chief Judicial Magistrate
at Bokaro. The case in the complaint is that the appellant and
the respondent formed various companies on different terms and
conditions regarding profit sharing. On 23rd September 2011, an
appointment letter was issued by the appellant in his capacity as
[2024] 3 S.C.R. 443

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

the Managing Director of the company M/s Thermotech Synergy
Pvt. Ltd. and on behalf of a proprietary concern, M/s Tech
Synergy, by which the post of Executive Director was offered by
the appellant to the respondent on consolidated salary of Rs.
1,00,000/- per month.
3. On 1st June 2012, the appellant formed a partnership with one
Rahul Kumar Basu, in which the respondent was shown as an
indirect partner. According to the respondent’s case, M/s Tech
Synergy was merged with another company - M/s Megatech
Synergy Pvt. Ltd. It is alleged by the respondent that in August
2012, there was an agreement to pay him 50 per cent of the
profit. One more partnership firm came into existence on 3 rd
June 2013, wherein the appellant, respondent, and Rahul Kumar
were shown as partners. It is the case of the respondent that
the appellant agreed to give a 50 per cent share in the profits
of another company, Geotech Synergy Pvt. Ltd. It is alleged that
the appellant did not pay the amounts due and payable to the
respondent. Therefore, a legal notice was issued to the appellant
by the respondent. According to the case of the respondent, the
appellant was liable to pay the total amount of Rs. 4,38,80,000/-
to the respondent, and in fact, a civil suit has been filed by the
respondent in the Civil Court at Bokaro for recovery of the said
amount. After that, on 13th July 2018, there was a meeting between
parties at Ranchi when the appellant agreed to pay a sum of Rs.
4,25,00,000/- to the respondent, and two cheques in the sum
of Rs. 2,20,00,000/- and 2,05,00,000/- dated 6 th August 2018
and 19th September 2018 respectively were handed over to the
appellant. As the first cheque in the sum of Rs. 2,20,00,000/- was
dishonoured, a complaint was filed after the service of a statutory
notice alleging the commission of an offence punishable under
Section 138 of the N.I. Act on which the learned Magistrate took
cognizance of the offence.
Application under Section 143A of the NI Act
4. Before the Court of the learned Magistrate, the respondent moved
an application under Section 143A of the N.I. Act seeking a direction
against the appellant/accused to pay 20 per cent of the cheque
amount as compensation. By the order dated 7th March 2020, the
learned Judicial Magistrate allowed the application and directed the
444 [2024] 3 S.C.R.

Digital Supreme Court Reports

appellant to pay an interim compensation of Rs. 10,00,000/- to the
respondent within 60 days. The Sessions Court affirmed the order of
the learned Magistrate in a revision application. The said orders were
subjected to a challenge before the High Court. The learned Judge
of Jharkhand High Court dismissed the petition by the impugned
judgment. These orders are the subject matter of challenge in the
present criminal appeal.
SUBMISSIONS
5. The learned counsel appearing for the appellant pointed out that
sub-section (1) of Section 143A of the N.I. Act uses the word
‘may’. Therefore, the provision is discretionary. He submitted that
the Trial Court cannot pass an order to pay interim compensation
mechanically. He submitted that the Court must apply its mind to
the facts of the case before passing the drastic order of deposit.
He submitted that the existence of a prima facie case is essential
for exercising the power under Section 143A. Only after prima
facie consideration of the merits of the complainant’s case and
defence of the accused, the Court must conclude whether a
case is made out for the grant of interim compensation. After the
Court comes to the conclusion that a case for grant of interim
compensation has been made out, the Court has to apply its
mind to the quantum of interim compensation. In every case, the
Court cannot grant 20 per cent of the cheque amount as interim
compensation.
6. The learned counsel appearing for the respondent submitted that
considering the very object of Section 138 of the N.I. Act, sub-section
(1) of Section 143A will have to be held as mandatory. He submitted
that there is a presumption under Section 139 of the N.I. Act that
unless a contrary is proved, the holder of a cheque received the
cheque for the discharge, in whole or in part, of any debt or liability.
He submitted that the question of rebutting the said presumption would
arise only after the evidence is adduced. Therefore, the defence of
the accused at the stage of considering an application under sub-
section (1) of Section 143A is irrelevant. In every case, an order of
payment of interim compensation must follow. He submitted that
unless it is held that sub-section (1) of Section 143A is mandatory,
the very object of the legislature of enacting this provision will be
frustrated.
[2024] 3 S.C.R. 445

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

CONSIDERATION OF SUBMISSIONS
The object of Section 143A
7. Section 143A was brought on the statute book by Act No. 20 of
2018 with effect from 1st September 2018. Section 143A reads thus:
“143-A. Power to direct interim compensation.—(1)
Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), the Court trying
an offence under Section 138 may order the drawer
of the cheque to pay interim compensation to the
complainant—
(a) in a summary trial or a summons case, where
he pleads not guilty to the accusation made
in the complaint; and
(b) in any other case, upon framing of charge.
(2) The interim compensation under sub-section (1)
shall not exceed twenty per cent of the cheque amount.
(3) The interim compensation shall be paid within sixty
days from the date of the order under sub-section (1), or
within such further period not exceeding thirty days as
may be directed by the Court on sufficient cause being
shown by the drawer of the cheque.
(4) If the drawer of the cheque is acquitted, the Court shall
direct the complainant to repay to the drawer the amount
of interim compensation, with interest at the bank rate as
published by the Reserve Bank of India, prevalent at the
beginning of the relevant financial year, within sixty days
from the date of the order, or within such further period not
exceeding thirty days as may be directed by the Court on
sufficient cause being shown by the complainant.
(5) The interim compensation payable under this section
may be recovered as if it were a fine under Section 421 of
the Code of Criminal Procedure, 1973 (2 of 1974).
(6) The amount of fine imposed under Section 138 or the
amount of compensation awarded under Section 357 of
the Code of Criminal Procedure, 1973 (2 of 1974), shall
446 [2024] 3 S.C.R.

Digital Supreme Court Reports

be reduced by the amount paid or recovered as interim
compensation under this section.”
(emphasis added)
7.1. In the statement of objects and reasons, it was stated that
unscrupulous drawers of the cheques prolong the proceedings of
a complaint under Section 138 by filing appeals and obtaining a
stay. Therefore, injustice is caused to the payee of a dishonoured
cheque, who has to spend considerable time and resources in
Court proceedings to realise the value of the cheque. It was
further observed that such delays compromise the sanctity of
the cheque transactions. Therefore, it was proposed to amend
the N.I. Act to address the issue of undue delay in the final
resolution of the cheque dishonour cases. It was also stated
that the proposed amendments would strengthen the credibility
of cheques and help trade and commerce.
8. We may note here that by the same Act No.20 of 2018, Section 148
was brought on the statute book, which provides that in an appeal
preferred by the drawer against conviction under Section 138, the
Appellate Court may order the appellant to deposit such a sum which
shall be a minimum 20 per cent of the fine or compensation awarded
by the Trial Court. The proviso to sub-section (1) of Section 148
clarifies that the amount payable under sub-section (1) of Section
148 is in addition to interim compensation paid by the appellant/
accused under Section 143A. There are no separate objects and
reasons set out for the addition of Section 148.
MANDATORY OR DIRECTORY
9. There is no doubt that the word “may” ordinarily does not mean
“must”. Ordinarily, “may” will not be construed as “shall”. But this is
not an inflexible rule. The use of the word “may” in certain legislations
can be construed as “shall”, and the word “shall” can be construed
as “may”. It all depends on the nature of the power conferred by the
relevant provision of the statute and the effect of the exercise of the
power. The legislative intent also plays a role in the interpretation
of such provisions. Even the context in which the word “may” has
been used is also relevant.
10. The power under sub-section (1) of Section 143A is to direct the
payment of interim compensation in a summary trial or a summons
[2024] 3 S.C.R. 447

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

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 under Section 138 of the N.I. Act is of imprisonment up
to 2 years, in view of clause (w) read with clause (x) of Section 2 of
the Code of Criminal Procedure, 1973 (for short, ‘the Cr.PC’), the
cases under Section 138 of the N.I. Act are triable as summons cases.
However, sub-section (1) of Section 143 provides that notwithstanding
anything contained in the Cr.PC, the learned Magistrate shall try the
complaint by adopting a summary procedure under Sections 262
to 265 of the Cr.PC. However, when at the commencement of the
trial or during the course of a summary trial, it appears to the Court
that a sentence of imprisonment for a term exceeding one year may
have to be passed or for any other reason it is undesirable to try
the case summarily, the case shall be tried in the manner provided
by the CrPC. Therefore, the complaint under Section 138 becomes
a summons case in such a contingency. We may note here that
under Section 259 of the Cr.PC, subject to what is provided in the
said Section, the learned Magistrate has the discretion to convert a
summons case into a warrant case. Only in a warrant case, there is
a question of framing charge. Therefore, clause (b) of sub-section
(1) of Section 143A will apply only when the case is being tried as a
warrant case. In the case of a summary or summons trial, the power
under sub-section (1) of Section 143A can be exercised after the
plea of the accused is recorded.
11. Under sub-section (5) of Section 143A, it is provided that the amount
of interim compensation can be recovered as if it were a fine under
Section 421 of the Cr.PC. Therefore, by a legal fiction, the interim
compensation is treated as a fine for the purposes of its recovery.
Section 421 of the Cr.PC deals with the recovery of the fine imposed
by a criminal court while passing the sentence. Thus, recourse
can be taken to Section 421 of the Cr.PC. for recovery of interim
compensation, which reads thus:
“421. Warrant for levy of fine.—(1) When an offender
has been sentenced to pay a fine, the Court passing the
sentence may take action for the recovery of the fine in
either or both of the following ways, that is to say, it may—
(a) issue a warrant for the levy of the amount by
attachment and sale of any movable property
belonging to the offender;
448 [2024] 3 S.C.R.

Digital Supreme Court Reports

(b) issue a warrant to the Collector of the district,
authorising him to realise the amount as arrears
of land revenue from the movable or immovable
property, or both, of the defaulter:
Provided that, if the sentence directs that in default of
payment of the fine, the offender shall be imprisoned,
and if such offender has undergone the whole of such
imprisonment in default, no Court shall issue such warrant
unless, for special reasons to be recorded in writing, it
considers it necessary so to do, or unless it has made an
order for the payment of expenses or compensation out
of the fine under Section 357.
(2) The State Government may make rules regulating the
manner in which warrants under clause (a) of sub-section
(1) are to be executed, and for the summary determination
of any claims made by any person other than the offender
in respect of any property attached in execution of such
warrant.
(3) Where the Court issues a warrant to the Collector
under clause (b) of sub-section (1), the Collector shall
realise the amount in accordance with the law relating to
recovery of arrears of land revenue, as if such warrant
were a certificate issued under such law:
Provided that no such warrant shall be executed by the
arrest or detention in prison of the offender.”
12. Non-payment of interim compensation by the accused does not take
away his right to defend the prosecution. The interim compensation
amount can be recovered from him treating it as fine. The interim
compensation amount can be recovered by the Trial Court by issuing
a warrant for attachment and sale of the movable property of the
accused. There is also a power vested with the Court to issue a warrant
to the Collector of the District authorising him to realise the interim
compensation amount as arrears of land revenue from the movable or
immovable property, or both, belonging to the accused. For recovery of
the interim compensation, the immovable or movable property of the
accused can be sold by the Collector. Thus, non-payment of interim
compensation fixed under Section 143A has drastic consequences. To
[2024] 3 S.C.R. 449

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

recover the same, the accused may be deprived of his immovable and
movable property. If acquitted, he may get back the money along with
the interest as provided in sub-section (4) of Section 143A from the
complainant. But, if his movable or immovable property has been sold
for recovery of interim compensation, even if he is acquitted, he will
not get back his property. Though, the N.I. Act does not prescribe any
mode of recovery of the compensation amount from the complainant
together with interest as provided in sub-section (4) of Section 143A,
as sub-section (4) provides for refund of interim compensation by the
complainant to the accused and as sub-section (5) provides for mode of
recovery of the interim compensation, obviously for recovery of interim
compensation from the complainant, the mode of recovery will be as
provided in Section 421 of the CrPC. It may be a long-drawn process
involved for the recovery of the amount from the complainant. If the
complainant has no assets, the recovery will be impossible.
13. At this stage, we may note sub-section (1) of Section 148. Section
148 reads thus:-
“148. Power of Appellate Court to order payment pending
appeal against conviction.—(1) Notwithstanding anything
contained in the Code of Criminal Procedure, 1973 (2 of
1974), in an appeal by the drawer against conviction under
section 138, the Appellate Court may order the appellant to
deposit such sum which shall be a minimum of twenty per
cent of the fine or compensation awarded by the trial Court:
Provided that the amount payable under this sub-section
shall be in addition to any interim compensation paid by
the appellant under section 143A.
(2) The amount referred to in sub-section (1) shall be
deposited within sixty days from the date of the order, or
within such further period not exceeding thirty days as
may be directed by the Court on sufficient cause being
shown by the appellant.
(3) The Appellate Court may direct the release of the
amount deposited by the appellant to the complainant at
any time during the pendency of the appeal:
Provided that if the appellant is acquitted, the Court shall
direct the complainant to repay to the appellant the amount
450 [2024] 3 S.C.R.

Digital Supreme Court Reports

so released, with interest at the bank rate as published by
the Reserve Bank of India, prevalent at the beginning of
the relevant financial year, within sixty days from the date
of the order, or within such further period not exceeding
thirty days as may be directed by the Court on sufficient
cause being shown by the complainant.”
Sub-section (1) of Section 148 confers on the Appellate Court a
power to direct the appellant/accused to deposit 20 per cent of the
compensation amount. It operates at a different level as the power
thereunder can be exercised only after the appellant/accused is
convicted after a full trial.
14. In the case of Section 143A, the power can be exercised even before
the accused is held guilty. Sub-section (1) of Section 143A provides for
passing a drastic order for payment of interim compensation against
the accused in a complaint under Section 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 under Section 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. The
provision can be held to be violative of Article 14 of the Constitution.
In a sense, sub-section (1) of Section 143A provides for penalising
an accused even before his guilt is established. Considering the
drastic consequences of exercising the power under Section 143A
and that also before the finding of the guilt is recorded in the trial,
the word “may” used in the provision cannot be construed as “shall”.
The provision will have to be held as a directory and not mandatory.
Hence, we have no manner of doubt that the word “may” used in
Section 143A, cannot be construed or interpreted as “shall”. Therefore,
the power under sub-section (1) of Section 143A is discretionary.
15. Even sub-section (1) of Section 148 uses the word “may”. In the
case of Surinder Singh Deswal v. Virender Gandhi1, this Court,
after considering the provisions of Section 148, held that the word

1 [2019] 8 SCR 746 : (2019) 11 SCC 341
[2024] 3 S.C.R. 451

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

“may” used therein will have to be generally construed as “rule” or
“shall”. It was further observed that when the Appellate Court decides
not to direct the deposit by the accused, it must record the reasons.
After considering the said decision in the case of Surinder Singh
Deswal1, this Court, in the case of Jamboo Bhandari v. Madhya
Pradesh State Industrial Development Corporation Limited &
Ors.2, in paragraph 6, held thus:
“6. What is held by this Court is that a purposive
interpretation should be made of Section 148 NI Act.
Hence, normally, the appellate court will be justified
in imposing the condition of deposit as provided in
Section 148. However, in a case where the appellate
court is satisfied that the condition of deposit of 20%
will be unjust or imposing such a condition will amount
to deprivation of the right of appeal of the appellant,
exception can be made for the reasons specifically
recorded.”
(Emphasis added)
15.1. As held earlier, Section 143A can be invoked before the
conviction of the accused, and therefore, the word “may” used
therein can never be construed as “shall”. The tests applicable
for the exercise of jurisdiction under sub-section (1) of Section
148 can never apply to the exercise of jurisdiction under sub-
section (1) of Section 143A of the N.I. Act.
FACTORS TO BE CONSIDERED WHILE EXERCISING DISCRETION
16. When the court deals with an application under Section 143A of the
N.I. Act, 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 under sub-
section (1) of Section 143A. The presumption under Section 139 of
the N.I. Act, by itself, is no ground to direct the payment of interim
compensation. The reason is that the presumption is rebuttable. The
question of applying the presumption will arise at the trial. Only if
the complainant makes out a prima facie case, a direction can be
issued to pay interim compensation. At this stage, the fact that the

2 (2023) 10 SCC 446
452 [2024] 3 S.C.R.

Digital Supreme Court Reports

accused is in financial distress can also be a consideration. Even
if the Court concludes that a case is made out for grant of interim
compensation, the Court will have to apply its mind to the quantum
of interim compensation to be granted. Even at this stage, the
Court will have to consider various factors such as the nature of the
transaction, the relationship, if any, between the accused and the
complainant and the paying capacity of the accused. If the defence of
the accused is found to be prima facie a plausible defence, the Court
may exercise discretion in refusing to grant interim compensation.
We may note that the factors required to be considered, which we
have set out above, are not exhaustive. There could be several other
factors in the facts of a given case, such as, the pendency of a civil
suit, etc. While deciding the prayer made under Section 143A, the
Court must record brief reasons indicating consideration of all the
relevant factors.
17. In the present case, the Trial Court has mechanically passed an
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 has been issued to pay the amount without
application of mind. Even the High Court has not applied its mind. We,
therefore, propose to direct the Trial Court to consider the application
for grant of interim compensation afresh. In the meanwhile, the
amount of Rs. 10,00,000/- deposited by the appellant will continue
to remain deposited with the Trial Court.
18. Hence, impugned orders are set aside, and the application made
by the complainant in Complaint Petition No. 1103/2018 under
Section 143A (1) of the N.I. Act is restored to the file of Judicial
Magistrate First Class, Bokaro. The learned Judge will hear and
decide the application for the grant of interim compensation
afresh in the light of what is held in this judgment. The amount
deposited by the appellant of Rs. 10,00,000/- shall be invested
in a fixed deposit till the disposal of the said application. At the
time of disposing of the application, the Trial Court will pass an
appropriate order regarding refund and/or withdrawal and/or
investment of the said amount.
19. Subject to what is held earlier, the main conclusions can be
summarised as follows:
[2024] 3 S.C.R. 453

Rakesh Ranjan Shrivastava v. The State of Jharkhand & Anr.

a. The exercise of power under sub-section (1) of Section 143A is
discretionary. The provision is directory and not mandatory. The
word “may” used in the provision cannot be construed as “shall.”
b. While deciding the prayer made under Section 143A, the
Court must record brief reasons indicating consideration of all
relevant factors.
c. The broad parameters 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.
20. The Appeal is partly allowed on the above terms.

Headnotes prepared by: Divya Pandey Result of the case:
Partly allowed.