Punjab and Haryana High Court Ruling on Interim Compensation
The Punjab and Haryana High Court recently ruled that the provision allowing trial judges to award interim compensation is directory, not mandatory. A division bench consisting of Justice Sureshwar Thakur and Justice Sudeepti Sharma emphasized the need for discretion to be exercised judiciously when deciding on the award of interim compensation, asserting that a separate well-reasoned order must be issued in such cases.
This significant ruling stemmed from a reference made by a single bench regarding Section 143-A of the Negotiable Instruments Act, which pertains to the power to direct interim compensation. The primary question was whether this section mandated the award of interim relief or left it to the discretion of the trial judge. The bench also considered the necessity of providing a separate speaking order in such instances.
After reviewing numerous judgments, the bench determined that the statutory provision is indeed directory in nature. Understanding the distinction between mandatory and directory provisions is crucial; the former must be followed rigorously, while the latter allows for greater flexibility. Non-compliance with a mandatory provision may lead to serious legal consequences, whereas failing to comply with a directory provision typically does not carry such repercussions.
Citing Supreme Court judgments on the matter, the bench highlighted that the ruling provided clarity on the issue at hand. The apex court reasoned that the term “may” in Section 143-A should not be interpreted as “shall” due to the potentially drastic consequences that could arise from making interim compensation mandatory, especially if an accused were ultimately found not guilty. The bench quoted the apex court’s conclusion: “The coinage ‘may’ is not required to be assigned the signification of ‘shall’ as thereby it will hold all the ill drastic consequences… Resultantly, if a tone of mandatoriness is employed, it may result in penalising an accused even before his guilt is established.”
Additionally, the court noted that imposing the provision mandatorily could violate Article 14 of the Constitution, as it might impose undue hardships on the accused, particularly if their movable or immovable property was affected by recovery measures before the conclusion of the trial.
The bench also discussed that trial judges must consider several specific factors when adjudicating such applications. These factors include the financial distress of the accused, the nature of the transaction, the relationship between the complainant and the accused, and whether the accused has a prima facie plausible defense. The court emphasized, “A somber application of mind was required to be made qua the quantum of interim compensation to be granted.”
Finally, the bench stated that while the interim compensation amount is capped at 20 percent of the cheque amount, it may be less depending on the circumstances. The court mandated that trial judges must issue justifiable and legally sound orders regarding interim compensation.
