In a landmark decision, the Supreme Court has ruled against the mandatory imposition of interim compensation on accused individuals in cheque dishonour cases.

Justices Abhay S Oka and Ujjal Bhuyan presided over the bench and emphasized the importance of fairness and justice in their judgment delivered on March 15.

The ruling stemmed from a case where the trial court mechanically ordered the accused to deposit a significant sum of Rs. 10,00,000 without due consideration of the prima facie case or other relevant factors. While this amount represented less than 5 percent of the cheque value, the court noted that such orders should not be made without careful deliberation.

Central to the court's decision was the interpretation of Section 143A of the Negotiable Instruments Act, which allows for the granting of interim compensation to complainants even before the accused is proven guilty. 

The bench clarified that the discretionary power granted under this section cannot be interpreted as mandatory. By using the word "may" instead of "shall," the legislature intended for the provision to be optional rather than obligatory.

The judges expressed concerns that enforcing interim compensation before establishing guilt could potentially violate Article 14 of the Constitution, which guarantees equality before the law. They stressed the need for courts to carefully evaluate the merits of each case and consider the financial circumstances of the accused before issuing any such orders.

The Supreme Court's ruling serves as a reminder of the importance of upholding principles of fairness and justice in legal proceedings. By affirming the discretionary nature of interim compensation orders, the court has provided clarity on a contentious issue that has implications for both accused individuals and complainants in cheque dishonour cases.

In setting aside a previous order from the Jharkhand High Court directing an accused to pay interim compensation, the apex court has reaffirmed its commitment to ensuring that legal processes are conducted with the utmost regard for fairness and constitutional principles.

Case: RAKESH RANJAN SHRIVASTAVA vs. THE STATE OF JHARKHAND & ANR,

CRIMINAL APPEAL NO. 741 OF 2024.

Click here to read/download judgment.