Repeated Defaults By Accused In Appearance & Permission Obtained To Travel Abroad Relevant Factors For Grant Of Interim Compensation U/S 143A NI Act: J&K And Ladakh High Court

The Court was hearing a petition challenging orders of the Chief Judicial Magistrate, Baramulla, at Sopore and the Additional Sessions Judge, Sopore, directing him to pay interim compensation of ₹8 lakh in a cheque dishonour complaint involving a cheque amount of ₹80 lakh.

A Bench of Justice Wasim Sadiq Nargal observed: “Significantly, the Trial Court recorded specific findings that the cheque, dishonour memo and statutory notice stood proved on record; that the accused had admitted the issuance of the cheque and his signatures thereon, disputing only the underlying liability; that there had been repeated defaults in appearance on the part of the accused; and that the permission obtained by him to travel abroad created a possibility of delay in conclusion of the proceedings. These are not extraneous considerations but factors directly relevant for determining whether the discretion under Section 143-A ought to be exercised.”

Aazim Pandith, Advocate, appeared for the petitioner. Mohsin-ul-Showkat Qadiri, Senior Additional Advocate General, assisted the Court as amicus curiae.

Background

The respondent had instituted a complaint under Section 138 of the Negotiable Instruments Act alleging dishonour of a cheque for ₹80 lakh. During the pendency of the proceedings, the complainant filed an application under Section 143-A of the Act seeking interim compensation.

The Chief Judicial Magistrate, Baramulla, at Sopore, allowed the application and directed payment of interim compensation. The petitioner challenged the order before the Additional Sessions Judge, Sopore, but the revision petition was dismissed. Aggrieved by the concurrent findings, the petitioner approached the High Court seeking the quashment of both orders.

Court's Observations

The High Court reiterated that Section 143-A does not make the grant of interim compensation automatic.

The Court observed that a plain reading of the provision shows that the legislature has empowered the trial court to direct payment of interim compensation up to twenty per cent of the cheque amount, but the power is discretionary in nature and must be exercised on relevant considerations supported by reasons reflecting application of mind.

The Bench noted that the judicial consensus regarding Section 143-A is that courts must undertake a prima facie assessment of the material on record before exercising the power and that interim compensation cannot be awarded mechanically merely because a complaint under Section 138 has been filed.

Rejecting the petitioner's contention that the order granting interim compensation was mechanical and non-speaking, the High Court found that the Trial Court had carefully considered the facts of the case, the objections raised by the accused and the legal principles governing Section 143-A.

The Court noted that the Trial Court had specifically relied upon the Supreme Court decisions in Rakesh Ranjan Shrivastava v. State of Jharkhand and G.J. Raja v. Tejraj Surana before exercising its discretion.

The High Court observed that the Trial Court had recorded several significant findings while directing payment of interim compensation.

The Trial Court had found that the cheque, dishonour memo and statutory notice stood duly proved; that the accused admitted the cheque and his signature and disputed only the liability; that there were repeated defaults in appearance; and that permission granted to the accused to travel abroad created a possibility of protracting the proceedings or evading trial.

According to the High Court, these considerations were directly relevant to the exercise of jurisdiction under Section 143-A and demonstrated a proper balancing of the complainant's interests and the accused's rights.

The Bench further remarked: “The order further reveals that the learned Magistrate did not proceed solely on the basis of the complainant’s claim. On the contrary, the Court remained alive to the requirement of maintaining a balance between the rights of the complainant and those of the accused and specifically observed that interim compensation cannot assume the character of punishment. It is only after noticing the conduct of the accused, the stage of the proceedings and the possibility of delay in conclusion of trial that the Court considered it appropriate to award interim compensation”.

The Court also endorsed the Trial Court's reasoning that interim compensation under Section 143-A is not intended to punish an accused.

Referring to the Trial Court's observations, the High Court affirmed that “the discretion under Section 143-A must be exercised judiciously—not as punishment, but as a safeguard.”

The Trial Court had therefore awarded only 10% of the cheque amount, i.e., ₹8 lakh, after considering the conduct of the accused, the advanced stage of the proceedings and the potential risk of delay.

“Thus, the reasons which weighed with the learned Trial Court in invoking Section 143-A are clearly discernible from the order itself, …the order cannot, therefore, be termed as a non-speaking order or one suffering from non-application of mind, …rather, it reflects a conscious exercise of judicial discretion founded upon relevant and germane considerations”, the Bench concluded.

Conclusion

Finding that the Trial Court had exercised its discretion under Section 143-A of the Negotiable Instruments Act based on relevant considerations and recorded reasons, the Court upheld the concurrent findings of the courts below and declined to interfere with the direction requiring payment of ₹8 lakh as interim compensation.

Cause Title: Mohammed Ashraf Mir v. Wazira Reshi

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