J&K High Court Upholds ₹8 Lakh Interim Compensation Order Under Section 143-A NI Act, Distinguishes Non-Speaking Order Precedents

Justice Wasim Sadiq Nargal held that a reasoned Section 143-A order cannot be set aside merely because the accused disputes the trial court’s conclusions on relevant factors.

The High Court of Jammu & Kashmir and Ladakh at Srinagar has dismissed a petition seeking to quash concurrent orders directing payment of interim compensation under Section 143-A of the Negotiable Instruments Act, 1881. Justice Wasim Sadiq Nargal, sitting singly, found that the Chief Judicial Magistrate, Baramulla at Sopore had recorded specific reasons and applied its mind to the relevant factors before directing the accused to pay ten per cent of the cheque amount — ₹8,00,000 — as interim compensation. The court held that a reasoned order passed upon due consideration of relevant factors is not vulnerable to interference merely because the accused disputes the conclusions reached by the trial court. The judgment also clarifies when earlier precedents on non-speaking Section 143-A orders can and cannot be relied upon.

The Dispute Before the High Court

The respondent, Wazira Reshi, filed a complaint against the petitioner, Mohammed Ashraf Mir, under Section 138 of the Negotiable Instruments Act alleging dishonour of a cheque for ₹80,00,000. During the pendency of those complaint proceedings, the respondent moved an application under Section 143-A seeking interim compensation.

The petitioner filed objections to that application. The Chief Judicial Magistrate, Baramulla at Sopore, allowed the application on 4 November 2025 and directed payment of interim compensation. The petitioner challenged that order before the Additional Sessions Judge, Sopore, who dismissed the revision petition on 27 February 2026 and affirmed the trial court’s order.

Still aggrieved, the petitioner approached the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita seeking quashment of both orders and the consequential proceedings.

Petitioner’s Challenge and the Amicus Curiae’s Assistance

Counsel for the petitioner argued that the power under Section 143-A is discretionary and not mandatory, and that the courts below had exercised it in a routine and mechanical manner without recording objective satisfaction or cogent reasons. It was contended that the petitioner’s detailed objections were neither considered nor dealt with, and that material contradictions had emerged in the cross-examination of the complainant and other witnesses — including the Bank Manager — which supported the defence. Counsel also argued that the presumption under Section 139 of the Act is rebuttable and cannot be invoked as a matter of course to justify interim compensation, and that the petitioner’s financial constraints had not been considered.

Because the petition raised an important question about the scope of Section 143-A, the court requested Mr. Mohsin Qadri, Senior Additional Advocate General, to assist as amicus curiae. Mr. Qadri submitted that the legislature’s use of the word “may” in Section 143-A(1) confirms the provision is discretionary, not automatic. He submitted that the court is required to conduct a prima facie evaluation of the material on record, examine the merits of the complaint, the nature of the defence, and other relevant circumstances before determining whether interim compensation is warranted. The mere filing of a complaint under Section 138 or the framing of notice does not, by itself, entitle the complainant to such an order.

What Section 143-A Requires

Section 143-A empowers the court trying an offence under Section 138 to direct the drawer of a cheque to pay interim compensation not exceeding twenty per cent of the cheque amount. In a summary trial or summons case, the power arises when the accused pleads not guilty; in other cases, upon framing of charge. If the drawer is acquitted, the complainant must repay the amount with interest at the bank rate published by the Reserve Bank of India. Any amount paid as interim compensation is later adjusted against the fine or compensation awarded under Section 138 or Section 357 of the Code of Criminal Procedure.

The court confirmed that the power is discretionary. It observed that the exercise of such discretion must be supported by reasons reflecting application of mind to the facts of the case, and that whether the discretion has been lawfully exercised depends on the contents of the impugned order and the reasons, if any, recorded therein.

How the Bench Reasoned

Justice Nargal examined the order dated 4 November 2025 in detail. He found that the Chief Judicial Magistrate had referred to the governing Supreme Court precedents, was conscious that the provision does not mandate automatic grant of interim compensation, and had examined the material on record before exercising jurisdiction.

The trial court had recorded four specific findings: the cheque, dishonour memo and statutory notice stood proved on record; the accused had admitted the issuance of the cheque and his signatures, disputing only the underlying liability; there had been repeated defaults in appearance by the accused; and the permission obtained by the accused to travel abroad created a real possibility of delay in conclusion of the proceedings or evasion of trial. The Magistrate had also observed that interim compensation cannot assume the character of punishment and that judicial balance required protecting the complainant’s interest without prejudicing the accused’s right to defend.

Justice Nargal held that these were not extraneous considerations but factors directly relevant to whether the discretion under Section 143-A ought to be exercised. The reasons which weighed with the trial court were clearly discernible from the order itself. The order could not, therefore, be termed non-speaking or one suffering from non-application of mind.

The court also noted that the revisional court had independently examined the matter and affirmed the trial court’s view by a reasoned order. Both orders were, accordingly, upheld.

Distinguishing Earlier Precedents

The petitioner had relied on two earlier judgments of the same court — Nazir Ahmad Chopan v. Abdul Rehman Chopan, CRM(M) No. 50/2020, decided on 23 December 2022, and Nargees Javaid v. Ghulam Jeelani Nengroo, CRM(M) No. 185/2026, decided on 20 April 2026 — to argue that the impugned orders were liable to be set aside.

Justice Nargal found this reliance misconceived. In both those cases, the orders under challenge had been interfered with because the courts concerned had failed to record reasons while exercising jurisdiction under Section 143-A. The orders in those cases were found to be non-speaking and reflective of non-application of mind. The present case stood on an entirely different footing because the Magistrate had recorded reasons and adverted to the relevant material. The factual basis on which those judgments were rendered was conspicuously absent here, making them clearly distinguishable.

The petitioner had also relied on the Supreme Court’s judgment in Rakesh Ranjan Shrivastava v. State of Jharkhand, (2024) 4 SCC 419, which holds that the power under Section 143-A is discretionary and that the court must record brief reasons demonstrating consideration of relevant factors. Justice Nargal held that far from supporting the petitioner, that judgment reinforced the validity of the impugned orders. The requirement in Rakesh Ranjan Shrivastava is that the court must disclose reasons — a requirement the Magistrate had complied with. The judgment does not lay down that a reasoned order passed upon due consideration of relevant factors remains vulnerable to interference merely because the accused disputes the conclusions reached.

Outcome

Justice Wasim Sadiq Nargal dismissed the petition along with connected applications on 6 June 2026. The court found no arbitrariness, perversity or jurisdictional error in either the order dated 4 November 2025 of the Chief Judicial Magistrate, Baramulla at Sopore, or the judgment dated 27 February 2026 of the Additional Sessions Judge, Sopore. The direction to pay interim compensation of ₹8,00,000 — ten per cent of the cheque amount of ₹80,00,000 — was held to be well within the statutory ceiling of twenty per cent prescribed under Section 143-A(2) and was upheld. The judgment has been marked reportable and speaking.