| HC quashes interim compensation order in cheque bounce case, seeks fresh reasoned decision | | | Early Times Report
Jammu, Apr 21: In a significant ruling on Section 143-A of the Negotiable Instruments Act, the High Court of Jammu & Kashmir and Ladakh has quashed an order of the Special Mobile Magistrate, Pulwama, which had directed payment of 10 per cent interim compensation in a cheque dishonour case, holding that such power is discretionary and cannot be exercised in a routine or mechanical manner.
Justice Wasim Sadiq Nargal passed the judgment in CRM(M) 185/2026, Nargees Javaid vs Ghulam Jeelani Nengroo, where the petitioner had challenged the trial court’s order dated March 16, 2026 passed on an application under Section 143-A of the Negotiable Instruments Act. The complaint before the trial court had arisen out of multiple dishonoured cheques allegedly issued towards a legally enforceable liability.
The High Court noted that the petitioner, after appearing before the trial court, had specifically denied issuance of the cheques and pleaded that she was not a signatory to them. Despite this defence, the Magistrate allowed the respondent’s application and directed payment of interim compensation at the rate of 10 per cent of the cheque amount.
Setting aside the order, the Court held that Section 143-A does not make grant of interim compensation automatic. It observed that the trial court was required to prima facie assess the complainant’s case, consider the defence raised by the accused and record reasons for both the grant of interim compensation and the quantum fixed.
The High Court found that the impugned order merely referred to the statutory provision and was silent on any real application of mind to the facts of the case. It also held that the Magistrate had assigned no cogent reason for fixing the compensation at 10 per cent, particularly when the statute permits any figure up to 20 per cent and requires judicial discretion to be exercised on settled principles.
Relying upon the Supreme Court judgment in Rakesh Ranjan Shrivastava v. State of Jharkhand and its own earlier ruling in Nazir Ahmad Chopan v. Abdul Rehman Chopan, the High Court reiterated that interim compensation under Section 143-A is directory, not mandatory, and must be supported by brief but clear reasons.
Accordingly, the High Court quashed the order dated March 16, 2026 and directed the Special Mobile Magistrate, Pulwama, to pass a fresh order expeditiously in light of the observations made in the judgment. The Court further directed both parties to appear before the Magistrate on April 27, 2026. |
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