Sr. No. 14 Regular List IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT SRINAGAR CRM(M) 218/2024 CrlM(1072/2024) CrlM(580/2024) CrlM(581/2024) CrlM(605/2026) ARIF SUHAIL BHAT …Petitioner(s)/appellant(s) Through: Mr. Prince Hamza, Advocate Vs. RAFEE BASHIR ALIAS RAFIA CHESFEED ...Respondent(s) Through: Mr. Ajaz Ahmad Dhar, Advocate & Mr. Shahid Rashid, Advocate CORAM: HON’BLE MR. JUSTICE SANJAY DHAR, JUDGE O R D E R 17-08-2026 1. The petitioner, through the medium of present petition, has challenged order dated 13-12-2023 passed by the learned Judicial Magistrate, (Judge Small Causes, Srinagar), [hereinafter the “Trial Magistrate”] as upheld by the 4th Additional Sessions Judge, Srinagar [hereinafter referred to as the “Revisional Court”] vide order dated 26-03-2024, whereby an amount equivalent to 18% of the cheque which is subject matter of the complaint filed by the respondent against the petitioner, has been awarded as interim compensation in terms of Section 143A of the Negotiable Instruments Act. 2. Heard and considered. 3. It appears that respondent-complainant has filed a complaint against the petitioner before the Trial Magistrate, alleging commission of offence under Section 138 of the Negotiable Instruments Act. The subject matter of the complaint is cheque dated 01-08-2022 for an amount of Rs. 19 lacs CRM(M) 218/2024 2 drawn on Jammu and Kashmir Bank, Government Medical College, Karan Nagar Branch, Srinagar. It appears that after issuance of process against the petitioner, he put in his appearance before the learned Trial Magistrate and his statement under Section 251 of Cr.P.C was recorded on 01-05-2023. In his statement, the petitioner took a defense that he does not know the complainant and that there was no business transaction between them. He also stated that the cheque in question had been lost by him. The learned Trial Magistrate, after recording statement of the petitioner under Section 251 of Cr.P.C., proceeded to decide the application of the respondent- complainant seeking interim compensation under Section 143A of the Negotiable Instruments Act. Vide impugned order dated 13-12-2023, the learned Trial Magistrate, after observing that there is a presumption in law that the cheque has been issued for a legally enforceable debt, awarded interim compensation in favor of the respondent to the extent of 18% of the cheque amount. The aforesaid order was challenged by the petitioner before the learned Revisional Court and vide order dated 26-03-2024, the revision petition came to be dismissed by observing that the learned Trial Magistrate has not exceeded the quantum beyond the limit and that the learned Trial Magistrate has properly followed the procedure. 4. Learned counsel appearing for the petitioner has, during the course of arguments, raised two grounds. One, that in the complaint itself, the respondent has admitted that the transaction in respect of which the petitioner had issued the cheque pertains to the year 2008 and, as such, the cheque in question, even if it has been issued by the petitioner, is in respect of a time-barred debt. Another ground that has been urged by learned counsel for the petitioner is that the cheque book from which the cheque, CRM(M) 218/2024 3 which is subject matter of the complaint, has been issued, was lost by the petitioner, and in this regard, a report has been registered with Police Station Rainawari, Srinagar, in Roznamcha, dated 24-11-2019. A copy of the same has been placed on record. 5. So far as the grant of interim compensation under Section 143A of Negotiable Instruments Act is concerned, the same is discretionary in nature, and it is within the discretion of the Trial Magistrate to award compensation under the said provision. The quantum of compensation to be awarded has to be up to 20% of the cheque amount. The quantum of compensation to be awarded is also within the discretion of the Trial Magistrate. However, the discretion has to be exercised in accordance with the settled principles of law, which have been enunciated by the Supreme Court in “Rakesh Ranjan Srivastava v. State of Jharkhand and Another”, (2024 INSC 205). 6. The principles governing the grant of interim compensation under Section 143A of Negotiable Instruments Act, as laid down by the Supreme Court in the aforesaid judgment, are reproduced as under: "19. Subject to what is held earlier, the main conclusions can be summarised as follows: a. The exercise of power under sub-section (1) of Section 143A is discretionary. The provision is directory and not mandatory. The word “may” used in the provision cannot be construed as “shall”. b. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors. c. The broad parameters for exercising the discretion under Section 143A are as follows: i. The Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the accused in the reply to the application. The financial distress of the accused can also be a consideration. ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case. CRM(M) 218/2024 4 iii. If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation. iv. If the Court concludes that a case is made out to grant interim compensation, it will also have to apply its mind to the quantum of interim compensation to be granted. While doing so, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc. v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated. The parameters stated above are not exhaustive." 7. From a perusal of the aforesaid principles summarized by the Supreme Court, it is clear that while awarding compensation under Section 143A of Negotiable Instruments Act, the Court has to evaluate, prima facie, merits of the case of the parties. The financial distress of the accused has also to be taken into consideration. The Court has also to evaluate whether the defense of accused is prima facie plausible, and if the Court decides to grant interim compensation, it will have to apply its mind to the quantum of interim compensation, and while doing so, the Court will have to take into account other factors such as nature of the transaction, the relationship, if any, between the accused and the complainant, etc. 8. If we have a look at the impugned order passed by the learned Trial Magistrate, as upheld by the learned Revisional Court, the principles summarized by the Supreme Court in Rakesh Ranjan Srivastava case (supra) have not been taken into consideration at all. The learned Trial Magistrate was required to consider and analyze the defense put up by the petitioner with regard to loss of cheque, which he had specifically stated in his statement, and the Court had also to analyze and take a prima facie view in regard to the contention that the cheque was issued in respect of a time- barred debt. Without analyzing these factors, it was not open to the learned CRM(M) 218/2024 5 Trial Magistrate to exercise its discretion of awarding interim compensation in favor of the respondent. While fixing the quantum of compensation, no discussion has been made by the learned Trial Magistrate as to why a particular percentage of the cheque amount has been fixed as the interim compensation. The learned Magistrate was expected to give some sort of reasoning for arriving at the figure of 18% while fixing quantum of interim compensation. 9. For what has been discussed hereinbefore, the impugned order passed by the learned Trial Magistrate, as upheld by the learned Revisional Court, is not sustainable in law. Both the orders are, therefore, set aside. The matter is remanded to the learned Magistrate for a fresh decision on the application of the respondent for grant of interim compensation in the light of the principles laid down by the Supreme Court in Rakesh Ranjan Srivastava case supra. 10. It has been submitted by learned counsel for the petitioner that during the pendency of the present petition, the petitioner had deposited an amount of Rs. 2.00 lacs with the Registry of this Court pursuant to orders of this Court and the said amount stands already released in favor of the respondent. The disbursement of the said amount to the respondent shall remain subject to final outcome of the application of the respondent under Section 143A of the Negotiable Instruments Act. 11. Ordered accordingly. The petition stands disposed of. 12. A copy of this order be sent to learned Trial Magistrate for information. (SANJAY DHAR) JUDGE SRINAGAR 17-08-2026 Aamir Amir Rashid Sofi I attest to the accuracy and authenticity of this document