Sr. No. 87 HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU CRM(M) No. 34/2025 Shamim Begum …. Petitioner/Appellant(s) Through:- Mr. Meharban Singh, Advocate V/s Pankaj Gupta …..Respondent(s) Through:- CORAM : HON’BLE MR. JUSTICE VINOD CHATTERJI KOUL, JUDGE ORDER 20.08.2025 1. By way of the instant petition, the petitioner seeks quashing of the complaint titled Pankaj Gupta vs. Shamim Begum, filed by the respondent for the alleged commission of offences under Section 138 of the Negotiable Instruments Act, 1881 (for short, ‘the N.I. Act’), which is presently pending adjudication before the Court of the learned Judicial Magistrate 1st Class, Batote(for short ‘Trial Court’). The petitioner also assails the order whereby cognizance has been taken and process issued, as well as the order directing her to pay interim compensation at the rate of 12% of the cheque amount. 2. The petitioner’s case, in brief, is that she availed a loan of ₹1,00,000/- from the respondent in April 2021 for her handloom business, with an agreed interest of ₹20,000/- per 2 annum. She was thus, liable to repay an amount of ₹1,20,000/- by April 2022. At the time of obtaining the loan, the petitioner issued two cheques, one for ₹30,000/- and another for ₹70,000/-as security in favour of the respondent. 3. It is the petitioner’s contention that she repaid the entire amount of ₹1,20,000/- via bank transfer on 22.04.2022. Upon repayment, she requested return of the security cheques, but the respondent refused, claiming the same had been misplaced. It is further alleged that despite having received the loan amount in full, the respondent, with malafide intention, presented the said cheques, which were subsequently, dishonoured, and thereafter issued a legal notice dated 15.10.2022, which was duly replied to by the petitioner on 29.10.2022. The respondent then filed the complaint under Section 138 of the N.I. Act on 05.12.2022. 4. Precisely, the following grounds have been raised by the petitioner seeking quashing of the complaint and the impugned order:- (I) That the complaint is not maintainable as the cheques were issued only as security and there existed no legally enforceable debt or liability on the date of their presentation; (II) That the entire loan amount along with interest has already been repaid through bank transfer, as evidenced by documentary proof; (III) That the complaint has been filed beyond the statutory period prescribed under Section 138 of the N.I. Act; (IV) That the direction of the Trial Court to pay interim compensation at the rate of 12% of the cheque amount is arbitrary and unsustainable in law, particularly when a prima facie case of no liability is established; 3 5. Heard the learned counsel for the petitioner and perused the material on record. 6. Section 138 of the Negotiable Instruments Act provides for penal consequences in case of dishonour of cheque for insufficiency of funds, provided the cheque is issued for the discharge, in whole or in part, of any legally enforceable debt or other liability. 7. Section 138 of Negotiable Instruments Act, reads as under:- “138. Dishonour of cheque for insufficiency, etc., of funds in the account.— Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and 4 (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.” 8. In Rakesh Ranjan Shrivastava vs. The State of Jharkhand &Anr.(2024 INSC 205) the Hon’ble Supreme Court has categorically held that the power under sub-section (1) of Section 143A of the N.I. Act to grant interim compensation is discretionary and not mandatory. The Court observed that such discretion must be exercised judiciously, particularly when the defence of the accused appears prima facie plausible. 9. In the present case, the petitioner has placed on record a transaction receipt evidencing transfer of ₹1,20,000/- into the account of the respondent on 22.04.2022. This fact has not been disclosed by the respondent in his complaint. The reply to the legal notice dated 29.10.2022 also indicates that the cheques in question were issued as security and that the debt had already been discharged. Prima facie, the petitioner’s defence appears plausible. Despite this, the Trial Court has passed the impugned order dated 13.05.2024 in a mechanical manner, without consideration of the petitioner’s prima facie defence and relevant legal position as laid down in Shrivastava’s case (supra). 10. In light of the above discussion, the impugned order dated 13.05.2024 passed by the learned Judicial Magistrate 5 1st Class, Batote directing payment of interim compensation is set aside. The Trial Court is directed to proceed in the matter and pass fresh order after taking into account the petitioner’s prima facie defence and all relevant materials on record. 11. The petition stands disposed of in the above terms. (VINOD CHATTERJI KOUL) JUDGE JAMMU BIR 20.08.2025