S.143A NI Act | Application Of Mind, Consideration Of Certain Factors By Magistrate Essential To Decide Quantum Of Interim Compensation: J&K High Court

Highlighting the factors that need to be considered while determining the compensation Justice Sanjay Dhar observed,

“… while deciding the quantum of interim compensation, a Magistrate has to apply his/her mind and he/she has to consider several factors such as nature of transaction, the relationship if any between the accused and the complainant etc”.

The dispute arose when the respondent Mushtaq Ahmad Wani filed a complaint under the NI Act against Mujeeb Ul Ashraf Dar, leading to proceedings before the Judicial Magistrate 1st Class, Srinagar. The Magistrate, without providing substantial reasoning, awarded the maximum interim compensation permissible under Section 143-A, which the petitioner subsequently challenged in the High Court.

The petitioner, represented by Advocate Mr. Aatir Kawoosa, contended that the Magistrate's order lacked the necessary reasoning and considerations, rendering it arbitrary.

He argued that the discretionary power under Section 143-A must be exercised based on valid reasons, which were absent in the impugned order.

Advocate Mr. F. A. Waida, representing the respondent, argued in favor of maintaining the interim compensation awarded by the Magistrate, asserting that the petitioner's challenge lacked merit.

Justice Sanjay Dhar emphasized the discretionary nature of Section 143-A of the NI Act, referencing the Supreme Court's judgment in Rakesh Ranjan Shrivastava Vs. State of Jharkhand (2024) 4 SCC 419, which outlines the criteria for awarding interim compensation.

The High Court observed that the Magistrate's order did not provide any reasoning for awarding the maximum interim compensation, thus failing to meet the required legal standards.

Justice Dhar noted, "The learned trial Magistrate has not assigned any reason much less a plausible reason for proceeding to award the maximum amount of interim compensation i.e., 20% of the cheque amount against the petitioner."

Consequently, the High Court quashed the Magistrate's order and directed the trial Magistrate to pass a fresh order, taking into account the guidelines established by the Supreme Court.

Case Title: MUJEEB UL ASHRAF DAR Vs MUSHTAQ AHMAD WANI

Citation: 2024 LiveLaw (JKL) 197

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