NI Act | Unless Accused Pleads Not Guilty, Interim Compensation U/S 143-A Cannot Be Granted: J&K High Court

In allowing a plea against impugned interim compensation orders Justice Sanjay Dhar observed,

“In the instant cases, the plea of the accused was yet to be recorded but the learned Magistrate proceeded to pass the order of interim compensation in favour of the complainant, which is clearly in contravention of the provisions contained in Section 143-A of the N. I. Act. On this ground also, the impugned orders are not sustainable in law”

The controversy began with three separate complaints filed by respondent Mushtaq Ahmad Wani, leading to orders by the Chief Judicial Magistrate, Srinagar. The Magistrate awarded interim compensation amounting to 20% of the cheque amount to Wani, invoking Section 143-A of the Negotiable Instruments Act. This prompted Mubashir Manzoor, the petitioner, to challenge these orders.

The petitioner, represented by Advocate Asif Ahmad Bhat, argued that the Magistrate's orders lacked a basis, as there were no recorded reasons justifying the maximum interim compensation. Additionally, it was contended that the accused's plea under Section 251 of the Cr. P. C had not been recorded before the orders were issued, contravening the stipulations of Section 143-A of the N. I. Act.

The respondent, Mushtaq Ahmad Wani, did not have legal representation during the proceedings before the High Court.

Court's Observations:

The Court, after hearing the petitioner and perusing the record, observed that the Magistrate had failed to provide any justification for awarding the maximum amount of interim compensation. It emphasized that the power to award interim compensation under Section 143-A is discretionary and must be exercised based on valid reasons.

The Court referred to the Supreme Court's judgment in Rakesh Ranjan Shrivastava vs. State of Jharkhand, where it was held that interim compensation can be granted only if the complainant makes out a prima facie case and the Court considers relevant factors like the nature of the transaction and the relationship between the accused and the complainant.

The Court further noted that Section 143-A of the NI Act explicitly states that interim compensation can be awarded only when the accused pleads not guilty. In the present case, the plea of the accused had not been recorded, rendering the Magistrate's order contrary to the provisions of the law.

In view of the above, the High Court allowed the petitions and quashed the impugned orders. The matter was remanded to the Magistrate with directions to pass fresh orders after considering the Supreme Court's judgment and recording the plea of the accused.

Case Title: Mubashir Manzoor Vs Mushtaq Ahmad Wani

Citation: 2024 LiveLaw (JKL) 205

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