S.143A NI Act | Magistrate Must Record Reasons For Exercising Discretionary Power To Order Interim Compensation: JKL High Court

The observations were made by Justice Sanjay Dhar while hearing a plea in terms of which the petitioner had thrown challenge to an order passed by a Judicial Magistrate, ordering interim compensation @20% of the cheque amount.

The petitioner impugned the compensation order submitting that the Magistrate has not spelled out as to why an amount @20% of the cheque amount was awarded in the favour of the complainant, particularly when the accused had denied the issuance of cheque in favour of the respondent/complainant.

Adjudicating upon the plea Justice Dhar observed that a bare perusal of sec 143A of the NI Act clearly prescribes that a Court trying a complaint for offence under Section 138 of NI Act has discretion to order the drawer of the cheque to pay interim compensation to the complainant, nonetheless the same shall not exceed 20% of the amount of the cheque.

Deliberating further on the matter the court noted that though no guidelines for grant of interim compensation have been laid down in Section 143-A of the NI Act, yet this discretionary power is to be exercised on well-recognized principles supported by reasons. The court has to spell out the reasons for grant of interim compensation in favour of the complainant and it has also to justify in its order with reasons the quantum of interim compensation that is being awarded by him as the said quantum can vary from 1% to 20% of the cheque amount, the bench underscored.

The Court added that some of the reasons for granting interim compensation may be that the accused absconds and avoids to appear before the Court despite service or there is overwhelming material on record to show that the accused is liable to pay an enforceable debt or that the accused is guilty of protracting the proceedings by avoiding to cross-examine the witnesses or producing his evidence.

"There can be so many other reasons for a Magistrate to grant interim compensation in favour of the complainant but these reasons have to be recorded in the order so that the validity of the order is tested by the superior court if and when such an order is challenged", the court recorded.

Applying the said position to the matter at hand the bench observed that the Magistrate has rightly awarded the interim compensation keeping in view the mandate of Negotiable Instrument Act but in doing so the Magistrate has failed to assign a reason, further adding that the learned Magistrate also has not dealt with the aspect of the matter relating to denial of execution of the cheque by the accused in his statement recorded under Section 251 of the Cr. P. C.

For the foregoing reasons, the bench allowed the petition and accordingly the impugned order was quashed with a direction to the Magistrate to pass a fresh order in the matter.

Case Title: Nazir Ahmad Chopan Vs Abdul Rehman Chopan

Citation: 2023 LiveLaw (JKL) 8

Coram: Justice Sanjay Dhar

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