Rahul Yadav vs State of U.P. and Another

HIGH COURT OF JUDICATURE AT ALLAHABAD
A.F.R.
APPLICATION U/S 528 BNSS No. - 22924 of 2026
Rahul Yadav
.....Applicant(s)
Versus
State of U.P. and Another
.....Opposite
Party(s)
Counsel for Applicant(s) : Shubham Kumar Yadav, Shubhendu
Mishra
Counsel for Opposite Party(s) : G.A.
Court No. - 35
HON'BLE JAI KRISHNA UPADHYAY, J.
1. Heard Sri Subham Kumar Yadav alongwith Shubhendu Mishra, learned
counsel for the applicant,Sri Vishwa Deepak Mishra, learned AGA-I for the
State and perused the record.
2. This application under Section 528 BNSS has been filed by the applicant
for quashing the order dated 14.05.2026 passed by the Court of learned
Sessions Judge, Gautam Buddh Nagar in Criminal Revision No. 36 of 2026
(Rahul Yadav vs. Rohit Singh) as well as the order dated 20.11.2025 passed
by the learned Special Court, 138 N.I. Act, Gautam Buddh Nagar arising out
of Complaint Case No. 9574 of 2024, under Section 138 of N.I. Act, 1881
(Rohit Singh Vs. Rahul Yadav), P.S. Sector 39, District Gautam Buddh
Nagar whereby the application under Section 143-A N.I. Act moved on
behalf of opposite party no.2 has been allowed.
3. Learned counsel for the applicant submitted that the alleged transaction
was found upon unverified and disputed cash payments allegedly made over
a prolonged period without any independent documentary proof, receipt,
banking transaction, income tax disclosure, or legally admissible evidence
establishing the existence of a legally enforceable debt or liability. It is
furher submitted that impugned order dated 20.11.2025 allowing the
application under Section 143-A of N.I. Act, is illegal, arbitrary, perverse
and contrary to the settled principle of law. It was further submitted that trial
Courts while passing the impugned orders dated 20.11.2025 and 14.05.2026,

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failed to appreciate that the provision under Section 143-A N.I. Act is
directory and discretionary in nature and not mandatory as has been held by
Hon'ble Apex Court in
Rakesh Ranjan Shrivastava vs. The State of
Jharkhand & Anr. (2024) 4 SCC 419. He further submitted that learned
Trial Court failed to prima facie evaluate the merits of the complaint as well
as the plausible defence raised by the applicant that no legally enforceable
debt or liability existed between the parties, no business transaction or
settlement of account ever took place and the aforesaid cheques were
allegedly misused from the vehicle of the petitioner.
4. Per contra , learned AGA-I argued that the impugned order is well-
reasoned and passed strictly in accordance with the law. It was submitted
that the cheques admittedly belong to the accused and bear his signatures;
therefore, the statutory presumptions under Sections 118 and 139 of the
Negotiable Instruments Act operate against the accused. It was further
argued that Section 143-A was enacted specifically to strengthen the
credibility of cheque transactions and prevent unnecessary delays in the
disposal of cases under Section 138 N.I. Act.
5. After perusal of the record, it transpires that the complainant filed a
complaint under Section 138 Negotiable Instrument Act on 30.07.2024
alleging that the accused-applicant, engaged in the real estate business, had a
liability of Rs. 10,00,000/- towards the complainant. To discharge this
liability, three cheques were issued (amounting to Rs. 3,00,000/-, Rs.
6,00,000/-, and Rs. 1,00,000/-), which were dishonoured upon presentation
with the remarks "Funds Insufficient" and "Account Inoperative". Following
this an application under Section 143-A of Negotiable Instrument Act was
filed by the complainant seeking interim relief as per the said provision of
law. The Learned Trial Court, after hearing both the parties and perusing the
material available on the record, vide order dated 20.11.2025, directed the
accused to pay 20% of the cheque amount (i.e., Rs. 2,00,000/-) as interim
compensation within two months, which was subsequently upheld by the
Revisional Court on 14.05.2026.
6.Before delving into the merits of the discretionary power under Section
143-A N.I. Act, it is pertinent to quote the said section. Section 143-A reads
thus:
" 143-A. Power to direct interim compensation.—(1)

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Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), the Court trying an offence under
Section 138 may order the drawer of the cheque to pay interim
compensation to the complainant—
(a) in a summary trial or a summons case, where he pleads not
guilty to the accusation made in the complaint; and
(b) in any other case, upon framing of charge.
(2) The interim compensation under sub-section (1) shall not exceed
twenty per cent of the cheque amount.
(3) The interim compensation shall be paid within sixty days from
the date of the order under sub-section (1), or within such further
period not exceeding thirty days as may be directed by the Court on
sufficient cause being shown by the drawer of the cheque.
(4) If the drawer of the cheque is acquitted, the Court shall direct
the complainant to repay to the drawer the amount of interim
compensation, with interest at the bank rate as published by Reserve
Bank of India, prevalent at the beginning of the relevant financial
year, within sixty days from the date of the order, or within such
further period not exceeding thirty days as may be directed by the
Court on sufficient cause being shown by the complainant.
(5) The interim compensation payable under this section may be
recovered as if it were a fine under Section 421 of the Code of
Criminal Procedure, 1973 (2 of 1974).
(6) The amount of fine imposed under Section 138 or the amount of
compensation awarded under Section 357 of the Code of Criminal
Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or
recovered as interim compensation under this section."
7.The Hon'ble Apex Court in the case of
Rakesh Ranjan Shrivastava v.
State of Jharkhand, (2024) 4 SCC 419 in paragraph nos. 22-27 has
observed that:-
Factors to be considered while exercising discretion;
"
22. When the court deals with an application under Section 143-A of
the NI Act, 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 under sub-
section (1) of Section 143-A. The presumption under Section 139 of
the NI Act, by itself, is no ground to direct the payment of interim
compensation. The reason is that the presumption is rebuttable. The
question of applying the presumption will arise at the trial. Only if
the complainant makes out a prima facie case, a direction can be
issued to pay interim compensation. At this stage, the fact that the
accused is in financial distress can also be a consideration.
23. Even if the court concludes that a case is made out for grant of
interim compensation, the court will have to apply its mind to the

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quantum of interim compensation to be granted. Even at this stage,
the court will have to consider various factors such as the nature of
the transaction, the relationship, if any, between the accused and the
complainant and the paying capacity of the accused. If the defence
of the accused is found to be prima facie a plausible defence, the
court may exercise discretion in refusing to grant interim
compensation.
24. We may note that the factors required to be considered, which
we have set out above, are not exhaustive. There could be several
other factors in the facts of a given case, such as, the pendency of a
civil suit, etc. While deciding the prayer made under Section 143-A,
the Court must record brief reasons indicating consideration of all
the relevant factors.
25. In the present case, the trial court has mechanically passed an
order of deposit of Rs 10,00,000 without considering the issue of
prima facie case and other relevant factors. It is true that the sum of
Rs 10,00,000 represents less than 5% of the cheque amount, but the
direction has been issued to pay the amount without application of
mind. Even the High Court has not applied its mind. We, therefore,
propose to direct the trial court to consider the application for grant
of interim compensation afresh. In the meanwhile, the amount of Rs
10,00,000 deposited by the appellant will continue to remain
deposited with the trial court.
26. Hence, the impugned orders are set aside, and the application
made by the complainant in Complaint Petition No. 1103 of 2018
under Section 143-A(1) of the NI Act is restored to the file of
Judicial Magistrate First Class, Bokaro. The learned Judge will
hear and decide the application for the grant of interim
compensation afresh in the light of what is held in this judgment.
The amount deposited by the appellant of Rs 10,00,000 shall be
invested in a fixed deposit till the disposal of the said application. At
the time of disposing of the application, the trial court will pass an
appropriate order regarding refund and/or withdrawal and/or
investment of the said amount.
27. Subject to what is held earlier, the main conclusions can be
summarised as follows:
27.1. The exercise of power under sub-section (1) of Section 143-A
is discretionary. The provision is directory and not mandatory. The
word "may" used in the provision cannot be construed as "shall".
27.2. While deciding the prayer made under Section 143-A, the
court must record brief reasons indicating consideration of all
relevant factors.
27.3. The broad parameters for exercising the discretion under
Section 143-A are as follows:
27.3.1. 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

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distress of the accused can also be a consideration.
27.3.2. A direction to pay interim compensation can be issued, only
if the complainant makes out a prima facie case.
27.3.3. If the defence of the accused is found to be prima facie
plausible, the court may exercise discretion in refusing to grant
interim compensation.
27.3.4. 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.
27.3.5. 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."
8. Therefore, it is a settled proposition of law that while the power under
Section 143-A is discretionary, the Court is only required to consider the '
prima facie' merits of the complaint and the defence raised. Now this court
proceeds to discuss the outline of the ' standard as mentioned in
prima facie'
the said provision of law. The Latin term ' prima facie' translates to "at first
sight" or "based on a 'first impression.' According to Webster's Third
International Dictionary , a " prima facie" case means a case established by "
prima facie evidence" sufficient in law to raise a presumption of fact unless
rebutted. Legal jurists explain this not as a final standard of absolute proof,
but as a threshold ensuring that a claim has enough legal merit to proceed to
trial and shift the burden of proof. In criminal and quasi-criminal
proceedings, this doctrine prevents the judicial machinery from being used
for frivolous harassment while ensuring legitimate offences are duly
investigated and tried.
9. The Hon'ble Supreme Court of India has reaffirmed this doctrine in
numerous precedents. In Balvir Singh v. State of Uttarakhand (AIR 2023
, the Court clarified that ' prima facie' only requires an initial,
SC 5551)
reliable impression rather than proof beyond a reasonable doubt. Similarly,
in cases like and
Sunil Bharti Mittal v. CBI (2015) 4 SCC 609 Neeharika
Infrastructure Pvt. Ltd. v. State of Maharashtra (2021) 19 SCC 401 , the
Hon'ble Apex Court observed that while a judge must actively apply their
mind to ensure the facts disclose a genuine offence, they must avoid
weighing the deeper merits, appreciating factual defences, or conducting a

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"mini-trial" at the preliminary stage.
10. Applying the aforementioned ' prima facie' standard to the present facts
this Court finds that the Trial Court has rightly observed that; (i)The cheques
in question admittedly belonged to the accused. (ii)The signatures on the
cheques are not disputed.(iii) The accused had already been summoned and
notice under Section 251 Cr.P.C. remained pending for a considerable time.
Also, the fact that bank statements of accused-applicant shows that his
account was already inoperative and out of money, makes his defence that
the said cheques were misused , highly improbable. At the stage of
consideration of an application under Section 143A N.I. Act, the Court is not
required to conduct a detailed appreciation of evidence as if deciding the
final complaint on merits. The defence sought to be raised by the accused
regarding the alleged misuse of cheques is essentially a matter of trial and
can only be adjudicated upon after evidence is led by the parties. Merely
because the accused has taken a defence that the cheques were misused does
not automatically exclude the complainant from seeking interim
compensation.
11.Further, the statutory presumptions under Sections 118 and 139 of the
Negotiable Instruments Act continue to operate unless rebutted during the
trial. The contention of the applicant that the complainant has not established
a legally enforceable debt cannot be conclusively examined at this
preliminary stage. The complaint discloses the nature of the liability and the
issuance of the cheques thus, the ' prima facie' ingredients necessary for the
exercise of power under Section 143-A N.I. Act stood satisfied.
12. This court also finds that the argument that the Trial Court awarded the
maximum permissible amount (20%) without adequate reasons does not
persuade this Court to interfere. The Trial Court properly considered the
pendency of the complaint, the nature of allegations, and the admitted
signatures on the cheques.
13.In the considered opinion of this Court, the impugned orders neither
suffer from perversity nor from any jurisdictional infirmity. The learned
Trial Court and learned Revisional Court exercised discretion vested under
law upon consideration of the material available on the record. No ground is
made out warranting interference by this Court.

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14.Consequently, the application is devoid of merits and liable to be
dismissed.
15. Accordingly, the application is dismissed.
16. Before parting with the order, I would like to put in a word of
appreciation for my Research Associate Ms. Anjali Singh for her dexterity in
research and assistance in drafting of this order.

June 2, 2026
AKT
(Jai Krishna Upadhyay,J.)

Digitally signed by :-
ASHOK KUMAR TRIPATHI
High Court of Judicature at Allahabad