Failure to contest statutory notice or prove cheque theft justifies interim compensation under Section 143A NI Act.

The respondent filed a complaint under Section 138 of the Negotiable Instruments (NI) Act, alleging the petitioner issued a cheque for a land transaction (valued at ₹7,00,000) which was subsequently dishonored

On 16.12.2024, the First Additional Sessions Judge, Vidisha, directed the petitioner to pay 20% interim compensation under Section 143A of the NI Act

The petitioner unsuccessfully challenged this order in a revision petition (Cr.R. No. 09/2025), which was dismissed on 17.05.2025

The petitioner then moved the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), contending that the cheque was stolen, the documents were fabricated, and the trial court failed to exercise its discretion as per Supreme Court guidelines

1. Whether the trial court’s order directing 20% interim compensation under Section 143A of the NI Act was arbitrary and contrary to established judicial precedents

2. Whether the Magistrate erred in taking cognizance of the complaint despite the petitioner’s defense of document fabrication and theft of the cheque

3. Whether the High Court should exercise its inherent powers under Section 528 of the BNSS to quash the impugned orders

The court primarily applied Section 143A of the NI Act, which empowers a court to order interim compensation not exceeding 20% of the cheque amount

It relied on the precedent set by the Supreme Court in Rakesh Ranjan Shrivastava v. State of Jharkhand [Cr.A No. 741 of 2024], which held that the power under Section 143A is discretionary (using "may" rather than "shall") and requires the court to record reasons while considering the prima facie merits of the case and the accused's defense

The court also exercised its jurisdiction under Section 528 of the BNSS regarding the High Court's inherent powers

The court examined whether the trial court correctly applied the discretionary power under Section 143A.

While the petitioner claimed the cheque was stolen and misused, the court noted that the cheque was dishonored specifically for "insufficient funds" and that the signature appeared to be the petitioner's

Significantly, the court observed that the petitioner failed to respond to the statutory legal notice and produced no evidence of having filed a police complaint for theft or issuing a "stop payment" instruction to the bank

In contrast, the complainant provided the underlying contract for the land transaction

Therefore, the court reasoned that the trial court and revisional court had a valid prima facie basis to favor the complainant's version and that their orders did not violate the guidelines in Rakesh Ranjan Shrivastava

The court found that the petitioner failed to substantiate the defense of theft or fraud at this stage to warrant interference under Section 528 of the BNSS

The petition was dismissed, and the orders directing 20% interim compensation were upheld