Interim Compensation Under Section 143A of the NI Act Is Discretionary and Requires Reasoned Judicial Application.

The respondent filed a complaint against the petitioner under Section 138 of the Negotiable Instruments (NI) Act, 1881, alleging the dishonour of a cheque worth ₹80,00,000

During proceedings, the respondent applied for interim compensation under Section 143-A of the NI Act. On 04.11.2025, the Chief Judicial Magistrate (CJM), Baramulla at Sopore, allowed the application and directed the petitioner to pay 10% of the cheque amount (₹8,00,000)

The petitioner challenged this before the Additional Sessions Judge, Sopore, who dismissed the revision petition on 27.02.2026

The petitioner subsequently approached the High Court under Section 528 of the BNSS seeking quashment, arguing that the order was mechanical, non-speaking, and failed to consider his financial constraints

1. Whether the power to grant interim compensation under Section 143-A of the NI Act is mandatory or discretionary

2. Whether the Trial Court exercised its discretion judiciously by recording objective satisfaction and cogent reasons for the award

Section 143-A of the Negotiable Instruments Act, 1881, which empowers a court to order the drawer of a cheque to pay interim compensation not exceeding 20% of the cheque amount

The Supreme Court precedent in Rakesh Ranjan Shrivastava v. State of Jharkhand (2024), which clarified that Section 143-A is discretionary, and the court must consider the merits of the complaint, the conduct of the accused, and the likelihood of trial delay before passing such orders

The court distinguished the present case from Nazir Ahmad Chopan v. Abdul Rehman Chopan and Nargees Javaid v. Ghulam Jeelani Nengroo, where orders were set aside for being non-speaking

The Court observed that unlike the precedents cited by the petitioner where orders lacked reasoning, the Trial Court in this instance provided a speaking order

The CJM specifically noted that the petitioner admitted to the cheque and signatures, had repeatedly defaulted in court appearances, and had obtained permission to travel abroad, which suggested a risk of protracting the trial

The High Court found that the Trial Court did not treat the provision as mandatory but applied a "judicial balance" to safeguard the complainant’s interests without prejudicing the accused's right to defend

The Court noted that the award of 10% was well within the 20% statutory cap and was founded on germane considerations, including the stage of proceedings and the conduct of the accused

The High Court upheld the orders of the Trial Court dated 04.11.2025 and the Revisional Court dated 27.02.2026, finding no jurisdictional error or perversity. The petition was dismissed, affirming the direction to pay ₹8,00,000 as interim compensation