The Jammu & Kashmir and Ladakh High Court opined that the power to order interim compensation under Section 143A of the Negotiable Instruments Act, 1881 (hereinafter referred to as “NIA”) is a discretionary power that has to be exercised by a Magistrate based on reason and logic. The High Court propounded that Section 143A of NIA itself does not lay any guidelines, but wherever discretion is exercised, the same must be on well-recognized principles based on reason and logic. While passing the order of interim compensation, the Magistrate must provide reasons to justify the quantum of compensation awarded.
Moreover, the Bench expounded some reasons based on which interim compensation may be awarded. The reasons could be that the accused absconds and remains absent before the Court or that the accused protracts the proceedings by avoiding cross-examination or producing evidence. It was opined that the Magistrate’s reasons have to be recorded in every situation so that the superior court may test the order's validity if the said order is challenged.
Brief Facts:
The present petition has been preferred against the order passed by the Judicial Magistrate directing interim compensation under Section 143A of the NIA in favour of the Respondent (Complainant).
Brief Background:
A case was registered under Section 138 NIA on the ground that the cheque issued by the Accused was returned by the Bank on the ground of insufficiency of funds. During the pendency of the complaint, another application under Section 143A was filed before the Judicial Magistrate who ordered interim compensation of @20% of the cheque amount. Therefore, the present petition has been filed.
Contentions of the Petitioner:
It was contended that the reason for granting interim compensation has not been recorded by the Magistrate therefore, the said order is void.
Contentions of the Respondent:
It was argued that Section 143A NIA is mandatory; hence, the Magistrate was bound to pass an order of interim compensation. It was also contended that since the said order is revisable, a petition under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “Cr.P.C.”) was not maintainable.
Observations of the Court:
Regarding the maintainability of the petition under Section 482 Cr.P.C., the Bench observed that it has revisional jurisdiction concerning orders passed by inferior criminal courts; therefore, the present petition is maintainable. It was expounded that the Court has concurrent revisional jurisdiction with the Sessions Court concerning the orders passed by the Magistrate.
Concerning the order of interim compensation, it was noted that the same is a discretionary power that has to be exercised by a Magistrate based on reason and logic. The High Court propounded that Section 143A of NIA itself does not lay any guidelines, but wherever discretion is exercised, the same has to be on well-recognized principles based on reason and logic. While passing the order of interim compensation, the Magistrate has to provide reasons to justify the quantum of compensation awarded.
Moreover, the High Court expounded some reasons based on which interim compensation may be awarded. The reasons could be that the accused absconds and remains absent before the Court or that the accused protracts the proceedings by avoiding cross-examination or producing evidence. It was opined that the Magistrate’s reasons must be recorded in every situation so that the superior court may test the order's validity if the said order is challenged.
The decision of the Court:
In the present case, the Magistrate failed to record reasons for awarding 20% interim compensation, and therefore, the order was set aside, and accordingly, the Petition was allowed.
Case Title: Nazir Ahmad Chopan v. Abdul Rehman Chopan
Coram: Hon’ble Mr. Justice Sanjay Dhar
Case No: CRM(M) No. 50/2020
Advocate for Petitioner: Adv. Mr. I. Sofi
Advocate for Respondent: Adv. Mr. Zaffer Mehdi
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