HC upholds interim compensation order in Rs 80 lakh cheque bounce case

08/06/2026

Srinagar, Jun 7: The High Court of Jammu & Kashmir & Ladakh has upheld orders directing payment of interim compe-nsation in a cheque dishonour case involving an amo-unt of Rs 80 lakh, holding that courts can exercise discretion under Section 143-A of the Negotiable Inst-ruments Act after considering relevant facts & recording reasons. Justice Wasim Sadiq Nargal dismissed a petition filed by Mohammed Ashraf Mir challenging the orders of the Chief Judicial Magistrate, Sopore, and the Additional Sessions Judge, Sopore, which had directed him to pay interim compensation to the complainant, Wazira Reshi. The complaint arose from the alleged dishonour of a cheque amounting to Rs 80 lakh. During the pendency of proce-edings under Sec-tion 138 of the Ne-gotiable Instrum-ents Act, the trial court had directed payment of interim compensation am-ounting to 10 per cent of the cheque value, i.e., Rs 8 lakh.
Appearing for the petitioner, Advocate Aazim Pandith argued that the power under Section 143-A was discretionary and that the trial court had exercised it mechanically without properly considering the defence raised by the accused. Senior Additional Advocate General Mohsin-ul-Showkat Qadiri assisted the court as amicus curiae. The High Court observed that Section 143-A empowers a court to grant interim compensation but does not make such relief automatic.
The court held that the discretion must be exercised on relevant considerations and supported by reasons reflecting application of mind.
After examining the impugned orders, Justice Nargal found that the trial court had taken into account the material on record, the conduct of the accused, the stage of proceedings and the need to balance the interests of both parties before directing payment of interim compensation.
The court noted that the magistrate had recorded reasons, referred to relevant Supreme Court precedents and awarded only 10 per cent of the cheque amount, which was well within the statutory limit prescribed under the law. Holding that no arbitrariness, perversity or jurisdictional error had been shown, the High Court upheld the orders of the courts below and dismissed the petition along with connected applications.

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