Jammu Kashmir High Court Orders Fresh Hearing in Cheque Bounce Case | Kashmir Life

SRINAGAR: The High Court of Jammu Kashmir and Ladakh has set aside an order directing payment of interim compensation in a cheque dishonour case, ruling that such relief cannot be granted mechanically without proper judicial reasoning.

The judgment was delivered by Justice Wasim Sadiq Nargal in CRM(M) No. 185/2026, reserved on April 15 and pronounced on April 20, 2026. The order was uploaded on April 21.

The petition was filed by Nargees Javaid, a 40-year-old resident of Bellow Dargund in Rajpora, Pulwama, through her counsel Advocate Mudasir Bin Hassan. The respondent in the case is Ghulam Jeelani Nengroo of Prichoo, Pulwama.

The dispute arises out of a complaint filed by the respondent under Sections 138 and 142 of the Negotiable Instruments Act, alleging dishonour of multiple cheques purportedly issued by the petitioner towards a legally enforceable liability.

According to the complaint, a series of cheques bearing numbers 209524, 209525, 209526, 209527, 209528, 209529, 209530, 209531, 209532, 209536 and 209540 were issued for amounts ranging between Rs 3 lakh and Rs 8 lakh. The total value of these cheques runs into several tens of lakhs of rupees.

Upon presentation, the cheques were dishonoured, following which the respondent initiated proceedings before the trial court in Pulwama.

The petitioner, after being summoned, denied issuing the cheques and specifically stated that she was not a signatory to them.

During the pendency of the proceedings, the respondent moved an application under Section 143A of the Negotiable Instruments Act, seeking interim compensation.

The Special Mobile Magistrate, Pulwama, by an order dated March 16, 2026, allowed the application and directed the petitioner to pay 10 percent of the cheque amount as interim compensation—approximately Rs 5 lakh.

Challenging the order, the petitioner argued that the trial court had acted mechanically without considering her defence, particularly her denial of signatures and request for forensic examination.

It was contended that Section 143A confers discretionary power on courts and does not mandate grant of interim compensation in every case. The petitioner also argued that awarding compensation at a preliminary stage could cause irreparable prejudice, especially in cases where the accused is ultimately acquitted.

The High Court, after examining the record and legal provisions, held that the power to grant interim compensation under Section 143A is discretionary and must be exercised judiciously.

The court observed that the trial magistrate had failed to conduct a prima facie evaluation of the case and the defence raised by the accused before granting interim compensation.

It further noted that the impugned order lacked reasoning, particularly with regard to the quantum of compensation fixed at 10 percent.

“The order is conspicuously silent on application of mind and does not disclose the basis on which interim compensation has been quantified,” the court observed.

Relying on the Supreme Court judgment in Rakesh Ranjan Shrivastava v State of Jharkhand (2024), the High Court reiterated that courts must record reasons and consider relevant factors, including the nature of the transaction and the defence raised, before granting such relief.

Setting aside the March 16 order, the High Court directed the Special Mobile Magistrate, Pulwama, to pass a fresh order expeditiously, strictly in accordance with law and the principles laid down.

The court clarified that if interim compensation is to be granted, the magistrate must record clear reasons reflecting consideration of all relevant factors, including justification for the quantum awarded.

The ruling underscores that interim compensation in cheque dishonour cases is not automatic and must be backed by judicial reasoning rather than routine application of the law.