Tareknath v. Dharmendra Kumar) under section

6. Learned counsel for the applicant has submitted that the order dated 02.04.2025 according interim compensation to the opposite party no. 2 to the tune of 20% under Section 143A of the NI Act cannot be sustained particularly when neither the financial distress of the applicant-accused nor the quantum of compensation has been considered. He seeks to rely upon the decision of the Hon'bble Apex Court in Rakesh Ranjan Srivastava v. State of Jharkand and another: [2024] 3 S.C.R. 438. He submits that since the said exercise is completely lacking the order dated

02.04.2025 be set aside, matter be remitted back to the court below to pass a fresh order.

7. Learned State Law Officer, on the other hand, submits that once the cheque stood drawn and dishonored, the presumption under Section 139 of the NI Act would be in favour of the holder of the cheuqe being the opposite party no. 2 but there has been on consideration of the financial distress of the applicant-accused as well as the quantum of the compensation. He submits that the order be set aside, matter be remitted back to the court below to pass a fresh order.

8. I have heard the submission so made across the bar and perused the record carefully.

9. Apparently, post dishonor of a cheque of Rs. 6,00,000/- a statutory demand notice was issued followed by a complaint and the applicant came to be summoned under Section 138 of the NI Act. Thereafter, an application came to be preferred by the opposite party no. 2 under Section 143A for according interim compensation amongst other grounds being one of them that the opposite party no. 2 was suffering from financial constraints. The said application on objection by the applicant came to be allowed on 02.04.2025 according interim compensation to the tune of 20% being 1,20,000/- of the total amount of 6,00,000/-. In Rakesh Ranjan Srivastava (supra), the provisions of Section 143A of the NI Act came to be considered and it was observed as under.- "19. Subject to what is held earlier, the main conclusions can be summarised as follows: a. The exercise of power under sub-section (1) of Section 143A is discretionary. The provision is directory and not mandatory. The word "may" used in the provision cannot be construed as "shall." b. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors. c. The broad parameters for exercising the discretion under Section 143A are as follows: i. The Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the accused in the reply to the application. The financial distress of the accused can also be a consideration. ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case. iii. If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation. iv. If the Court concludes that a case is made out to grant interim compensation,it will also have to apply its mind to the quantum of interim compensation to be granted. While doing so, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc. v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated. The parameters stated above are not exhaustive."

10. Applying the said principles of law culled out in the above noticed judgment an irresistible conclusion stands drawn that neither the financial distress of the applicant accused nor the quantum of compensation has been considered that too after holding that the opposite party no. 2 complainant by a, prima facie, case for according interim compensation. Since the said exercise is virtually lacking, thus, this Court has not option but to set aside the order and remit the matter back.

11. According, the application is being decided in the following terms.- (a) the order dated 02.04.2025 passed by the court of Additional Civil Judge (S.D.)-III/ACJM, Bhadohi in Complaint Case No. 628 of 2018 dated 02.04.2025 according interim compensation to the tune of 20% out of the total amount of Rs. 6,00,000/- under Section 143A is set aside; (b) matter stands remitted back to the court below to pass a fresh order; (c) the applicant shall furnish a certified copy of the order passed today before the court below by

21.08.2025; (c) the court below shall decide the matter afresh strictly in accordance with law.

12. With the above observation, the application stands disposed of. Order Date :- 6.8.2025 Rajesh RAJESH KUMAR High Court of Judicature at Allahabad

6. Learned counsel for the applicant has submitted that the order dated 02.04.2025 according interim compensation to the opposite party no. 2 to the tune of 20% under Section 143A of the NI Act cannot be sustained particularly when neither the financial distress of the applicant-accused nor the quantum of compensation has been considered. He seeks to rely upon the decision of the Hon'bble Apex Court in Rakesh Ranjan Srivastava v. State of Jharkand and another: [2024] 3 S.C.R. 438. He submits that since the said exercise is completely lacking the order dated

02.04.2025 be set aside, matter be remitted back to the court below to pass a fresh order.

7. Learned State Law Officer, on the other hand, submits that once the cheque stood drawn and dishonored, the presumption under Section 139 of the NI Act would be in favour of the holder of the cheuqe being the opposite party no. 2 but there has been on consideration of the financial distress of the applicant-accused as well as the quantum of the compensation. He submits that the order be set aside, matter be remitted back to the court below to pass a fresh order.

8. I have heard the submission so made across the bar and perused the record carefully.

9. Apparently, post dishonor of a cheque of Rs. 6,00,000/- a statutory demand notice was issued followed by a complaint and the applicant came to be summoned under Section 138 of the NI Act. Thereafter, an application came to be preferred by the opposite party no. 2 under Section 143A for according interim compensation amongst other grounds being one of them that the opposite party no. 2 was suffering from financial constraints. The said application on objection by the applicant came to be allowed on 02.04.2025 according interim compensation to the tune of 20% being 1,20,000/- of the total amount of 6,00,000/-. In Rakesh Ranjan Srivastava (supra), the provisions of Section 143A of the NI Act came to be considered and it was observed as under.- "19. Subject to what is held earlier, the main conclusions can be summarised as follows: a. The exercise of power under sub-section (1) of Section 143A is discretionary. The provision is directory and not mandatory. The word "may" used in the provision cannot be construed as "shall." b. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating consideration of all relevant factors. c. The broad parameters for exercising the discretion under Section 143A are as follows: i. The Court will have to prima facie evaluate the merits of the case made out by the complainant and the merits of the defence pleaded by the accused in the reply to the application. The financial distress of the accused can also be a consideration. ii. A direction to pay interim compensation can be issued, only if the complainant makes out a prima facie case. iii. If the defence of the accused is found to be prima facie plausible, the Court may exercise discretion in refusing to grant interim compensation. iv. If the Court concludes that a case is made out to grant interim compensation,it will also have to apply its mind to the quantum of interim compensation to be granted. While doing so, the Court will have to consider several factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant, etc. v. There could be several other relevant factors in the peculiar facts of a given case, which cannot be exhaustively stated. The parameters stated above are not exhaustive."

10. Applying the said principles of law culled out in the above noticed judgment an irresistible conclusion stands drawn that neither the financial distress of the applicant accused nor the quantum of compensation has been considered that too after holding that the opposite party no. 2 complainant by a, prima facie, case for according interim compensation. Since the said exercise is virtually lacking, thus, this Court has not option but to set aside the order and remit the matter back.

11. According, the application is being decided in the following terms.- (a) the order dated 02.04.2025 passed by the court of Additional Civil Judge (S.D.)-III/ACJM, Bhadohi in Complaint Case No. 628 of 2018 dated 02.04.2025 according interim compensation to the tune of 20% out of the total amount of Rs. 6,00,000/- under Section 143A is set aside; (b) matter stands remitted back to the court below to pass a fresh order; (c) the applicant shall furnish a certified copy of the order passed today before the court below by

21.08.2025; (c) the court below shall decide the matter afresh strictly in accordance with law.

12. With the above observation, the application stands disposed of. Order Date :- 6.8.2025 Rajesh RAJESH KUMAR High Court of Judicature at Allahabad