Arvind Chaudhary v. Mohd. Rahis and another) under Section

1. Heard Sri Satish Chandra Dubey, learned counsel for the applicants and Sri Pankaj Kumar Rai, learned State Law Officer for the State.

2. This application u/s 528 of BNSS has been preferred to quash the impugned summoning order dated 23.08.2023 and impugned order dated

29.05.2024 for interim compensation as well as impugned order dated

28.08.2024 issuing NBW and recovery warrant against the applicants including the entire proceedings of Complaint No. 14779/2023 (Arvind Chaudhary vs. Mohd. Rahis and another) under Section 138 of Negotiable Instrument Act, pending in the Court of Additional Civil Judge-7, Muzaffar Nagar.

3. The case of the applicants is that a complaint was lodged by the opposite party no. 2 under Section 138 of the NI Act on 23.05.2023 with an allegation that with respect to the discharge of the liability the applicants had drawn a cheque of an amount of Rs. 9,26,500/- which on presentation in the bank came to be dishonored thereafter the applicants were summoned on 23.08.2023 thereafter, during the pendency of the said proceedings, an order came to be passed on 29.05.2024 directing the applicants to pay 20% interim compensation under Section 143A.

4. Questioning the said order as well as the order issuing the recovery warrant and non bailable warrant, the present application has been preferred. 2 NA528 No. 35539 of 2025

5. Learned counsel for the applicants submits that the order dated

29.05.2024 cannot be sustained for the simple that the same is not as per the mandate of Hon'ble Apex Court in the case of Rakesh Ranjan Srivastava v. State of Jharkand and another; [2024] 3 S.C.R. 438. Submission is that the court is under legal obligation who have prima facie considered the merits of the case of the complainant as well as of the accused the financial distress and, in case, any decision was to be made for grant of interim compensation then the relationship of the parties and also the nature of the transaction ought to have been seen, the same has not been done, he submits that the order be set aside.

6. Learned State Law Officer, on the other hand, submits that once the cheque stood drawn and it was dishonored then the presumption under Section 139 of the NI Act would be there, however, he could not dispute the fact that the order in question has not been passed as per the mandate of Hon'ble Apex Court in Rakesh Rajan Srivastava (supra).

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

8. The order dated 29.05.2024 reads as under.- "29.05.2024 Called out. complainant is power of attorny holder case present. Accust came present counsel Cr.P.C. is recorded of the Mohd. Rais who stated any situation for security purpose I closed the A/c in the I did not recent the notice of the complaint I did not pay the cheque amount which is and due on me. the case is wrolgy and said. - the case As the demed the of the counsel would be tried as a summon trial he cause of the court of the cheque. The counsel for the complainant argued him and admitted he give the cheque of his signature the complaint and the case is running the business and in a portion to pay is of heard the one and he ordered he is paid _ amount. On the _ and for the _ argued with they are did not_ the cheque and Rs. 2,75,000/- one due of the complainant and he has no source of income to pay and tried the and he relieved to pay not of cheque amount heard. For one the present the above further the accuse admitted for took good _ complainant and Rs. 275,000/- one due and admitted for the gave the cheque of his 3 NA528 No. 35539 of 2025 signature to the complainant when the amount is due or not in a question the _ by evidence of both parties and not at the stage. in admitted _ running his case. Hence on the basis of above it is clear that the accused has the capacity to pay the amount. Hence under section 143a of the N.I. Act and to pay 20% of the cheque amount to the complainant within 60 days of the order__. Fix 26.06.2024 for P.E."

9. A close reading of the order dated 19.05.2024 according interim compensation under Section 143A of the NI Act would be that the same is not as per the mandate of Hon'ble Apex Court in Rakesh Ranjan Srivastava (supra), prima facie, the merits of the case of the complainant accused, the financial distress and quantum while taking into account the relationship of the parties and the nature of transaction has not been considered. Accordingly, the same cannot be sustained. In Rakesh Ranjan Srivastava (supra), the following was observed.- "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. 4 NA528 No. 35539 of 2025 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. Since the aforesaid exercise is lacking, thus, the order cannot be sustained.

11. Accordingly, the application stands decided in the following manner.- (a) the order dated 29.05.2024 passed by Civil Judge (J.D.) in Complaint Case No. 14779 of 2023 under Section 143A is set aside; (b) matter stands remitted back to the court below to pass a fresh order. Since non- bailable warrants have been issued, thus, the applicants shall file a recall application for recalling of the order by which an order for non-bailable warrant by 09.10.2025 has been issued and in the meantime no coercive action against them shall be taken.

12. Till the disposal of the application/proceedings which would be initiated, no coercive action shall be taken against the applicants in the proceedings of Complaint No. 14779/2023 (Arvind Chaudhary vs. Mohd. Rahis and another) under Section 138 of Negotiable Instrument Act, pending in the Court of Additional Civil Judge-7, Muzaffar Nagar.

13. Interim protection so accorded today, shall only be available to the applicants in those contingencies wherein, he sticks to the timeline and does not commit any default to the order passed by this Court.

14. With the above observations, the application stands disposed of. September 16, 2025 Rajesh (Vikas Budhwar,J.) RAJESH KUMAR High Court of Judicature at Allahabad

1. Heard Sri Satish Chandra Dubey, learned counsel for the applicants and Sri Pankaj Kumar Rai, learned State Law Officer for the State.

2. This application u/s 528 of BNSS has been preferred to quash the impugned summoning order dated 23.08.2023 and impugned order dated

29.05.2024 for interim compensation as well as impugned order dated

28.08.2024 issuing NBW and recovery warrant against the applicants including the entire proceedings of Complaint No. 14779/2023 (Arvind Chaudhary vs. Mohd. Rahis and another) under Section 138 of Negotiable Instrument Act, pending in the Court of Additional Civil Judge-7, Muzaffar Nagar.

3. The case of the applicants is that a complaint was lodged by the opposite party no. 2 under Section 138 of the NI Act on 23.05.2023 with an allegation that with respect to the discharge of the liability the applicants had drawn a cheque of an amount of Rs. 9,26,500/- which on presentation in the bank came to be dishonored thereafter the applicants were summoned on 23.08.2023 thereafter, during the pendency of the said proceedings, an order came to be passed on 29.05.2024 directing the applicants to pay 20% interim compensation under Section 143A.

4. Questioning the said order as well as the order issuing the recovery warrant and non bailable warrant, the present application has been preferred. 2 NA528 No. 35539 of 2025

5. Learned counsel for the applicants submits that the order dated

29.05.2024 cannot be sustained for the simple that the same is not as per the mandate of Hon'ble Apex Court in the case of Rakesh Ranjan Srivastava v. State of Jharkand and another; [2024] 3 S.C.R. 438. Submission is that the court is under legal obligation who have prima facie considered the merits of the case of the complainant as well as of the accused the financial distress and, in case, any decision was to be made for grant of interim compensation then the relationship of the parties and also the nature of the transaction ought to have been seen, the same has not been done, he submits that the order be set aside.

6. Learned State Law Officer, on the other hand, submits that once the cheque stood drawn and it was dishonored then the presumption under Section 139 of the NI Act would be there, however, he could not dispute the fact that the order in question has not been passed as per the mandate of Hon'ble Apex Court in Rakesh Rajan Srivastava (supra).

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

8. The order dated 29.05.2024 reads as under.- "29.05.2024 Called out. complainant is power of attorny holder case present. Accust came present counsel Cr.P.C. is recorded of the Mohd. Rais who stated any situation for security purpose I closed the A/c in the I did not recent the notice of the complaint I did not pay the cheque amount which is and due on me. the case is wrolgy and said. - the case As the demed the of the counsel would be tried as a summon trial he cause of the court of the cheque. The counsel for the complainant argued him and admitted he give the cheque of his signature the complaint and the case is running the business and in a portion to pay is of heard the one and he ordered he is paid _ amount. On the _ and for the _ argued with they are did not_ the cheque and Rs. 2,75,000/- one due of the complainant and he has no source of income to pay and tried the and he relieved to pay not of cheque amount heard. For one the present the above further the accuse admitted for took good _ complainant and Rs. 275,000/- one due and admitted for the gave the cheque of his 3 NA528 No. 35539 of 2025 signature to the complainant when the amount is due or not in a question the _ by evidence of both parties and not at the stage. in admitted _ running his case. Hence on the basis of above it is clear that the accused has the capacity to pay the amount. Hence under section 143a of the N.I. Act and to pay 20% of the cheque amount to the complainant within 60 days of the order__. Fix 26.06.2024 for P.E."

9. A close reading of the order dated 19.05.2024 according interim compensation under Section 143A of the NI Act would be that the same is not as per the mandate of Hon'ble Apex Court in Rakesh Ranjan Srivastava (supra), prima facie, the merits of the case of the complainant accused, the financial distress and quantum while taking into account the relationship of the parties and the nature of transaction has not been considered. Accordingly, the same cannot be sustained. In Rakesh Ranjan Srivastava (supra), the following was observed.- "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. 4 NA528 No. 35539 of 2025 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. Since the aforesaid exercise is lacking, thus, the order cannot be sustained.

11. Accordingly, the application stands decided in the following manner.- (a) the order dated 29.05.2024 passed by Civil Judge (J.D.) in Complaint Case No. 14779 of 2023 under Section 143A is set aside; (b) matter stands remitted back to the court below to pass a fresh order. Since non- bailable warrants have been issued, thus, the applicants shall file a recall application for recalling of the order by which an order for non-bailable warrant by 09.10.2025 has been issued and in the meantime no coercive action against them shall be taken.

12. Till the disposal of the application/proceedings which would be initiated, no coercive action shall be taken against the applicants in the proceedings of Complaint No. 14779/2023 (Arvind Chaudhary vs. Mohd. Rahis and another) under Section 138 of Negotiable Instrument Act, pending in the Court of Additional Civil Judge-7, Muzaffar Nagar.

13. Interim protection so accorded today, shall only be available to the applicants in those contingencies wherein, he sticks to the timeline and does not commit any default to the order passed by this Court.

14. With the above observations, the application stands disposed of. September 16, 2025 Rajesh (Vikas Budhwar,J.) RAJESH KUMAR High Court of Judicature at Allahabad