Himachal Pradesh High Court
_______________________________________________________ vs Ram Kumar on 30 March, 2026
Author: Sandeep Sharma
Bench: Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.MMO No.853 of 2025 Reserved on:20.03.2026 .
Date of Decision: 30.03.2026 _______________________________________________________ Sh. Ramesh .......Petitioner Versus Ram Kumar ... Respondent _______________________________________________________ Coram:
Hon'ble Mr. Justice Sandeep Sharma, Judge.
of Whether approved for reporting? 1 Yes.
For the Petitioners: Mr. P.S. Chandel, Advocate. For the Respondent: Mr. Ajay Kumar Chauhan, Advocate.
rt _______________________________________________________ Sandeep Sharma, Judge(oral):
Being aggrieved and dissatisfied with orders dated 04.06.2024 passed by Judicial Magistrate First Class, Jubbal, District Shimla, Himachal Pradesh (Camp at Rohru) and 18.06.2025 passed by Judicial Magistrate First Class, Court No.II, Rohru, District Shimla, Himachal Pradesh (Annexures P-1 and P-2), whereby petitioner-
accused (in short "accused") came to be directed to pay interim compensation equivalent to 20% of the cheque amount within 60 days from the date of order, in terms of Section 143-A of Negotiable Instruments Act (in short "NI Act") as inserted by Act 20 of 2018, accused has approached this Court in the instant proceedings filed under Section 528 of Bharatiya Nagrik Suraksha Sanhita, praying therein to quash and set aside the aforesaid orders.
1Whether the reporters of the local papers may be allowed to see the judgment?
::: Downloaded on - 30/03/2026 20:33:16 :::CIS 22. Precisely, the facts of the case as emerge from the pleadings as well as other material adduced on record by the .
respective parties are that respondent/complainant (in short "complainant") filed a complaint under Section 138 of the NI Act in the competent Court of law, alleging therein that accused issued post-
dated cheque No.876733 amounting to Rs.12,00,000/- dated of 04.03.2022 drawn from SBI branch Pujarli No.4, Shimla in favour of the complainant towards discharge of his lawful liability. However, the rt same was dishonoured on account of insufficient funds in the bank account of the accused. Since despite having received legal notice, accused failed to make the payment good within stipulated time, complainant preferred the aforesaid complaint in the competent Court of law, which is pending adjudication. During proceedings of the case, accused filed an application under Section 145-2 of NI Act, praying therein to cross-examine the complainant. Learned Court below, after having heard learned counsel for the parties, proceeded to pass order dated 04.06.2024, whereby Court concerned, while allowing the application under Section 145-2 of the NI Act, thereby permitting the accused to cross-examine the complainant, also invoked the provisions of Section 143-A of NI Act, as inserted by Act 20 of 2018 and directed the accused to pay interim compensation equivalent to 20% of the cheque amount within 60 days from the date of the order.
::: Downloaded on - 30/03/2026 20:33:16 :::CIS 3Though in terms of afore order, interim compensation awarded by the learned Court below was to be paid on or before 04.08.2024, but .
since accused failed to comply with the aforesaid direction, Court proceeded to pass order dated 18.06.2025, thereby directing the accused to pay interim compensation as per order dated 04.06.2025, failing which same shall be recovered in terms of provisions contained of under Section 421 of Cr.P.C. Accused is aggrieved of second part of order dated 04.06.2024, whereby he has been directed to pay interim rt compensation equivalent to 20% of the cheque amount.
3. In nutshell, the grouse of the accused, as has been highlighted in the petition and further canvassed by Mr. P.S. Chandel, learned counsel representing the petitioner, is that impugned order dated 04.06.2024, whereby the accused has been directed to pay interim compensation equivalent to 20% of the cheque amount, is in complete violation of the principles of natural justice, inasmuch as no opportunity of being heard was afforded to the accused prior to passing of the aforesaid order. Mr. Chandel further submitted that by now it is well settled that while dealing with an application under Section 143-A of the NI Act, the Court is required 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 under Section 143-A (1). He submitted that neither any ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 4 application under Section 143-A ever came to be filed at the behest of complainant nor any opportunity was ever afforded to file reply. Mr. .
Chandel further submitted that since accused has specifically denied factum of his having availed loan to the tune of Rs.12,00,000/-, learned Court below ought not have straightaway proceeded to order grant of interim compensation, rather at first instance, it was required of to give an opportunity of being heard to the accused that too after evaluating the merits of the case set up by the complainant and the rt merits of the defence pleaded by the accused in the reply to the application under Section 143-A (1) of the NI Act, which was otherwise never permitted to be filed.
4. To the contrary, Mr. Ajay Kumar Chauhan, learned counsel representing the respondent, while supporting the impugned order, vehemently argued that bare reading of Section 143-A nowhere suggests that an opportunity to file reply, if any, is required to be given to the accused, rather, in terms of aforesaid provision of law, Court trying an offence under Section 138 of NI Act may order the drawer of the cheque to pay interim compensation to the complainant, which shall not exceed 20% of the cheque amount.
5. Having heard learned counsel for the parties and perused material available on record vis-a-vis reasoning assigned in the orders impugned in the instant proceedings, this Court is persuaded to ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 5 interfere with the same for the reason that same is not based upon proper appreciation of Section 143-A of NI Act as well as law laid .
down by Hon'ble Apex Court as well as this Court in number of judgments. At first instance, it would be apt to take note of Section 143 of NI Act, which reads as under:-
"S. 143 A Power to direct interim compensation
1. Notwithstanding anything contained in the Code of Criminal of Procedure, 1973, the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant--
rt a. in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and b. in any other case, upon framing of charge.
2. The interim compensation under sub-section (1) shall not exceed twenty percent of the amount of the cheque.
3. The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.
4. If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.::: Downloaded on - 30/03/2026 20:33:16 :::CIS 6
5. The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973.
.
6. The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973, shall be reduced by the amount paid or recovered as interim compensation under this section."
6. Careful perusal of aforesaid provision of law suggests of that Court trying an offence under Section 138 of NI Act may order the drawer of the cheque to pay the interim compensation to the complainant.
rt
7. Though having perused aforesaid provision of law, this Court is persuaded to agree with Mr. Ajay Kumar Chauhan, learned counsel representing the respondent, that Court of its own may also proceed to award interim compensation, which shall not exceed 20% of the cheque amount, but use of word "may" in aforesaid provision of law compels this Court to agree with the contention raised at the behest of the accused that it is not must for the Court to order payment of interim compensation in every complaint, rather it is the discretion of the learned trial Court "whether to order payment of interim compensation or not?" No doubt, power under Section 143-A (1) is discretionary as is evident from the bare reading of aforesaid provision but at the same time, it is not mandatory for the Court to order the accused to pay interim compensation. Once the Trial Court ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 7 decides for ordering payment of interim compensation, the maximum cap that can be imposed is 20% of the cheque amount. Directing the .
accused to pay interim compensation between 1% to 20% of the cheque amount is another discretionary power of the Court, which is to be exercised in accordance with law after considering all attending parameters. Use of word "may" in aforesaid provision of law though of gives discretion to the Court concerned to award interim compensation, but same cannot be awarded in a routine manner, rt rather Court concerned, while deciding issue of interim maintenance, is necessarily required to look into the pleadings adduced on record by the parties to the lis, especially defence of the accused. Had legislature used the word "shall" instead of "may, learned counsel representing the respondent was right in contending that in all eventualities, Court is under obligation to award interim maintenance, but in the instant case, use of word "may" instead of "shall" and cap of 20% of the cheque amount clearly suggests that though it is the discretion of the Court to award interim maintenance, but it shall not exceed 20% of the cheque amount, meaning thereby, Court, in given facts and circumstances, can proceed to grant interim compensation from 1% to 20% of the cheque. However for determining the correct percentage, Court is necessarily required to look into the defence of the accused. Since application for interim maintenance is normally ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 8 decided at first instance and defence of the accused is not disclosed at the initial stage, learned Court below, while considering issue of .
interim compensation, is required to afford an opportunity to the accused to file reply to the application, if any, filed under Section 143- A of NI Act, wherein certainly he can provide reasoning for not awarding interim compensation, prayed at the behest of the of complainant. Coordinate Bench of this Court had an occasion to deal with similar situation in Cr.MMO No. 264 of 2023, titled as Mukesh rt Kumar Vs Raman, decided on 15.05.2023, wherein it has held as under:-
"Thus from a holistic reading of Section 143A of the Act, it becomes apparent that power given to the Court to order payment of interim compensation amount, is discretionary. It is not mandatory for the Court to order the accused to pay interim compensation. However, once the Trial Court decides for ordering payment of interim compensation, the maximum cap that can be imposed is 20% of the cheque amount. Directing the accused to pay interim compensation between 1% to 20% of the cheque amount is another discretionary power of the Court. The discretionary powers be it for deciding to direct the accused to pay interim compensation amount or to order him to pay specified percentage of cheque amount, towards interim maintenance has to be exercised in accordance with law after considering all attending parameters. The learned Trial Court was to give a reasonable opportunity to the accused-petitioner on the interim compensation to be awarded against him. Without affording any opportunity to the petitioner and without giving any reason for awarding 10% of the interim compensation, learned Trial Court has simply ordered the petitioner to pay 10% of the cheque amount as interim compensation. This ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 9 course is not in consonance with the scheme of the Act. The order should indicate application of mind by the Court to the facts and relevant factors while awarding interim compensation & extent thereof. The impugned order does not disclose any application of .
mind. It straightway directed the petitioner to deposit 10% of the cheque amount as interim compensation that too at his first appearance in the Court. Hence for aforesaid reasons, the present petition is allowed. The impugned order dated 05.08.2022 is set aside alongwith consequent proceedings arising out of it. The parties through their respective learned counsel are directed to of appear before the learned Trial Court on 13.06.2023. Learned Trial Court shall consider the matter for the grant of interim compensation afresh in light of above observations and in rt accordance with law. Pending miscellaneous application(s), if any, shall also stand disposed of.
8. Reliance is also placed upon judgment passed by Hon'ble Apex Court in Criminal Appeal No.741 of 2024, case titled as Rakesh Ranjan Shrivastava Vs. The State of Jharkhand & Anr., wherein Hon'ble Apex Court held that power under sub-section (1) of Section 143-A of NI Act is discretionary and not mandatory. Sub-
section (1) of Section 143-A NI Act provides for passing a drastic order for payment of interim compensation against the accused in a complaint under Section 138 of NI Act, even before any adjudication is made on the guilt of the accused. Hon'ble Apex Court held that afore power can be exercised at the threshold even before the evidence is recorded, as such, if word "may' is interpreted as "shall", it would have drastic consequences as in every complainant under ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 10 Section 138 of NI Act, the accused will have to pay interim compensation upto 20% of the cheque amount. Relevant paras of the .
afore judgment are extracted herein below:-
"MANDATORY OR DIRECTORY
9. There is no doubt that the word "may" ordinarily does not mean "must". Ordinarily, "may" will not be construed as "shall". But this is not an inflexible rule. The use of the word "may" in certain of legislations can be construed as "shall", and the word "shall" can be construed as "may". It all depends on the nature of the power conferred by the relevant provision of the statute and the effect of the exercise of the power. The legislative intent also plays a role in rt the interpretation of such provisions. Even the context in which the word "may" has been used is also relevant.
10. The power under sub-section (1) of Section 143A is to direct the payment of interim compensation in a summary trial or a summons case upon the recording of the plea of the accused that he was not guilty and, in other cases, upon framing of charge. As the maximum punishment under Section 138 of the N.I. Act is of imprisonment up to 2 years, in view of clause (w) read with clause (x) of Section 2 of the Code of Criminal Procedure, 1973 (for short, 'the Cr.PC'), the cases under Section 138 of the N.I. Act are triable as summons cases. However, sub-section (1) of Section 143 provides that notwithstanding anything contained in the Cr.PC, the learned Magistrate shall try the complaint by adopting a summary procedure under Sections 262 to 265 of the Cr.PC. However, when at the commencement of the trial or during the course of a summary trial, it appears to the Court that a sentence of imprisonment for a term exceeding one year may have to be passed or for any other reason it is undesirable to try the case summarily, the case shall be tried in the manner provided by the CrPC. Therefore, the complaint under Section 138 becomes a summons case in such a contingency. We may note here that under Section 259 of the Cr.PC, subject to what ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 11 is provided in the said Section, the learned Magistrate has the discretion to convert a summons case into a warrant case. Only in a warrant case, there is a question of framing charge. Therefore, clause (b) of sub-section (1) of Section 143A will apply only when .
the case is being tried as a warrant case. In the case of a summary or summons trial, the power under sub-section (1) of Section 143A can be exercised after the plea of the accused is recorded.
11. Under sub-section (5) of Section 143A, it is provided that the amount of interim compensation can be recovered as if it were a of fine under Section 421 of the Cr.PC. Therefore, by a legal fiction, the interim compensation is treated as a fine for the purposes of its recovery. Section 421 of the Cr.PC deals with the recovery of the rt fine imposed by a criminal court while passing the sentence. Thus, recourse can be taken to Section 421 of the Cr.PC. for recovery of interim compensation, which reads thus:"
421. Warrant for levy of fine.-(1) When an offender has been sentenced to pay a fine, the Court passing the sentence may take action for the recovery of the fine in either or both of the following ways, that is to say, it may-
(a) issue a warrant for the levy of the amount by attachment and sale of any movable property belonging to the offender:
(b) issue a warrant to the Collector of the district.
authorising him to realise the amount as arrears of land revenue from the movable or immovable property, or both, of the defaulter:
Provided that, if the sentence directs that in default of payment of the fine, the offender shall be imprisoned, and if such offender has undergone the whole of such imprisonment in default, no Court shall issue such warrant unless, for special reasons to be recorded in writing, it considers it necessary so to do, or unless it has made an ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 12 order for the payment of expenses or compensation out of the fine under Section 357.
(2) The State Government may make rules regulating the manner in .
which warrants under clause (a) of sub-section (1) are to be executed, and for the summary determination of any claims made by any person other than the offender in respect of any property attached in execution of such warrant.
(3) Where the Court issues a warrant to the Collector under clause of
(b) of sub-section (1), the Collector shall realise the amount in accordance with the law relating to recovery of arrears of land revenue, as if such warrant were a certificate issued under such rt law:
Provided that no such warrant shall be executed by the arrest or detention in prison of the offender."
FACTORS TO BE CONSIDERED WHILE EXERCISING
DISCRETION
16. When the court deals with an application under Section 143A of the N.I. Act. 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 under sub-
section (1) of Section 143A. The presumption under Section 139 of the N.I. Act, by itself, is no ground to direct the payment of interim compensation. The reason is that the presumption is rebuttable. The question of applying the presumption will arise at the trial. Only if the complainant makes out a prima facie case, a direction can be issued to pay interim compensation. At this stage, the fact that the accused is in financial distress can also be a consideration. Even if the Court concludes that a case is made out for grant of interim compensation, the Court will have to apply its mind to the quantum of interim compensation to be granted. Even at this stage, the Court ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 13 will have to consider various factors such as the nature of the transaction, the relationship, if any, between the accused and the complainant and the paying capacity of the accused. If the defence of the accused is found to be prima facie a plausible defence, the .
Court may exercise discretion in refusing to grant interim compensation. We may note that the factors required to be considered, which we have set out above, are not exhaustive. There could be several other factors in the facts of a given case, such as, the pendency of a civil suit, etc. While deciding the prayer made under Section 143A, the Court must record brief reasons indicating of consideration of all the relevant factors.
17. In the present case, the Trial Court has mechanically passed an rt order of deposit of Rs. 10,00,000/- without considering the issue of prima facie case and other relevant factors. It is true that the sum of Rs. 10,00,000/- represents less than 5 per cent of the cheque amount, but the direction has been issued to pay the amount without application of mind. Even the High Court has not applied its mind. We, therefore, propose to direct the Trial Court to consider the application for grant of interim compensation afresh. In the meanwhile, the amount of Rs. 10,00,000/- deposited by the appellant will continue to remain deposited with the Trial Court.
9. In afore case, Hon'ble Apex Court has held that if word "may' is interpreted as "shall", such interpretation will be unjust and contrary to the well settled concept of fairness and justice.
10. Consequently, in view of the detailed discussion made herein above as well as law taken into consideration, this Court finds merit in the present petition and accordingly, the same is allowed.
Impugned orders dated 04.06.2024 and 18.06.2025 (Annexures P-1 ::: Downloaded on - 30/03/2026 20:33:16 :::CIS 14 and P-2) as well as subsequent proceedings initiated in lieu thereof are quashed and set aside.
.
11. Learned counsel representing the parties undertake to cause presence of their respective clients before the learned Court below on 23.04.2026, enabling it to consider and decide the matter for grant of interim compensation afresh in light of observations made of hereinabove and in accordance with law. Pending applications, if any, also stand disposed of.
rt (Sandeep Sharma), Judge March 30, 2026 (sunil) ::: Downloaded on - 30/03/2026 20:33:16 :::CIS