Noor Mohammed v. Khurram Pasha

The Supreme Court delivered an authoritative ruling on the constitutional validity and procedural operation of Section 143A of the Negotiable Instruments Act, 1881 (power to direct interim compensation). The Court held that Section 143A is a directory and discretionary provision, not mandatory. Crucially, the Court ruled that if an accused fails to deposit the directed interim compensation (up to 20%), the trial court has absolutely no power to strike off the defense or prohibit the accused from cross-examining prosecution witnesses. The only permissible statutory method to recover interim compensation is through the recovery process under Section 421 CrPC (fine recovery warrant). Striking off the right to defend violates the fundamental right to a fair trial under Article 21.

• Section 143A is Discretionary: The word 'may' in Section 143A(1) indicates that granting interim compensation is discretionary, requiring judicial application of mind.
• Prohibition on Striking Off Defense: Trial courts cannot shut out the accused's defense or prevent cross-examination of complainant witnesses for default of interim deposit.
• Exclusive Recovery Mechanism under Section 421 CrPC: Non-deposit can only be recovered as a fine by issuing distress warrants or attachment of movable/immovable property.
• Protection of Fair Trial Rights: Depriving an accused of the right to cross-examine prosecution witnesses strikes at the core of procedural due process under Article 21.
• High Court and Trial Orders Quashed: Orders barring the accused from cross-examining the complainant set aside; matter remitted with defense restored.

The respondent (complainant) filed a complaint under Section 138 NI Act against the appellant for dishonor of a cheque for Rs. 7,00,000/-. At the stage of framing notice under Section 251 CrPC, the trial court directed the appellant under Section 143A NI Act to deposit 20% of the cheque amount (Rs. 1,40,000/-) as interim compensation.

Due to acute financial distress, the appellant failed to deposit the interim compensation within the 60-day period.

Upon non-payment, the trial Magistrate passed an order striking off the defense of the appellant and debarring him from cross-examining the complainant and prosecution witnesses.

The High Court of Karnataka dismissed the appellant's petition, upholding the closure of his right to cross-examine. The accused appealed to the Supreme Court.

Section 143A of the Negotiable Instruments Act, 1881 empowers the Court trying an offence under Section 138 to direct the drawer of the cheque to pay interim compensation to the complainant. Subsection (5) of Section 143A explicitly provides the consequence and method of recovery if interim compensation is not paid: '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.' Neither Section 143A nor any other provision of the Code of Criminal Procedure or the Negotiable Instruments Act empowers the Court to strike off the defense of the accused or to debar the accused from cross-examining the complainant or his witnesses for non-compliance with an order passed under Section 143A. The right to cross-examine prosecution witnesses is a fundamental attribute of a fair trial guaranteed under Article 21 of the Constitution and codified in the Indian Evidence Act. Striking off the defense in a criminal trial is completely alien to criminal jurisprudence. The only consequence of failure to pay interim compensation under Section 143A is that the amount can be recovered by the court adopting the procedure prescribed under Section 421 CrPC, namely, by issuing a warrant for levy of fine by attachment and sale of movable property or by issuing a warrant to the Collector. The orders passed by the trial court and the High Court closing the right of the appellant to cross-examine the complainant were wholly without jurisdiction, illegal, and destructive of a fair trial. The orders are set aside and the appellant is permitted to cross-examine the complainant.

• Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) 4 SCC 419: Applied Noor Mohammed to confirm Section 143A is directory, not mandatory.
• Surinder Singh Deswal v. Virender Gandhi (2019) 11 SCC 341: Harmonized with Section 148 (appellate stage deposit) principles.
• G.J. Raja v. Tejraj Sharma (2019) 19 SCC 469: Affirmed that Section 143A is prospective in operation.