Yes, and it is the one part of a cheque case that puts money in your hands before judgment. The provision is Section 143A of the Negotiable Instruments Act, 1881, and the law around it is set out in our guide to interim compensation under Section 143A. What follows is the working sequence from the complainant's side: when to apply, what you will get, what happens if he does not pay, and what becomes of the money at the end.
When can I apply, and what do I file?
Timing is fixed by the section. In a summary trial or a summons case, which is how nearly every Section 138 matter runs, the power arises when the accused pleads not guilty to the accusation. In any other case it arises on framing of charge. An application filed before the plea is recorded is premature and will be dismissed or, worse, allowed and then set aside in revision.
- Wait for the plea. Under Section 274 BNSS the particulars are put to the accused and he is asked whether he pleads guilty or has a defence. The moment he says he has a defence, the door opens.
- File a written application with the cheque, the return memo, the demand notice with proof of service, and the documents showing the debt: the agreement, invoices, ledger or bank transfer.
- Plead the figure. Twenty per cent is the ceiling, not the entitlement. Give the court a reason tied to the transaction for the sum you seek.
- Answer the defence in advance. If the reply to the notice said security cheque or debt repaid, deal with it in the application rather than leaving it to the reply.
- Ask for reasons. An order that merely allows the application is the order that gets overturned.
How much will the court order?
Anything up to twenty per cent of the cheque amount, and possibly nothing. In Rakesh Ranjan Shrivastava v. State of Jharkhand, decided on 15 March 2024, the Supreme Court held that the power under Section 143A(1) is discretionary, that the word may cannot be read as shall, and that the court must record brief reasons showing it considered the relevant factors. The parameters it listed are the prima facie merits of the complaint and of the defence in the reply, the financial distress of the accused, and, if a case is made out, the nature of the transaction and the relationship between the parties when fixing the amount. A plausible defence can lead to refusal. So the application is argued like a small trial on paper, and the side with the better documents usually wins it.
What if the accused does not pay within the sixty days?
Section 143A(5) says the interim compensation may be recovered as if it were a fine. The section still refers to Section 421 of the old Code, and the corresponding provision is now Section 461 of the Bharatiya Nagarik Suraksha Sanhita, 2023. Under it the court may issue a warrant for the levy of the amount by attachment and sale of his movable property, or a warrant to the Collector of the district to realise it as arrears of land revenue from his movable or immovable property. The proviso to Section 461(3) says the Collector's warrant cannot be executed by arrest or detention, so this is a recovery tool, not a jail threat.
That recovery route is the only consequence the law attaches to default. In Noor Mohammed v. Khurram Pasha, decided on 2 August 2022 in an appeal from a Karnataka trial court, the Supreme Court set aside orders that had refused the accused the right to cross-examine the complainant because he had not deposited the interim compensation. The remedy for non-payment is the one the legislature provided in sub-section (5), and the court cannot invent another. Apply for recovery, then, and do not ask for his defence to be shut out.
What happens to the money at the end of the case?
| Point | Section 143A (trial) | Section 148 (appeal) |
|---|---|---|
| Who pays | The drawer of the cheque | The drawer appealing against conviction |
| Amount | Up to twenty per cent of the cheque amount | A minimum of twenty per cent of the fine or compensation awarded, in addition to anything paid under Section 143A |
| Time to pay | Sixty days, extendable by up to thirty on sufficient cause | Sixty days, extendable by up to thirty on sufficient cause |
| Release to complainant | Paid to the complainant | The appellate court may release the deposit to the complainant during the appeal |
| If the drawer wins | Complainant repays with interest at the RBI bank rate within sixty days | Complainant repays the released amount with interest at the RBI bank rate within sixty days |
| Set off | Reduces any fine or compensation finally ordered, Section 143A(6) | Counts towards the fine or compensation under appeal |
Which cheques does this not cover?
Cheques dishonoured before the section existed. In G.J. Raja v. Tejraj Surana, decided on 30 July 2019, the Supreme Court held that Section 143A is prospective and can be invoked only where the Section 138 offence was committed after the section entered the statute book on 1 September 2018. Section 148 was treated differently in Surinder Singh Deswal v. Virender Gandhi, decided on 29 May 2019, because it operates after conviction, so the appellate deposit applies to appeals filed after that date even where the complaint was older. The other limit is the word drawer. Where the cheque is drawn on a company account, the company is the drawer, and the position of the signatory director is dealt with in our note on directors and Section 141.
What I tell clients is that Section 143A is worth far more as a settlement lever than as a recovery. An accused who has just been ordered to pay twenty per cent, with a Collector's warrant behind it, is an accused who now wants to talk about the remaining eighty, and Section 147 lets the offence be compounded at any stage. The cases where it fails are the ones where the application was filed too early, sought the ceiling without a reason, or was met with a reply and a bank statement the complainant had never read. Prepare the application as if the case turned on it, because for the money it often does. The hearing that follows is described in our answer on what happens at a cheque bounce hearing.