A trial court hearing a cheque bounce case can order the drawer to pay the complainant up to twenty per cent of the cheque amount before the trial is over, but it is not obliged to. That is the whole of section 143A of the Negotiable Instruments Act, 1881, and the Supreme Court settled in March 2024 that the power is discretionary, not automatic. A complainant who asks for section 143A interim compensation must show a prima facie case, and a court that grants it must record reasons. Filing a section 138 complaint, by itself, entitles nobody to anything.
This note explains when the power arises, what the accused can argue, what happens if the money is not paid, and how section 143A differs from the very different provision that operates after conviction.
What Section 143A Interim Compensation Actually Provides
Section 143A was inserted by the Negotiable Instruments (Amendment) Act, 2018 with effect from 1 September 2018. Its structure is short and every sub-section matters.
Sub-section (1) allows the court trying an offence under section 138 to order the drawer of the cheque to pay interim compensation to the complainant, in a summary trial or summons case where the accused pleads not guilty to the accusation, and in any other case upon framing of charge. Sub-section (2) caps the amount at twenty per cent of the cheque amount. Sub-section (3) gives the drawer sixty days from the date of the order to pay, extendable by up to a further thirty days on sufficient cause shown.
Sub-section (4) is the safeguard. If the drawer is acquitted, the court shall direct the complainant to repay the interim compensation with interest at the bank rate published by the Reserve Bank of India prevalent at the beginning of the relevant financial year, again within sixty days, extendable by up to thirty. Sub-section (5) makes the interim compensation recoverable as if it were a fine. Sub-section (6) provides that any fine imposed under section 138, or compensation awarded on conviction, is reduced by what has already been paid or recovered as interim compensation, so the accused is not made to pay twice.
The section works sub-section by sub-section, and each one carries a separate rule.
Sub-section (1): the power
The court trying a section 138 offence may order the drawer to pay interim compensation to the complainant, once the accused pleads not guilty or charge is framed.
Sub-section (2): the ceiling
Interim compensation cannot exceed twenty per cent of the cheque amount. That figure is a maximum the court may award, not a default starting point.
Sub-section (3): time to pay
The drawer gets sixty days from the date of the order to pay, extendable by up to a further thirty days on sufficient cause shown.
Sub-section (4): if acquitted
On acquittal the complainant must repay the money with interest at the Reserve Bank of India bank rate for the relevant financial year, within sixty days.
Key takeaway. Twenty per cent is a ceiling under section 143A, not a starting point. Nothing in the section says the court must award the maximum, and after the 2024 ruling a court that awards twenty per cent without explaining why is vulnerable on revision.
It Is Discretionary, Not Automatic
The leading authority is Rakesh Ranjan Shrivastava v. State of Jharkhand, decided by the Supreme Court on 15 March 2024 and reported as 2024 INSC 205. Justices Abhay S. Oka and Ujjal Bhuyan held that the word "may" in sub-section (1) is directory and cannot be read as "shall", precisely because the consequence is drastic: money leaves the accused before any finding of guilt.
The Court set out how the discretion is to be exercised. The complainant must make out a prima facie case. The court must conduct a prima facie evaluation of the merits of the complaint and of the defence pleaded by the accused. If the accused raises a prima facie plausible defence, interim compensation can be refused. If compensation is granted, the quantum must itself be a considered decision, taking into account the nature of the transaction, the relationship between the parties, and the paying capacity of the accused, and the financial distress of the accused is a relevant consideration. In every case, the court must record brief reasons showing that the relevant factors were applied.
The practical consequence is that a section 143A application is now a small contested hearing on the strength of the case, not a form-filling exercise. Both sides should treat it as such.
At What Stage Can the Order Be Made?
Timing is jurisdictional. In a summary trial or a summons case, which is how the overwhelming majority of section 138 matters proceed, the power arises only when the accused pleads not guilty to the accusation made in the complaint. Before the plea is recorded, there is no power. In any other case, the power arises upon framing of charge.
Applications filed at the stage of issue of process, or before the accused has entered a plea, are therefore premature. An order made prematurely is open to challenge in revision, and the point is worth taking early rather than after the sixty-day window has run.
Section 143A Applies Only to Post-2018 Offences
In G.J. Raja v. Tejraj Surana, decided on 30 July 2019, the Supreme Court held that section 143A is prospective. It applies only where the offence under section 138 was committed after 1 September 2018, when the provision came into force. The reasoning was that the section does not merely change procedure, it creates a new liability and exposes the accused to coercive recovery before any adjudication of guilt, so it cannot operate retrospectively.
The Court drew a deliberate contrast with section 148, which it treated differently because that provision operates after conviction and uses recovery machinery that already existed.
Section 143A Compared With Section 148
The two provisions were inserted by the same 2018 amendment and are constantly confused. They are not the same thing and they do not work the same way.
| Feature | Section 143A | Section 148 |
|---|---|---|
| Stage | During trial, before any finding of guilt | In appeal by the drawer against a conviction under section 138 |
| Trigger | Plea of not guilty in a summary or summons case, or framing of charge | Filing of the appeal against conviction |
| Amount | Maximum twenty per cent of the cheque amount | Minimum twenty per cent of the fine or compensation awarded by the trial court |
| Base figure | The cheque amount | The fine or compensation actually awarded, which is often larger than the cheque |
| Character of the power | Discretionary, requiring reasons, following Rakesh Ranjan Shrivastava | Treated far more strictly, on the footing that guilt has already been found |
| Application to pre-2018 cases | Prospective only, following G.J. Raja | Distinguished in G.J. Raja and not confined in the same way |
| 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 the complainant | Paid to the complainant under the order itself | Appellate court may direct release of the deposit during the pendency of the appeal |
Note the proviso to section 148(1): the appellate deposit is in addition to any interim compensation already paid under section 143A. A drawer who pays at trial and then appeals does not get credit against the section 148 deposit for what he paid earlier, though sub-section (6) of section 143A still reduces the final fine or compensation.
Who Can Be Ordered to Pay
Section 143A speaks of "the drawer of the cheque". In Shri Gurudatta Sugars Marketing Pvt. Ltd. v. Prithviraj Sayajirao Deshmukh, decided on 24 July 2024 and reported as 2024 INSC 551, the Supreme Court held that an authorised signatory of a company is not the drawer for this purpose. The company that maintains the account and issues the cheque is the drawer. Officers and signatories can be made liable under section 141 on the conditions set out there, but that is a different route and it does not convert them into drawers for section 143A. Our note on liability of company directors under section 141 deals with that distinction.
Common mistake. Filing a section 143A application against every accused named in the complaint. If the cheque was drawn on a company account, the application lies against the company and not against the managing director who signed it. Getting this wrong invites a revision that undoes an otherwise good order.
If the Accused Does Not Pay
Sub-section (5) makes the interim compensation recoverable as if it were a fine, which brings in the fine recovery machinery of the criminal procedure code. Section 143A still refers to the Code of Criminal Procedure, 1973, which has since been repealed by section 531 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The corresponding provisions in the Sanhita are section 461 for a warrant for levy of fine and section 395 for an order to pay compensation.
What the court cannot do is punish the default in some other way. In Noor Mohammed v. Khurram Pasha, decided on 2 August 2022, the trial court had dismissed the accused's application to cross-examine the complainant because he had not deposited the interim compensation. The Supreme Court set that aside, holding that the provision nowhere contemplates that an accused who fails to deposit interim compensation can be fastened with any other disability, including denial of the right to cross-examine. The recovery mechanism in sub-section (5) is the remedy, and it is the only one.
Default on a section 143A order carries one consequence, and the section also limits what the money finally costs the accused.
Recovery as a fine
Sub-section (5) makes interim compensation recoverable as if it were a fine, which now engages section 461 of the Bharatiya Nagarik Suraksha Sanhita, 2023.
No collateral penalty
In Noor Mohammed v. Khurram Pasha the Supreme Court held that an accused who has not deposited cannot be denied the right to cross-examine the complainant.
Sixty days from the order
The payment window runs from the date of the order itself, not from the date on which the accused receives a copy of it.
Credit under sub-section (6)
Whatever is paid or recovered as interim compensation reduces the fine imposed under section 138, or the compensation awarded on conviction, so nothing is paid twice.
How the Application Is Run
- Confirm the cheque was dishonoured after 1 September 2018, since section 143A does not reach earlier offences.
- Wait for the correct stage. In a summary trial or summons case, file after the accused has pleaded not guilty; in other cases, after charge is framed.
- File a written application with the cheque, the return memo, the demand notice, proof of service, and the documents showing the underlying debt or liability. The prima facie case has to be visible on paper.
- Plead the quantum separately. Do not simply ask for twenty per cent. Give the court a reason for the figure sought, tied to the transaction and to the conduct of the accused.
- Anticipate the defence. If the accused is likely to say the cheque was a blank security cheque, or that the debt was repaid, address it in the application rather than leaving it to reply.
- For the accused, file a reply that sets out a plausible defence with documents, and place the paying capacity position on record if financial distress is genuine.
- Insist that the order records reasons. An order that merely says the application is allowed is exactly the order that gets set aside.
- If an order is made and not complied with, apply for recovery as a fine rather than asking the court to strike off the defence, which it cannot do.
- Diarise the sixty-day date and any extension. Both sides need it, because the extension is capped at thirty days and requires sufficient cause.
Deadline warning. The sixty-day period in section 143A(3) runs from the date of the order, not from the date the accused receives a copy. An accused who intends to challenge the order in revision should move promptly rather than allowing the payment window to lapse while the papers are being prepared.
Indicative Timelines
These are broad indications of how such applications tend to move. They are not commitments, and every court list moves at its own pace.
| Step | Indicative time |
|---|---|
| From recording of plea to disposal of a contested section 143A application | Commonly a few weeks to a few months |
| Payment window once an order is made | Sixty days, extendable by up to thirty on sufficient cause |
| Criminal revision against a section 143A order | Usually several months, depending on the Sessions Court or High Court roster |
| Recovery as a fine after default | Variable; depends on the attachable assets identified |
| Repayment with interest after acquittal | Sixty days from the order, extendable by up to thirty |
A Practitioner's Note
Section 143A changed the negotiating position in cheque cases more than it changed the law. Before 2018 an accused could take a section 138 matter through several years of adjournments at almost no cost, and many did. The prospect of parting with a fifth of the cheque amount early, with the money going to the complainant rather than into court deposit, is what makes some of these matters settle at the plea stage. But the 2024 judgment cuts the other way too. A complainant who walks in with a bare complaint, no supporting documents for the underlying liability and no explanation for the figure claimed will now often be refused, and the refusal itself becomes a bargaining chip for the accused. Both sides should prepare the application as though it were a mini-trial on the documents, because that is broadly what it has become. Our notes on cheque bounce case procedure under section 138 and on section 138 defences in recent rulings cover the surrounding ground, and the cheque bounce and recovery page gives an overview.
Related guides and where to get help
- Cheque Bounce Case Procedure Under Section 138 NI Act
- Cheque Bounce Legal Notice Format (Section 138 Guide)
- Compounding vs Quashing of a Cheque Bounce Case
Frequently Asked Questions
Is interim compensation under section 143A mandatory once a cheque case is filed?
No. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024 INSC 205) the Supreme Court held the power is discretionary. The complainant must show a prima facie case and the court must record reasons.
How much can the court order?
Up to twenty per cent of the cheque amount. That is a maximum, not a default figure, and the court must apply its mind to the quantum separately from the question of whether to grant anything at all.
When does the court get the power to pass the order?
In a summary trial or summons case, only after the accused pleads not guilty to the accusation in the complaint. In any other case, upon framing of charge. An application before that stage is premature.
Does section 143A apply to cheques dishonoured before September 2018?
No. G.J. Raja v. Tejraj Surana held that the provision is prospective and applies only to offences committed after 1 September 2018.
What happens if the accused does not pay?
The amount is recoverable as if it were a fine, which now engages section 461 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The court cannot instead deny the accused the right to cross-examine, as the Supreme Court held in Noor Mohammed v. Khurram Pasha.
Does the accused get the money back if acquitted?
Yes. Section 143A(4) requires the complainant to repay it with interest at the Reserve Bank of India bank rate prevalent at the beginning of the relevant financial year, within sixty days of the order, extendable by up to thirty days on sufficient cause.
Can the managing director be ordered to pay when the cheque is a company cheque?
No. In Shri Gurudatta Sugars Marketing Pvt. Ltd. (2024 INSC 551) the Supreme Court held that an authorised signatory is not the drawer for section 143A purposes. The company is.
Is a section 143A order appealable?
It is an interlocutory order made during trial, and challenges are ordinarily mounted by way of criminal revision or, in appropriate cases, the inherent jurisdiction now found in section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, which replaced section 482 of the Code of Criminal Procedure, 1973.
Does paying interim compensation reduce what is finally payable?
Yes. Section 143A(6) requires the fine imposed under section 138 or the compensation awarded on conviction to be reduced by the amount already paid or recovered as interim compensation.
This article states the general position under Indian law as at August 2026 and is not legal advice. Orders under section 143A turn heavily on the documents and on the defence actually raised in each case.
