Interim Compensation in Cheque Bounce Cases: Section 143A Explained

Cheque bounce cases can take years to decide. To reduce the hardship this causes to the person who received the bounced cheque, Parliament added Section 143A to the Negotiable Instruments Act, 1881 in 2018. It allows the trial court to order the accused to pay interim compensation while the case is still going on.

This article explains what Section 143A says, when it applies, and what happens to the money at the end of the case.

What Section 143A says

• The court trying a Section 138 case may order the drawer of the cheque to pay interim compensation to the complainant.
• The amount cannot exceed 20% of the cheque amount.
• It can be ordered in a summary trial or summons case when the accused pleads not guilty, and in other cases after the charge is framed.
• It must be paid within 60 days of the order. The court can extend this by up to 30 more days if sufficient cause is shown.
• If not paid, it can be recovered in the same way as a fine.

It is not automatic

The word used in Section 143A is "may". In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024), the Supreme Court held that the power is discretionary, not mandatory. Before ordering interim compensation, the court should look at:

• whether the complainant has shown a prima facie case;
• the nature of the defence raised by the accused;
• the financial position of the accused, and whether the dispute appears to be a genuine one; and
• how much to award within the 20% limit, with reasons.

So an accused who has a plausible defence can argue against interim compensation, or for a lower amount.

Which cases it applies to

In G.J. Raja v. Tejraj Surana, (2019) 19 SCC 469, the Supreme Court held that Section 143A applies only to offences committed after it came into force on 1 September 2018. It does not apply to older cheque bounce cases.

What happens to the money at the end?

• If the accused is acquitted, the court directs the complainant to repay the interim compensation, with interest at the bank rate published by the RBI, within 60 days (extendable by 30 days).
• If the accused is convicted, the amount already paid as interim compensation is adjusted against the fine or compensation finally ordered.

Deposit in appeal: Section 148

A related provision, Section 148, applies after conviction. When the convicted person files an appeal, the appellate court may order a deposit of at least 20% of the fine or compensation awarded by the trial court. This is separate from any interim compensation paid under Section 143A.

What this means for you

If you are the complainant: you can apply for interim compensation once the stage under Section 143A is reached. A well-documented complaint makes it easier to show a prima facie case.

If you are the accused: you can oppose the application by showing your defence and your circumstances. If interim compensation is ordered, it must be paid on time; if you are later acquitted, it is returned with interest. Settlement remains possible at any stage, because the offence is compoundable.

Related reading: Received a Cheque Bounce Notice? How to Reply and What Your Options Are and How to Send a Cheque Bounce Legal Notice under Section 138.

This article is general information, not legal advice. Every case depends on its own facts and documents.