Section 143A NI Act Interim Compensation in a Cheque Bounce Case: When a Court Orders 20%, How to Oppose It & What Happens on Acquittal (2026)
Under Section 143A of the Negotiable Instruments Act, 1881, a court trying a cheque-bounce complaint under Section 138 can order the drawer (the person who issued the cheque) to pay the complainant interim compensation of up to 20% of the cheque amount — before the trial ends and before any conviction. The money must be paid within 60 days of the order (extendable by up to 30 more days). But this power is discretionary, not automatic: in Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) the Supreme Court held that a court is not obliged to grant it and must record reasons after weighing the merits.
Section 143A interim compensation is money the accused drawer is ordered to pay the complainant while a Section 138 cheque-bounce case is still pending — capped at 20% of the cheque value, payable within 60 days, and refundable with interest if the drawer is later acquitted.
This guide is written for the drawer who has just received a Section 143A application (or an order to deposit 20%) and wants straight answers: is it mandatory, how do you oppose it, what happens if you cannot pay, and how is the money returned if you win. If you are on the other side — the payee sending the notice — start with our full walkthrough of cheque bounce under Section 138: procedure and time limits.
What Section 143A actually says
Section 143A was inserted by the Negotiable Instruments (Amendment) Act, 2018 and came into force on 1 September 2018. Its sub-sections work like this:
- 143A(1) — the court may order interim compensation (a) in a summary trial or summons case, where the drawer pleads not guilty; or (b) in any other case, upon framing of charge.
- 143A(2) — the interim compensation shall not exceed 20% of the cheque amount.
- 143A(3) — it must be paid within 60 days of the order, or within a further period not exceeding 30 days that the court allows for sufficient cause.
- 143A(4) — if the drawer is acquitted, the complainant must repay the interim compensation with interest at the RBI bank rate (the rate published by the Reserve Bank of India at the beginning of the relevant financial year), within 60 days.
- 143A(5) — unpaid interim compensation can be recovered as if it were a fine under Section 421 of the CrPC (now read with the corresponding recovery-of-fine provision of the BNSS, 2023, as the NI Act still refers to the 1973 Code).
You can read the bare provision on indiacode.nic.in under the Negotiable Instruments Act, 1881.
Is the 20% mandatory? No — this is the single most important point
The word "may" in Section 143A(1) is directory, not mandatory: a court has discretion to grant interim compensation, refuse it, or order less than 20%, and it must give reasons for whatever it decides. This was settled by the Supreme Court in Rakesh Ranjan Shrivastava v. State of Jharkhand, 2024 INSC 205 (decided 15 March 2024, Oka and Bhuyan JJ.).
The Court held that before ordering interim compensation the trial court must apply its mind to factors such as:
- the prima facie merits of the complainant's case and the nature of the transaction;
- the defence the drawer raises and its likelihood of success;
- the financial distress or paying capacity of the accused; and
- any other relevant circumstance — with the 20% figure treated as a ceiling, not a starting point.
So a magistrate who mechanically orders "deposit 20%" without recording reasons has passed an order that is vulnerable in a criminal revision or under Article 227 of the Constitution.
When can the court order it — and on which cheques?
Two gates must be crossed before Section 143A can bite:
- Stage of the case. In the usual summons/summary Section 138 trial, the application can be moved once the drawer pleads not guilty; in other cases, only after charge is framed. A 143A order cannot be passed at the very first hearing before the drawer has entered a plea.
- Date of the offence. Section 143A applies only where the Section 138 offence was committed on or after 1 September 2018. In G.J. Raja v. Tejraj Surana, AIR 2019 SC 3817 (decided 30 July 2019), the Supreme Court held Section 143A to be prospective, precisely because it creates a new liability to pay before conviction. If your cheque's cause of action arose before 1 September 2018, Section 143A cannot be invoked at all.
This is the opposite of Section 148 — the appeal-stage deposit an appellate court can order after conviction — which courts treat as retrospective. If your case has already reached the conviction-and-appeal stage, see our separate guide on appealing a cheque bounce conviction and the Section 148 deposit.
How much, and by when — at a glance
| Question | Section 143A answer |
|---|---|
| Maximum amount | 20% of the cheque value (s.143A(2)) — court can order less |
| Trigger stage | Plea of not guilty (summary/summons case) or framing of charge |
| Payment deadline | 60 days from the order, extendable by up to 30 days (s.143A(3)) |
| Only for cheques where offence is | On or after 1 September 2018 (G.J. Raja) |
| If acquitted | Complainant repays full amount + RBI bank-rate interest in 60 days (s.143A(4)) |
| If convicted | Amount adjusted against the final fine/compensation — no double payment |
| Recovery if unpaid | As if a fine (s.143A(5) read with s.421 CrPC / BNSS) |
How the drawer can oppose a Section 143A application
Because the power is discretionary, a drawer has real room to resist. Grounds that courts accept in practice:
- No hearing, no reasons. You are entitled to be heard before the order; an order passed without hearing you, or without recorded reasons, is a procedural infirmity and a ground to challenge it.
- Pre-01.09.2018 cheque. If the offence predates the section, it simply does not apply (G.J. Raja).
- Strong prima facie defence. For example, the instrument was a blank or security cheque, the debt is disputed or time-barred, there is material alteration or a signature dispute, or there is no legally enforceable debt at all — the stronger your defence looks, the weaker the case for a pre-trial deposit.
- Financial incapacity. Genuine inability to pay 20% is a factor the court must weigh (Rakesh Ranjan Shrivastava).
- Quantum. Even where some compensation is justified, argue for a figure well below the 20% ceiling.
What happens if you don't pay the interim compensation?
The amount is recoverable as if it were a fine through the CrPC/BNSS fine-recovery machinery (attachment and sale of property, and so on). But the Supreme Court has clarified that non-payment of interim compensation does not, by itself, strip the accused of the right to cross-examine the complainant's witnesses or to defend the trial — the trial continues. Non-payment carries recovery consequences; it does not forfeit your defence.
What happens to the money if you are acquitted?
If you are acquitted — at trial or on appeal — Section 143A(4) requires the complainant to repay the interim compensation with interest at the RBI bank rate, within 60 days (extendable by 30). And if you are ultimately convicted, any interim compensation you paid is adjusted against the final compensation or fine, so you are never made to pay twice.
How long does it take, court fees, and do you need an advocate?
A Section 143A application is decided as an interlocutory step, often within a few hearings after the plea; the 60-day deposit clock runs from the order. The court-fee cost of opposing is minimal — the real work is a reasoned written objection and, if the order is bad, a revision. For a small, clearly-defined dispute a litigant-in-person can file a written objection themselves; but where the cheque amount is large or the deposit order was passed without reasons, a criminal revision to the Sessions Court or a petition under Article 227 is usually advocate's work. If the 60-day deadline to deposit has already passed, apply promptly for the 30-day extension under Section 143A(3) with sufficient cause rather than waiting for recovery proceedings to begin. If you also received a demand notice and want to contest liability itself, see how to reply to a Section 138 cheque bounce legal notice.
The bigger picture — why this provision exists
Interim compensation was created because Section 138 litigation is slow: 35.16 lakh cheque-bounce cases were pending as of 31 December 2019, and in In Re: Expeditious Trial of Cases under Section 138 of the NI Act (2021) the Supreme Court noted that dishonour cases make up roughly 30–40% of the criminal docket in several High Courts. Section 143A is Parliament's attempt to put something in an honest payee's hands while that queue clears — which is exactly why the courts now insist it not be used mechanically against drawers who have a genuine defence.
How Urava helps
Urava turns a Section 143A application or a "deposit 20%" order into a court-ready, citation-backed research memo in about 10 minutes — over WhatsApp, in English, Hindi or Malayalam, and even from a scanned or photographed court order (Sarvam OCR reads Malayalam, Hindi and English). Ask it "how do I oppose a 143A application on a ₹X cheque" or "draft grounds for a criminal revision against a 20% interim-compensation order," and you get a memo citing the current Supreme Court position (Rakesh Ranjan Shrivastava, G.J. Raja) with the statutory timelines built in. Start free — 3 researches, no card needed — at urava.app/register.
Frequently Asked Questions
Is interim compensation under Section 143A mandatory in every cheque bounce case?
No. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024 INSC 205) the Supreme Court held that the word "may" in Section 143A(1) is directory, not mandatory. The court has discretion to grant, reduce or refuse interim compensation and must record reasons after weighing the prima facie case, the drawer's defence and the accused's financial position.
How much interim compensation can a court order, and by when must it be paid?
The maximum is 20% of the cheque amount (Section 143A(2)). It must be paid within 60 days of the order, extendable by up to 30 more days for sufficient cause (Section 143A(3)). Courts often order less than 20% where the facts justify a lower figure.
Can Section 143A be applied to a cheque issued before September 2018?
No. In G.J. Raja v. Tejraj Surana (AIR 2019 SC 3817) the Supreme Court held Section 143A is prospective. It applies only where the Section 138 offence was committed on or after 1 September 2018, the date the provision came into force.
What happens to the 20% deposit if I am acquitted?
The complainant must repay the entire interim compensation with interest at the RBI bank rate, within 60 days of the acquittal (Section 143A(4)). If you are instead convicted, the amount already paid is adjusted against the final fine or compensation, so you never pay twice.
What if I cannot pay the interim compensation the court has ordered?
Unpaid interim compensation is recoverable as if it were a fine, but the Supreme Court has held that non-payment does not by itself take away your right to cross-examine witnesses or defend the case. If you genuinely cannot pay, put your financial position on record, seek the 30-day extension under Section 143A(3), and consider a criminal revision if the order was passed without reasons.
Is Section 143A the same as the Section 148 deposit in appeals?
No. Section 143A is a trial-stage interim compensation (up to 20% of the cheque amount, before conviction). Section 148 applies after conviction, when a convicted drawer appeals — the appellate court may order a deposit of a minimum of 20% of the fine or compensation awarded. They are separate provisions at different stages of the same case.