Interim Compensation in Cheque Bounce: Section 143A

If a Section 138 complaint has arrived and the magistrate has listed the case for your plea, the immediate worry is money: can the court make you pay before the trial even begins? Under Section 143A of the Negotiable Instruments Act, 1881, it can. The trial court may order interim compensation in a cheque bounce case of up to 20% of the cheque amount, payable within a short fixed window, while the complaint is still being tried. On a ₹15,00,000 cheque, that ceiling is ₹3,00,000. This article explains when the power arises, how the figure is chosen, what follows a default, and what you should place on record before the hearing.

What Section 143A Allows, and at What Stage

Section 143A was inserted into the Negotiable Instruments Act, 1881 by the Negotiable Instruments (Amendment) Act, 2018, published by the Legislative Department. The consolidated Act is available on India Code. The section opens with a non-obstante clause, so it overrides anything inconsistent in the criminal procedure law, and it speaks of "the Court trying an offence under section 138". The person ordered to pay is the drawer of the cheque; the money goes to the complainant.

The power is not available the day the complaint is filed. Sub-section (1) creates two gateways, and the case must pass through one of them:

• In a summary trial or a summons case, the trigger is the drawer pleading not guilty to the accusation in the complaint.
• In any other case, the trigger is the framing of charge.

Most cheque bounce complaints before magistrates are tried summarily, so in practice the order is passed at or immediately after the plea hearing. If you plead guilty, Section 143A is not the route the court takes; the case moves towards conviction and sentence instead.

The stage cannot be stretched

In Rakesh Ranjan Shrivastava v. State of Jharkhand (Supreme Court, 2024), the Court held that the power under Section 143A can be exercised only at the stage the section itself specifies, that is when the plea of not guilty is recorded or the charge is framed, and not at a later point in the trial. If an application for interim compensation is moved months later, that timing is a legitimate ground of objection.

Two limits written into the section

The word used is "may". A court is not obliged to order interim compensation merely because a complaint exists; it is a discretionary relief. And the outer limit is 20% of the amount of the cheque — not of the debt claimed, not of the notice demand, and not of the interest alleged. A cheque for ₹8,00,000 therefore carries a maximum exposure of ₹1,60,000, whatever figure the complainant claims in the prayer.

Do not confuse this with Section 148, which operates at the appeal stage. If you are convicted and file an appeal, the appellate court can require a deposit of at least 20% of the fine or compensation awarded by the trial court. Section 148 expressly provides that such a deposit is in addition to any interim compensation already paid under Section 143A.

Interim Compensation in Cheque Bounce Cases: How the Court Fixes the Figure

The section gives no formula. In practice, magistrates weigh the cheque amount, the prima facie strength of the complaint and of your defence, any part payment already made after dishonour, and your conduct in the proceedings. A drawer who has acknowledged the liability in writing or made a partial transfer usually faces a higher percentage; a drawer with a documented dispute about the underlying supply or quality usually faces a lower one, or no order at all.

A worked scenario

Prakash runs a fabric trading firm in Surat. In February 2026 he issued a cheque for ₹12,00,000 to a yarn supplier. The bank returned it unpaid for insufficient funds. The supplier sent a statutory notice, then filed a Section 138 complaint in the local magistrate's court. Prakash had already transferred ₹4,00,000 to the supplier in March 2026 and holds the bank acknowledgement for it.

At the plea hearing, Prakash pleads not guilty. The complainant applies under Section 143A for 20%, that is ₹2,40,000. Prakash's reply places the ₹4,00,000 part payment on record, points out that the dispute over short supply is already the subject of an exchange of emails, and argues that the cheque amount no longer represents the unpaid liability. The magistrate orders 12% of the cheque amount — ₹1,44,000 — payable within 30 days, noting the part payment. That is a realistic outcome: the ceiling is a cap, not a default.

The arithmetic is worth memorising before the hearing. On a cheque of ₹12,00,000, the 20% cap is ₹2,40,000; at 15% it is ₹1,80,000; at 10% it is ₹1,20,000. Arrive in court knowing these three numbers.

Payment Timelines and Consequence of Default

Sub-section (3) gives two clocks. The interim compensation must be paid within 30 days of the order, or within such further period as the court allows, but that extension cannot exceed 60 days and the court must record reasons in writing for granting it. In effect, the outside limit is 90 days from the date of the order, and the extra 60 days is not a matter of right. If you need it, apply before the 30 days lapse, with an affidavit explaining the cash position or the documentation.

Sub-section (4) supplies the teeth. The amount may be recovered as if it were a fine, using the machinery for recovery of fines under the criminal procedure law. That can mean attachment and sale of movable property, or other coercive steps the magistrate directs. Practically, an unpaid interim compensation order follows you through the trial: it is raised at every subsequent hearing, it weakens an application for exemption from personal appearance, and it rarely improves the sentence if the case ends in conviction.

What default does not do is end the case in the complainant's favour. The complaint still has to be proved, and you retain every defence on the merits.

Adjustment Against the Final Compensation

The interim amount is not a separate penalty; it is money paid on account of the complainant's claim. When the trial ends in conviction, the court fixes the fine or compensation under Section 138 and gives credit for what you have already deposited. Keep the receipt and the order, and ask for the adjustment to be recorded in the judgment itself rather than left to inference.

If you are acquitted, Sub-section (5) reverses the flow. The court must 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, within 60 days of the order. That repayment obligation is a court direction, not something to negotiate privately with the supplier. If the complainant does not pay, the order can be enforced.

What to Place on Record Before the Hearing

Preparation at the plea stage decides the percentage. Documents filed later carry less weight, so assemble them now.

• Copy of the cheque, the bank return memo and the statutory notice with the postal receipt, so the dates can be checked on the spot.

• Proof of every part payment made after dishonour: bank statements, UPI references, ledger extracts signed by both sides.

• Correspondence showing a genuine dispute over quality, quantity, delivery or accounts, arranged date-wise.

• A short affidavit or written submission on why the 20% ceiling should not be applied at its maximum.

• Your firm's cash-flow statement, if you genuinely need the additional 60 days, filed with a request for extension before the 30-day limit.

• The limitation calculation, since a complaint filed beyond the statutory window is vulnerable at the very stage when Section 143A is invoked.

Common mistakes

Treating the 20% as an automatic order and paying it without contest. Staying away from the hearing and learning about the order only from a recovery notice. Filing a request for extension after the 30 days have run out. Assuming an interim payment amounts to an admission of guilt, and then pleading guilty to "be done with it" — the two decisions should be taken separately. And forgetting that the appellate deposit under Section 148 sits on top of anything paid under Section 143A.

Your next step is straightforward: before the plea hearing, brief your advocate on the exact cheque amount, pull together the part-payment receipts and the dispute correspondence, and be ready with the three percentage figures for your own case.

This article is for general information only and is not legal advice. Consult a qualified professional for your specific facts.