Interim Compensation Under Section 143A NI Act: Meaning, Amount, Conditions and Refund

Section 143A, Negotiable Instruments Act, 1881 allows the trial court to order the accused in a cheque bounce case to pay interim compensation of up to 20% of the cheque amount while the case is pending. It must be paid within 60 days, extendable by 30 days. The power is discretionary, not automatic (Rakesh Ranjan Shrivastava v. State of Jharkhand, 2024), and the amount is refunded with interest if the accused is acquitted.

Key Takeaways

• Section 143A of the Negotiable Instruments Act, 1881, inserted by the Negotiable Instruments (Amendment) Act, 2018 with effect from 1 September 2018, allows the court to order interim compensation in a cheque bounce case.
• Interim compensation cannot exceed 20% of the cheque amount and must be paid within 60 days of the order, which the court can extend by up to 30 days for sufficient cause.
• The Supreme Court held in Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) that the power is discretionary, and that the court must form a prima facie view and record brief reasons before ordering it.
• If the accused is acquitted, the complainant must repay the interim compensation with interest at the bank rate published by the RBI, within 60 days, extendable by 30 days.
• Unpaid interim compensation can be recovered as if it were a fine, and any amount paid is adjusted against the final fine or compensation on conviction.
• Section 143A applies only to offences committed after 1 September 2018 (G.J. Raja v. Tejraj Surana, 2019).

Introduction

For years, a common complaint about cheque bounce cases was that the accused had no reason to pay while the case dragged on. Section 143A was introduced in 2018 to change that, by allowing the court to order part payment early in the trial.

Today, interim compensation is one of the most important tools in a cheque bounce case. It often pushes the accused towards settlement, and for the complainant it is money in hand well before judgment.

This guide explains what Section 143A says, when it applies, how much can be ordered, how courts decide, how it is recovered or refunded, and how it relates to the 20% deposit on appeal under Section 148.

What Is Interim Compensation Under Section 143A?

Interim compensation is a payment the trial court can order the accused to make to the complainant during the trial, of up to 20% of the cheque amount.

What the law says

(a) The statute: Section 143A(1) provides that the court trying a Section 138 offence “may order the drawer of the cheque to pay interim compensation to the complainant”:

• (a) in a summary trial or summons case, where the accused pleads not guilty; and
• (b) in any other case, upon framing of charge.

The other sub-sections set the limits:

(b) What courts have held: In G.J. Raja v. Tejraj Surana (2019), the Supreme Court held that Section 143A is prospective and does not apply to offences committed before 1 September 2018. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024), it held that the power is discretionary, not mandatory.

(c) Practical advice: Complainants should apply for interim compensation as soon as the accused pleads not guilty. Accused persons should be ready to show a plausible defence or financial difficulty at that hearing.

Is Interim Compensation Mandatory?

No. The Supreme Court has held that the word “may” in Section 143A gives the court discretion, and the court must apply its mind before ordering any amount.

In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024 INSC 205, decided 15 March 2024), the Supreme Court held:

• The power under Section 143A(1) is discretionary, not mandatory. Reading “may” as “shall” would make payment compulsory in every case, which would be unjust.
• The court must make a prima facie evaluation of the complainant’s case and the accused’s defence. The presumption under Section 139 alone is not enough, because it is rebuttable.
• If the accused’s defence is prima facie plausible, the court may refuse interim compensation.
• When deciding the amount, the court can consider the nature of the transaction, the relationship between the parties, the accused’s capacity to pay, and other relevant factors such as a pending civil suit.
• The court must record brief reasons showing it considered the relevant factors.

Factors courts consider

How Much Interim Compensation Can Be Ordered?

Anything up to 20% of the cheque amount. The 20% is a ceiling, not a fixed figure.

The court may order a lower percentage depending on the factors above.

Step-by-Step: How Interim Compensation Works

1. Complaint filed under Section 138 and summons issued.
2. Accused appears, gets bail and is asked how they plead.
3. Accused pleads not guilty (or charge is framed in a non-summary case).
4. Complainant files an application under Section 143A, explaining the transaction and why interim compensation is justified.
5. Accused files a reply, setting out the defence and, if relevant, financial difficulty.
6. Court hears both sides and passes a reasoned order, fixing the amount up to 20%.
7. Accused pays within 60 days, or applies for up to 30 more days showing sufficient cause.
8. If unpaid, the complainant applies for recovery as a fine under Section 461 BNSS.
9. At the end of the trial: on conviction, the amount is adjusted against the fine or compensation; on acquittal, the complainant repays it with interest.

What Happens If the Accused Does Not Pay?

Unpaid interim compensation can be recovered as if it were a fine, by attachment and sale of the accused’s property.

Under Section 143A(5), the amount can be recovered under Section 461 BNSS (earlier Section 421, CrPC), which allows the court to issue a warrant to attach and sell the accused’s movable property, or to authorise the Collector to recover it as arrears of land revenue.

Non-payment can also count against the accused when the court considers other applications, such as exemption from appearance. Courts have differed on whether non-payment can lead to more serious consequences, such as closing the accused’s right to cross-examine, so the effect depends on the facts and the court.

What Happens If the Accused Is Acquitted?

The complainant must refund the interim compensation with interest.

Under Section 143A(4), if the accused is acquitted, the court directs the complainant to repay the amount with interest at the bank rate published by the Reserve Bank of India at the beginning of the relevant financial year. The repayment is due within 60 days of the order, extendable by 30 days for sufficient cause.

This refund obligation is one reason courts weigh the strength of the complainant’s case before ordering interim compensation.

Section 143A vs Section 148: What Is the Difference?

Section 143A applies during the trial; Section 148 applies when the convicted person appeals.

Worked Example: Interim Compensation in Practice

This example shows the order, payment and adjustment.

Rajesh Sharma files a Section 138 complaint against Amit Goyal over a cheque for ₹6,00,000 that bounced in January 2026.

If Amit had been acquitted instead, Rajesh would have had to repay ₹90,000 with interest at the RBI bank rate.

Rights of Both Sides

The complainant

• Apply for interim compensation once the accused pleads not guilty
• Seek recovery as a fine if it is not paid
• Have the amount adjusted against the final award on conviction

The accused

• Oppose the application by showing a plausible defence or financial difficulty
• Insist on a reasoned order (Rakesh Ranjan Shrivastava, 2024)
• Seek up to 30 more days to pay for sufficient cause
• Get a refund with interest on acquittal
• Challenge an unreasoned or excessive order before a higher court

Costs and Documents

Documents for the complainant’s application

• Complaint, cheque, return memo and notice
• Proof of the debt (agreement, invoices, bank transfers)
• A short application under Section 143A stating the prima facie case

Documents for the accused’s reply

• Documents supporting the defence (payment proof, agreements, correspondence)
• Proof of financial difficulty, if claimed (income records, bank statements)

Common Mistakes With Interim Compensation

• Assuming 20% is automatic. The court must apply its mind and give reasons.
• Applying under Section 143A for an offence before 1 September 2018. It does not apply (G.J. Raja, 2019).
• Accused ignoring the order and facing recovery proceedings.
• Not seeking an extension within time when genuinely unable to pay.
• Complainants forgetting the refund risk if the case is weak.
• Not adjusting interim compensation in settlements or final orders.

Key Court Rulings on Section 143A

FAQs

1. What is interim compensation under Section 143A of the NI Act?
It is an amount of up to 20% of the cheque amount that the trial court can order the accused to pay the complainant while a cheque bounce case is pending. It was introduced by the Negotiable Instruments (Amendment) Act, 2018 and applies once the accused pleads not guilty or a charge is framed.

2. Is interim compensation under Section 143A mandatory?
No. In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024), the Supreme Court held that the power is discretionary. The court must make a prima facie assessment of both sides’ cases, consider factors such as the accused’s capacity to pay, and record brief reasons before ordering any amount.

3. How much interim compensation can a court order?
Up to 20% of the cheque amount, under Section 143A(2). The 20% is a maximum, not a fixed amount. The court may order a lower percentage depending on the strength of the case, the nature of the transaction and the accused’s financial capacity.

4. When must interim compensation be paid?
Within 60 days of the court’s order. The court can extend this by up to 30 more days if the accused shows sufficient cause. The extension must be sought before the time runs out.

5. What happens if interim compensation is not paid?
It can be recovered as if it were a fine under Section 461 BNSS (earlier Section 421 CrPC), by attachment and sale of the accused’s property or through recovery as arrears of land revenue. Non-payment may also affect how the court views the accused’s other requests.

6. Is interim compensation refunded if the accused is acquitted?
Yes. Under Section 143A(4), the complainant must repay the amount with interest at the bank rate published by the Reserve Bank of India, within 60 days of the order, extendable by 30 days for sufficient cause.

7. Does Section 143A apply to old cheque bounce cases?
No. The Supreme Court held in G.J. Raja v. Tejraj Surana (2019) that Section 143A applies only to offences committed after it came into force on 1 September 2018. It cannot be applied to cheques dishonoured before that date.

8. Is interim compensation adjusted against the final compensation?
Yes. Under Section 143A(6), if the accused is convicted, the fine or compensation awarded is reduced by the amount already paid as interim compensation. In a settlement, the parties usually also adjust the amount paid.

9. What is the difference between Section 143A and Section 148?
Section 143A allows the trial court to order up to 20% of the cheque amount during the trial. Section 148 applies when a convicted person appeals, and allows the appellate court to order a deposit of at least 20% of the fine or compensation awarded by the trial court.

10. Can the accused challenge an order for interim compensation?
Yes. An accused can challenge an order that is unreasoned, excessive or passed without considering the relevant factors, usually by approaching the Sessions Court or High Court. After Rakesh Ranjan Shrivastava (2024), courts expect the trial court to give brief reasons.

Conclusion

Interim compensation under Section 143A gives complainants early relief and encourages settlement, but it is not automatic. The court must assess the case, consider the accused’s defence and capacity to pay, and give reasons before ordering up to 20% of the cheque amount. Accused persons should pay within 60 days or seek an extension in time, and complainants should remember the duty to refund with interest if the accused is acquitted. For advice on your specific situation, consult a qualified advocate.

Written and legally reviewed by: [Advocate Name], Advocate, Enrolment No. [XXXX], [X] years of practice, [City]
Published by: Barrister Gram
Last updated: October 2026

Disclaimer: This article is general legal information for awareness and is not legal advice. Whether interim compensation is ordered, and how much, depends on the facts of each case and the court’s discretion. Please consult a qualified advocate before acting on any information here.