Chapter XVII - Of Penalties in Case of Dishonour of Certain Cheques for Insufficiency of Funds in the Accounts
Section 143A
Section 143A: Power to direct interim compensation
Section 143A allows a trial court to order interim compensation from the cheque drawer at the stated procedural stage, subject to a 20% ceiling and judicial discretion.
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Need advice on Section 143A?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant—
(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and
(b) in any other case, upon framing of charge.
(2) The interim compensation under sub-section (1) shall not exceed twenty per cent. of the amount of the cheque.
(3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.
(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.
(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974).
(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this section.
When an interim order may be considered
The case must concern an offence under section 138. In a summary trial or summons case, the stage is a plea of not guilty; in another case, the section refers to framing of charge.
The provision directs the order to the drawer. For a company cheque, identify the account holder and separate the company’s position from that of its authorised signatory.
Twenty per cent is a ceiling, not an automatic award
Section 143A limits interim compensation to 20% of the cheque amount. It does not compel an award of 20% whenever an application is filed.
In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024 INSC 205), the Supreme Court held that the power is discretionary and requires reasons. The court examines the prima facie claim, defence and relevant circumstances before deciding whether to award compensation and its amount.
Payment, extension and acquittal refund
Payment is due within 60 days of the order. A court may allow a further period up to 30 days on sufficient cause shown by the drawer; it is not an automatic 90-day entitlement.
If the drawer is acquitted, the court directs repayment with interest at the RBI bank rate prevailing at the beginning of the relevant financial year. The repayment window is 60 days from the order, with a court-directed extension up to 30 days on sufficient cause.
The statute permits recovery as a fine and requires credit for interim amounts when calculating the stated final fine or compensation. Check the applicable current procedural law and transitional provisions when seeking recovery.
Hypothetical example
Hypothetical: a complaint concerns a cheque of ₹5 lakh. Twenty per cent is ₹1 lakh, the statutory ceiling for an interim award under section 143A; the court must still decide whether an order is justified and what sum is appropriate.
A defendant with a plausible documented defence should place it before the court instead of assuming that the ceiling is a fixed mandatory deposit.
Practical preparation
Identify the drawer, cheque amount, trial type and procedural stage.
Provide transaction records and a reasoned response on the prima facie merits and requested quantum.
Calendar the order date and seek any extension on stated sufficient cause before relying on extra time.
Track any payment for later credit or refund, rather than treating it as a final adjudication of liability.
Verified judicial guidance
Rakesh Ranjan Shrivastava, 15 March 2024 explains the discretionary nature of the power. Bijay Agarwal v. M/s Medilines, 2024 INSC 918 distinguishes a company’s authorised signatory from the drawer for these payment powers.
The bare-law block preserves the statutory references to the Code of Criminal Procedure. For an actual proceeding, check the applicable procedural transition rather than silently substituting a new section number.
Practical checklist
Do
- Address the merits and amount separately.
- Keep the order and payment record for credit or refund.
Avoid
- Do not call a 20% award mandatory.
- Do not treat every company signatory as the drawer.
Glossary
- Interim compensation
- A provisional payment ordered before final determination under section 143A.
- Quantum
- The amount of an award, which must be decided within the statutory ceiling.
- Sufficient cause
- A reason accepted by the court for the limited extension.
Frequently asked questions
Must the court award 20% in every case?
No. The power is discretionary, and 20% of the cheque amount is the upper limit.
Is there automatically a 90-day payment period?
No. The ordinary period is 60 days; up to 30 additional days requires a court direction on sufficient cause.
What happens after acquittal?
The court directs repayment with the specified RBI bank-rate interest under subsection (4).
Is the company’s authorised signatory automatically the drawer?
No. Identify who maintains the cheque account and apply the Supreme Court’s distinction; signing alone does not establish drawer status.
Is the interim amount additional to the stated final award?
Subsection (6) requires reduction of the specified fine or compensation by the amount paid or recovered as interim compensation.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026