Section 143A — Interim Compensation

Section 143A of the Negotiable Instruments Act, 1881 was inserted by the Negotiable Instruments (Amendment) Act, 2018 (No. 20 of 2018), with effect from 1 September 2018. The provision empowers the trial court, in any proceeding for an offence under Section 138, to order the drawer of the cheque to pay interim compensation to the complainant of an amount not exceeding twenty per cent of the cheque amount, in two enumerated situations and subject to a defined recovery mechanism. The 2018 amendment was a conscious legislative response to the prolonged litigation that bedevilled the §138 cluster: complainants who had won on the merits were waiting years for actual recovery, while accused persons used appellate stays to delay disposal. Section 143A puts a partial financial outcome in the complainant's hands at the trial stage itself.

The procedural map of how a Section 138 complaint is filed and tried is set out in Section 138 — Procedure on Complaint; the substantive presumptions and jurisdictional rules are in Sections 139 to 142 — Presumptions, Cognizance, Jurisdiction; the summary-trial regime is in Section 143 — Power to Try Cases Summarily. This chapter is the focused study of Section 143A — its text, the trigger conditions, the twenty-per-cent ceiling, the sixty-day payment timeline, the recovery mechanism under Section 421 CrPC, the constitutional-validity challenge, the Supreme Court's prospective-only ruling in G.J. Raja, and the conceptual distinction from Section 148 NI Act. The register, like the rest of the cluster of Negotiable Instruments Act notes dealing with the §138 cluster, is criminal-procedural.

The text and structure of Section 143A

Section 143A contains five sub-sections, each doing distinct work.

Section 143A(1) opens with the operative power: 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 trial, where the drawer pleads not guilty to the accusation made in the complaint; and (b) in any other case, upon framing of charge.

Section 143A(2) caps the interim compensation at twenty per cent of the amount of the cheque. The cap is statutory and not waivable; the court cannot order more, even where the cheque amount runs into crores.

Section 143A(3) sets the timeline: 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. The maximum extended window is therefore ninety days.

Section 143A(4) provides for refund: if the drawer is acquitted at trial, the court shall 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 sixty days of the order, or within such further period not exceeding thirty days. The refund obligation cures what would otherwise be a constitutional infirmity — pre-conviction payment without ultimate liability.

Section 143A(5) deals with recovery: the interim compensation payable under the section may be recovered as if it were a fine under Section 421 of the Code of Criminal Procedure, 1973 (Section 461 BNSS). The cross-reference imports the levy and attachment machinery available for fine recovery, including attachment and sale of movable and immovable property of the defaulter.

The trigger conditions — when interim compensation may be ordered

Section 143A(1) limits the trigger to two clearly defined moments. First, in a summary trial under Section 143 NI Act or a summons trial under Chapter XX CrPC, the trigger is the accused's plea of not guilty to the substance of the accusation. There is no formal charge in either summary or summons mode; the substance of the accusation is stated under Section 263 CrPC (in summary mode) or Section 251 CrPC (in summons mode), and the plea is recorded. A plea of not guilty triggers the Section 143A power.

Second, in any other mode of trial — namely, a warrant trial — the trigger is the framing of charge. Warrant trial is the residual mode for the rare §138 case that does not fit the summary regime; the trigger of framing of charge under Section 240 CrPC is the analogue of the plea-of-not-guilty trigger in summary or summons mode. Warrant trial is rare for §138 cases (the offence is triable as a summons case under Section 142(c) read with Section 143), but where for any reason the matter proceeds in warrant mode, the trigger is the formal framing of charge under Section 240 CrPC.

The triggers are statutory; the court cannot order interim compensation before the plea or the framing of charge. The architecture is deliberate — the legislature wanted a defined moment after which the trial court has visibility on the contestation of the matter, before authorising a partial financial outcome.

The discretionary character of the power

The word the statute uses is "may" — the court may order interim compensation. The Supreme Court in Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) confirmed that the Section 143A power is discretionary, not mandatory. The trial court must apply its judicial mind to the question whether interim compensation is warranted on the facts of the case, and must consider, among other factors, the strength of the prima facie case, the nature of the defence, the financial capacity of the drawer, and the likely length of the trial. A rote order directing twenty per cent without any assessment of these factors will be vulnerable on appeal or revision.

The court must also consider whether the cap should be applied at twenty per cent or at a lower figure. The statute fixes only the ceiling; the floor is zero. A trial court that is satisfied of a strong prima facie case but conscious of the drawer's limited financial capacity may order ten or fifteen per cent rather than the full twenty.

Recovery as a fine — Section 421 CrPC

Section 143A(5) deems the interim compensation a fine for purposes of recovery. Section 421 CrPC (Section 461 BNSS) provides two recovery modes: attachment and sale of movable property by warrant of distress, and recovery as if it were arrears of land revenue from movable or immovable property by warrant to the Collector. The provision empowers the magistrate, where a fine is not paid, to issue a warrant for the levy of the amount.

The cross-reference to Section 421 CrPC imports the entire fine-recovery machinery into the interim-compensation regime. The drawer who fails to pay within sixty (or ninety) days is amenable to attachment and sale of his property — a coercive remedy that operates without further judicial inquiry beyond the issuance of the recovery warrant. The deeming fiction is a strong tool: it converts what is, in form, an interlocutory order into a fine-equivalent that the magistrate can execute by the same processes available for fines on conviction.

The G.J. Raja ruling — prospective only

The Supreme Court in G.J. Raja v. Tejraj Surana (2019) 19 SCC 469 held that Section 143A operates prospectively only; it cannot be invoked in respect of complaints filed before the commencement date of 1 September 2018. The Bench reasoned that the provision creates a substantive obligation — an obligation to pay before adjudication — and substantive obligations cannot be retrospectively imposed in the absence of clear statutory language. Procedural amendments are presumptively retrospective; substantive amendments are presumptively prospective; Section 143A, the Court held, is on the substantive side of the line.

The doctrinal significance of G.J. Raja is that it confines the Section 143A interim-compensation power to the post-1 September 2018 caseload. Complaints filed under Section 138 before that date — and the corresponding pending trials — proceed without the interim-compensation overlay; the trial court has no power to direct twenty per cent at the plea stage in those cases. The ruling has practical force for the residual backlog of pre-2018 cases still pending in the magistracy.

Constitutional validity challenges

Section 143A has been the subject of constitutional-validity challenges on the ground that it imposes a financial obligation on an accused before conviction, in violation of Articles 14, 20 and 21 of the Constitution. The principal arguments have been that pre-conviction payment effectively presumes guilt; that the twenty-per-cent cap is arbitrary; that the recovery as fine under Section 421 CrPC operates without an independent merits inquiry; and that the provision discriminates between §138 accused and other criminal accused.

The High Courts, in line with the criminal-procedural register that runs through the entire §138 cluster of the Negotiable Instruments Act, have, by and large, repelled the challenges. The reasoning has been that the refund mechanism under Section 143A(4) — repayment with interest on acquittal — cures the presumption-of-guilt objection; that the cap of twenty per cent is a legislative choice within the permissible range and not arbitrary; that the recovery mechanism mirrors fine recovery and does not introduce a new coercive process; and that the differentiation between §138 accused and other accused is rationally connected to the Legislature's concern with the docket-pressure problem peculiar to cheque-bounce litigation. The Supreme Court has not invalidated the section; G.J. Raja read it down to prospective operation but did not strike it down.

Section 143A distinguished from Section 148

The 2018 amendment introduced two financial-relief provisions, not one: Section 143A at the trial stage, and Section 148 at the appellate stage. Aspirants must keep the two distinct.

Section 143A operates at the trial stage, in any proceeding for an offence under Section 138. The trigger is the accused's plea of not guilty (in summary or summons trial) or the framing of charge (in warrant trial). The cap is twenty per cent of the cheque amount. Refund with interest on acquittal is mandatory under Section 143A(4). Recovery is as a fine under Section 421 CrPC. Per G.J. Raja, the provision operates prospectively only.

Section 148 operates at the appellate stage, where the appellant has been convicted by the trial court and is appealing. Section 148(1) empowers the appellate court, in an appeal by the drawer against conviction under Section 138, to order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial court. The deposit is in addition to any amount already paid as interim compensation under Section 143A. The appellate court may direct release of the deposited sum to the complainant pending appeal, on terms it considers fit. Recovery on default is as a fine under Section 421 CrPC.

The conceptual distinction is therefore as follows. Section 143A: trial stage, twenty per cent of the cheque amount, on plea or framing of charge, prospective only post G.J. Raja. Section 148: appellate stage, minimum twenty per cent of the fine or compensation already awarded by the trial court, on filing of the appeal, applied prospectively but on a different jurisprudential footing as held in Surinder Singh Deswal v. Virender Gandhi (2019) 11 SCC 341 — which read Section 148 as procedural and applicable to appeals filed after its commencement even where the underlying complaint was filed earlier.

The deemed-fine architecture and its enforcement edge

The most striking feature of Section 143A is its enforcement edge. By deeming the interim compensation a fine for recovery purposes, the section gives the trial magistrate a tool that has no parallel in the ordinary criminal trial. In a regular criminal case the magistrate cannot order pre-conviction payment of any compensation; if the accused refuses the conviction is recorded, sentence is passed, and recovery follows under Section 421 CrPC. Section 143A inverts that order: it allows the magistrate to order payment first, before conviction, and to recover as if the order were itself a conviction-stage fine. The acquittal, when it comes, triggers the refund mechanism — but in the meantime the complainant has had the use of the money.

The architecture is unusual; it is also intentionally so. The legislative judgment was that the docket pressure of cheque-bounce litigation, and the practical impossibility of ensuring recovery after years-long appellate journeys, justified an exceptional financial remedy at the trial stage. The combination of the statutory ceiling (twenty per cent), the refund safety valve (with interest), and the prospective-only operation per G.J. Raja keeps the provision within the band that the High Courts have considered constitutional.

Interim compensation and the presumption framework

One conceptual question deserves separate treatment: how does Section 143A interact with the presumption framework under Sections 118 and 139? The orthodox answer is that the presumption framework lays the foundation for the trial court's prima facie satisfaction, and the prima facie satisfaction is the predicate for the discretionary exercise of the Section 143A power. Where the complainant has produced the cheque, the dishonour memo, the statutory notice and proof of service, the presumption of consideration under Section 118(a) and the offence-specific presumption under Section 139 — together with the Section 146 presumption on the dishonour memo — operate to give the trial court a strong prima facie case. That strong prima facie case is the principal factor that justifies an order under Section 143A.

The doctrinal subtlety, drawn from Rangappa v. Sri Mohan (2010) 11 SCC 441, is that the rebuttal standard at trial is preponderance of probabilities, not proof beyond reasonable doubt. The trial court contemplating a Section 143A order may therefore properly take into account whether the accused has, by the plea stage, indicated any plausible line of rebuttal. A pure denial without any suggested defence theory tilts the balance toward an order; a credible suggested rebuttal — for instance, that the cheque was issued only as security for a separate transaction — may justify a smaller percentage or no order at all.

Operational practice in the magistracy

In practice, a Section 143A application is filed by the complainant shortly after the accused enters his plea of not guilty. The magistrate hears both sides, considers the prima facie case (which is largely already on the documentary record by virtue of the presumptions under Sections 118, 139 and 146), considers the drawer's financial capacity and the contested-or-not character of the defence, and makes an order. The order specifies the percentage (typically up to twenty per cent), the timeline (sixty days, with thirty extendable on sufficient cause), and the consequences of non-payment (recovery as fine).

The Section 143A order does not stay the trial. The trial proceeds in parallel; the affidavit-evidence regime under Section 145 NI Act, the dishonour-memo presumption under Section 146, the day-to-day-trial obligation under Section 143(2), and the six-month disposal target under Section 143(3) all continue to operate. Section 143A is supplementary to the trial machinery, not a substitute for it. The order itself is interlocutory and not appealable as of right; it may be challenged by revision under Section 397 CrPC (Section 438 BNSS) or by Section 482 CrPC (Section 528 BNSS) where the order is shown to be perverse or arbitrary.

The 2018 amendment in legislative context

Section 143A did not arrive in isolation. The 2018 amendment also inserted Section 148, dealing with the appellate-stage deposit. Both provisions emerged from the same legislative concern: the docket pressure of cheque-bounce litigation, the years-long delays between filing and recovery, and the perception that Section 138 had become a hollow remedy because by the time the complainant prevailed the recovery had become impractical. The Standing Committee on Finance had recommended a financial-relief overlay, and the Legislature's response was the two-stage architecture of Sections 143A and 148.

The architecture must be read alongside the Sections 138 to 147 cluster as a whole. The substantive offence, the cause-of-action machinery and the limitation regime — drilled in Section 138 — Statutory Notice and Limitation — set the front of the proceeding. The procedural choreography of cognizance, summary trial and judgment occupies the middle. The financial-relief layer of Sections 143A, 148 and 357 CrPC sits on top, ensuring that the criminal-procedural register of the cluster carries with it a credible recovery outcome for the complainant. The post-conviction compensation regime under Section 357 CrPC is treated separately in the dedicated post-conviction compensation chapter.

Compounding under Section 147 and Section 143A

The compounding power under Section 147 NI Act can be exercised at any stage of the trial, including after a Section 143A order has been made. Where the parties compound after the interim compensation has been paid, the agreed settlement amount is typically negotiated taking into account the sum already paid; the magistrate records the compromise, accounts for the interim compensation in the final settlement, and acquits the accused. Where the parties compound before the interim compensation has been paid, the Section 143A order may be vacated on consent and the compounded settlement amount substituted.

The interaction with the cost-scale regime in Damodar S. Prabhu v. Sayed Babalal H. (2010) 5 SCC 663 is also worth noting. Damodar Prabhu directs progressively higher costs for late compounding to discourage tactical delay; the trial court may take into account the fact that an interim compensation order has been made, and the willingness or otherwise of the parties to settle, in fixing the cost-scale on the compounding application. The Section 143A power and the Section 147 power thus operate in parallel: the first as a financial-relief mechanism if the trial proceeds, the second as a settlement gateway that can short-circuit the trial.

Section 143A in one paragraph

Section 143A is the trial-stage interim-compensation power, exercisable on plea of not guilty (summary or summons trial) or framing of charge (warrant trial), capped at twenty per cent of the cheque amount, payable in sixty days extendable to ninety, recoverable as a fine under Section 421 CrPC, refundable with interest on acquittal, prospective in operation per G.J. Raja v. Tejraj Surana (2019), and constitutionally upheld by the High Courts as a measured legislative response to the docket-pressure problem peculiar to the §138 cluster. Read with Section 148 at the appellate stage, the 2018 amendment created a two-stage financial-relief architecture that aspirants must distinguish carefully — the post-conviction compensation regime under Section 357 CrPC, treated separately in Compensation in Cheque Bounce Cases, sits at the third layer of the same architecture.

Frequently asked questions

What is the cap on interim compensation under Section 143A NI Act?

Section 143A(2) caps the interim compensation at twenty per cent of the cheque amount. The cap is statutory and not waivable. The court cannot order more than twenty per cent even where the cheque amount runs into crores. The floor is zero, so the trial court has discretion to fix any percentage between zero and twenty depending on the strength of the prima facie case, the drawer's financial capacity, and the likely length of the trial. The Supreme Court in Rakesh Ranjan Shrivastava v. State of Jharkhand (2024) confirmed the discretionary character of the power.

When can a trial court order interim compensation under Section 143A?

Section 143A(1) limits the trigger to two moments. First, in a summary trial or a summons trial, on the accused's plea of not guilty to the substance of the accusation. Second, in any other mode of trial — namely, a warrant trial — on the framing of charge. The triggers are statutory; the court cannot order interim compensation before plea or framing of charge. The architecture is deliberate — the legislature wanted a defined moment of contestation before authorising a partial financial outcome at the trial stage itself.

Can Section 143A be invoked in complaints filed before 1 September 2018?

No. The Supreme Court in G.J. Raja v. Tejraj Surana (2019) 19 SCC 469 held that Section 143A operates prospectively only and cannot be invoked in respect of complaints filed before the commencement date of 1 September 2018. The Bench reasoned that the provision creates a substantive obligation to pay before adjudication, and substantive obligations cannot be retrospectively imposed in the absence of clear statutory language. The ruling confines the Section 143A power to the post-1 September 2018 caseload.

What happens to the interim compensation if the drawer is acquitted at trial?

Section 143A(4) requires the court to 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 sixty days of the acquittal order, or within such further period not exceeding thirty days as the court may direct. The refund obligation cures what would otherwise be a constitutional infirmity — pre-conviction payment without ultimate liability. The interest mechanism ensures the drawer is compensated for the loss of use of the money during the trial.

How is the interim compensation recovered if the drawer fails to pay?

Section 143A(5) deems the interim compensation a fine for purposes of recovery. The cross-reference to Section 421 CrPC (Section 461 BNSS) imports the entire fine-recovery machinery, including attachment and sale of movable property by warrant of distress, and recovery as if it were arrears of land revenue. The drawer who fails to pay within sixty (or ninety) days is amenable to attachment and sale of his property — a coercive remedy that operates without further judicial inquiry beyond the issuance of the recovery warrant.

How does Section 143A differ from Section 148 of the NI Act?

Section 143A operates at the trial stage on plea of not guilty or framing of charge, with a twenty-per-cent cap, and per G.J. Raja applies prospectively only. Section 148 operates at the appellate stage where the drawer is appealing his conviction; it requires a minimum deposit of twenty per cent of the fine or compensation awarded by the trial court, in addition to any sum already paid under Section 143A. The Supreme Court in Surinder Singh Deswal v. Virender Gandhi (2019) 11 SCC 341 read Section 148 as procedural and applicable to appeals filed after its commencement even where the underlying complaint was filed earlier.