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Understanding Section 143A of the Negotiable Instruments Act: A Complete Guide to Interim Compensation
Cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) are among the most common criminal complaints in India. With mounting delays in trials, the legislature introduced Section 143A through the Negotiable Instruments (Amendment) Act, 2018, effective from September 1, 2018. This provision empowers courts to direct interim compensation to the complainant during trial, aiming to provide quick relief while upholding cheque credibility. But what exactly does Section 143a Negotiable Securities (likely referring to NI Act) entail? This blog breaks it down based on key judicial interpretations.
Disclaimer: This article provides general information on legal principles derived from court judgments. It is not legal advice. Consult a qualified lawyer for case-specific guidance, as outcomes depend on individual facts.
What is Section 143A of the NI Act?
Section 143A allows the court trying a Section 138 offence to order the drawer (accused) to pay interim compensation to the payee (complainant) in a range of 10% to 20% of the cheque amount. Key features include:
- Timing: Can be ordered at any stage after the accused pleads not guilty (Section 143A(1)).
- Discretionary: The word may indicates it's not mandatory Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - 2019 6 Supreme 84.
- Recovery: Treated as a fine, recoverable under CrPC Sections 421 Vijaya W/o Shiddalingayya Hiremath (Vijaya D/o. Shadaksharappa) VS Shekharappa S/o Shivappa Madinur - 2022 Supreme(Kar) 16.
- Refund: If acquitted, the amount is refunded with interest P.K.SELVARAJ vs UMADEVI SUNDARAM - 2021 Supreme(Online)(MAD) 16372.
The provision addresses delays in Section 138 cases, ensuring complainants aren't left waiting years for justice. However, courts must exercise this power judiciously.
Is Section 143A Discretionary or Mandatory?
Overwhelmingly, courts have held Section 143A as discretionary, not mandatory. The Supreme Court and High Courts emphasize that may should not be read as shall Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - 2019 6 Supreme 84.
Key Judicial Pronouncements
- In a landmark ruling, the Apex Court clarified: The exercise of power under Section 143-A is discretionary and not mandatory, emphasizing that the word 'may' should not be construed as 'shall' PARDHANANI CHATRABHUJ BASSARMAL vs M/S. OMR INVESTMENTS LLP - 2024 Supreme(Online)(KAR) 22704.
- Another decision noted: Interim compensation under Section 143-A of the NI Act is discretionary; thus, courts must evaluate the merits of both parties and grant opportunities for a proper hearing Ramesh vs Ram Kumar - 2026 Supreme(Online)(HP) 1284.
- Courts must provide a reasoned order, considering merits, accused's financial status, and conduct Shiv Kumar vs Vishram (Deceased) Through L.R.S. Aradhana - 2024 Supreme(Online)(MP) 16547.
Failure to hear the accused or provide reasons renders the order unsustainable Mubashir Manzoor vs Mushtaq Ahmad Wani - 2024 Supreme(J&K) 365, leading to quashing by higher courts Falcon Technologies Pvt Ltd VS Union Of India - 2021 Supreme(Del) 1247.
Retrospective Application of Section 143A
A critical question: Can Section 143A apply to complaints filed before September 1, 2018?
- No, it's prospective: Multiple High Courts ruled it applies only to offences committed after its introduction. Section 143-A of the NI Act can only be applied to cases where the offence under Section 138 of the Act was committed after the introduction of Section 143-A Sanjay Singh Goud VS Firm Swariya Sewa Kendra Devgad - 2020 Supreme(MP) 1129.
- Cheques issued pre-amendment cannot trigger interim compensation SHREE RAM CORPORATION PARTNERSHIP FIRM vs STATE OF GUJARAT - 2024 Supreme(Online)(GUJ) 9678, Beeka Mohd. VS Mukesh Kumar - 2024 Supreme(J&K) 272.
- Exception: Some cases applied it to pre-2018 complaints if appeals were post-amendment, but this is limited Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - 2019 6 Supreme 84.
This protects vested rights and avoids retrospective burdens on the accused.
Procedure for Granting Interim Compensation
Courts follow a structured approach:
- Post-Plea Stage: After recording plea under CrPC Section 251 JSB Cargo and Freight Forwarder Pvt. Ltd. VS State - 2021 Supreme(Del) 710.
- Hearing Opportunity: Accused must get a chance to respond; mere service of application suffices if no reply filed Khuzema Nadir vs Rishabh Kumar Jain - 2024 Supreme(Online)(MP) 5518.
- Consider Factors:
- Prima facie merits of the case.
- Cheque amount and transaction nature.
- Accused's financial capacity.
- Conduct (e.g., evasion warrants higher compensation) D.Natarajan vs V.Muthukumar - 2025 Supreme(Online)(Mad) 24363.
- Quantum: Up to 20%, not automatic Ramesh vs Ram Kumar - 2026 Supreme(Online)(HP) 1284.
- No Denial of Rights: Non-payment doesn't bar cross-examination; recovery is via fine mechanisms only Sandip Sarkar VS Mahindra & Mahindra Financial Service Limited - 2023 Supreme(Cal) 154.
Pro Tip: Complainants should provide accused details (email, mobile) for dasti summons to expedite Sanjabij Tari VS Kishore S. Borcar - 2025 7 Supreme 171.
Interplay with Other Provisions
- Section 148 (Appellate Deposit): Related but distinct; requires 20% deposit for suspension of sentence in appeals, retrospective in some views Surinder Singh Deswal @ Col. S. S. Deswal VS Virender Gandhi - 2019 6 Supreme 84. Section 357(2) CrPC doesn't apply due to non-obstante clause.
- IBC Moratorium: Section 138 proceedings against corporate debtors halt under IBC Section 14, but not against individuals under Section 141 P. MOHANRAJ VS SHAH BROTHERS ISPAT PVT. LTD. - 2021 2 Supreme 528.
- Income Tax Violations: Breach of Section 269SS IT Act doesn't invalidate cheques or rebut presumptions under Sections 118/139 NI Act Sanjabij Tari VS Kishore S. Borcar - 2025 7 Supreme 171.
- Concurrent Civil Suits: Allowed; cheque as security raises presumption of debt Nalini Kanta Nayak vs Prasanna Kumar - 2026 Supreme(Online)(Ori) 2648.
Common Challenges and Court Remedies
Accused often challenge orders via Section 482 CrPC petitions:
| Issue | Court Response | Citation |
|-------|----------------|----------|
| No hearing | Quashed; remand for fresh consideration | Ramesh vs Ram Kumar - 2026 Supreme(Online)(HP) 1284 |
| No reasons | Set aside; needs speaking order | Shiv Kumar vs Vishram (Deceased) Through L.R.S. Aradhana - 2024 Supreme(Online)(MP) 16547 |
| Pre-2018 offence | Not applicable; order quashed | Rajendra Kumar Jaat VS Lokendra Singh Sendhav - 2022 Supreme(MP) 1158 |
| Arbitrary 20% | Reduced/ quashed if unjustified | Mubashir Manzoor vs Mushtaq Ahmad Wani - 2024 Supreme(J&K) 365 |
Trial courts must avoid mechanical orders, especially in high-value cash transactions lacking proof Vijaya W/o Shiddalingayya Hiremath (Vijaya D/o. Shadaksharappa) VS Shekharappa S/o Shivappa Madinur - 2022 Supreme(Kar) 16.
Expeditious Trials and Broader Reforms
Section 138 cases suffer delays due to summons issues and accused evasion. Courts advocate:
- Coordinated mechanisms with banks/police/NLSA Makwana Mangaldas Tulsidas VS State of Gujarat - 2020 Supreme(SC) 619.
- Dasti summons and tech for service Sanjabij Tari VS Kishore S. Borcar - 2025 7 Supreme 171.
- Summary trials, converting only with reasons.
Key Takeaways for Stakeholders
For Complainants
- File detailed applications with evidence.
- Expect discretion; strong prima facie case helps.
- Use for leverage in compounding (quasi-criminal offence) Sanjabij Tari VS Kishore S. Borcar - 2025 7 Supreme 171.
For Accused
- Respond promptly to applications.
- Challenge via revision/482 CrPC if flawed.
- Deposit doesn't admit guilt; refundable on acquittal.
For Courts
- Mandatory reasoned orders.
- Balance relief with natural justice.
In summary, Section 143A strengthens complainant remedies in cheque bounce cases but demands judicial restraint. As held: Punishment under NI Act is not a means of seeking retribution but... to ensure payment of money and to promote credibility of cheques Sanjabij Tari VS Kishore S. Borcar - 2025 7 Supreme 171. Stay informed, act promptly, and seek professional advice.
This post draws from authoritative judgments to demystify Section 143A. Legal landscapes evolve—check latest rulings.
Search Results for "Section 143A NI Act: Interim Compensation Guide"
2019 6 Supreme 84 • India - Supreme Court
M.R.SHAH, A.S.BOPANNA
(a) Negotiable Instruments Act, 1881 - Section 148 ... ... Section 357(2), CrPC shall not apply to section 148, N.I.Act. ... nbsp;(b) Interpretation of statute - Mandatory or directory - ‘May’ and ‘shall’ - To be determined by reading the statute as a ... Securities and Exchange Board of India, reported in (2015) 4 SCC 33. ... It is, therefore, proposed to introduce the Negotiable Instruments (Amendment) Bill, 2017 to provide, inter alia, for the following ... , name....
2021 2 Supreme 528 • India - Supreme Court
ROHINTON FALI NARIMAN, NAVIN SINHA, K. M. JOSEPH
plain language, include a Section 138 proceeding for reason that a Section 138 proceeding would be a legal proceeding in respect ... given object and context of Section 14 of IBC, amount to a “proceeding” within meaning of Section 14(1)(a), moratorium therefore ... , Section 138 proceeding being conducted before a Magistrate would certainly be a proceeding in a ....
2020 0 Supreme(SC) 619 • India - Supreme Court
S. A. BOBDE, L. NAGESWARA RAO
Act, 1881 - Chapter XVII of the Negotiable Instrument Act, 1881, Section 138, Section 144 of the Act, Sections 62, 66 and 67 of Cr.P.C ... in 1988 under Chapter XVII of the Negotiable Instrument Act, 1881. ... of cases under Section 138 of N.I. ... of Chapter XVII in the Negotiable Instrument Act, 1881. ... A similar co-ordinated effort may be evolved to recover interim compensation under #HL_STAR....
2026 Supreme(Online)(Ori) 2648 • India - IN THE HIGH COURT OF ORISSA AT CUTTACK
R.K.PATTANAIK
(A) Negotiable Instruments Act, 1881 - Section 138 - Criminal Procedure Code, 1973 - Sections 401 and 397 - Revision against conviction ... ... ... Findings of Court: ... The Court confirmed the conviction for dishonour under Section 138 but modified the compensation to ... issued a cheque for Rs.20 lac which was dishonoured due to insufficient funds, and claimed it was a security deposit. ... /law/10890~S.401">Section 401 read with Sect....
2025 2 Supreme 109 • India - Supreme Court
J. B. PARDIWALA, R. MAHADEVAN
language of statute if Section 138 of Act is interpreted to mean that even if a person draws a cheque on an account not maintained ... in cases where offence under Section 138 is committed by a company and not an individual person – Any delegation of authority to ... – “any debt or other liability” – Scope of – Section 138 of NI Act does not envisage that only those cases where a cheque issued ... That the accused has thus committed an offence U/s. 138 of the #H....
2024 Supreme(Online)(KAR) 22704 • India - High Court of Karnataka
MR JUSTICE M.NAGAPRASANNA, J
(A) Negotiable Instruments Act, 1881 - Section 138 and 143-A - Interim compensation - The petitioner challenged the order of the ... Court of Session that reversed the interim compensation granted by the Magistrate under Section 143-A. ... The Apex Court's ruling clarified that the exercise of power under Section 143-A is discretionary and not mandatory, emphasizing ... Section 143A#HL_E....
2020 0 Supreme(MP) 1129 • India - Madhya Pradesh
S.K.AWASTHI
Section 143-A of the Negotiable Instruments Act, 1881 - Interim Compensation - Court held that Section 143-A can only be applied ... 143-A of the NI Act for an offence committed before the introduction of Section 143-A. ... 143-A, as the offence occurred before the introduction of Section 143-A in the statute....
2022 0 Supreme(P&H) 1929 • India - Punjab and Haryana
KARAMJIT SINGH
Negotiable Instruments Act - Interim Compensation - Section 143A - 143A(1), 143A(1)(a)Fact of the Case: The petitioner ... Finding of the Court: The court found that the provision of Section 143(A) is discretionary and not mandatory, and ... Ratio Decidendi: The court held that Section 143(A) is essentially directory and cannot be termed as mandatory in nature, ... Laxmi Kant Govind Joshi, decided....
2024 Supreme(Online)(MP) 16547 • India - High Court of Madhya Pradesh
Section 143-A - Deposit of Interim Compensation - Court's DiscretionFact of the Case: The applicant filed a petition ... 143-A of the Negotiable Instruments Act. ... 143-A of the Negotiable Instruments Act was upheld. ... “10) Although no guidelines for grant of interim compensation have been laid down in Section 143-A of the NI Act, yet it ... reasoned order for directing to deposit 20% of the c....
2024 Supreme(Online)(MP) 5518 • India - High Court of Madhya Pradesh
HON'BLE SHRI JUSTICE GURPAL SINGH AHLUWALIA
Negotiable Instruments Act - Interim Compensation - Section 143-AFact of the Case: The applicants were directed ... by the trial court to pay 15% of the cheque amount as interim compensation under Section 143-A of the Negotiable Instruments Act ... Finding of the Court: The court found that the copy of the application under Section 143-A was provided to the applicants ... 143-A of Negotiable Instr....
2024 0 Supreme(J&K) 272 • India - J&K
SINDHU SHARMA
143A, arguing it was not applicable retrospectively as the offence occurred before the amendment - The court held that Section 143A ... ... ... Issues: The primary issue was whether Section 143A of the Negotiable Instruments Act could be applied retrospectively to ... ... ... Findings of Court: ... The court found merit in the petition, ruling that Section 143A is prospective and set aside the orders ... The learned Magistrate invoked its jurisdiction under #HL_S....
2025 0 Supreme(All) 2971 • India - IN THE HIGH COURT OF ALLAHABAD, LUCKNOW BENCH
Rajnish Kumar
143A and the handling of the application before evidence was recorded. ... 143A, emphasizing upon consideration of merits and the conduct of the parties. ... (Paras 8, 14) ... ... Issues: Court addressed the validity of interim compensation under Section ... As per Sub- section (2) of Section 143 A, the trial is to be conducted as expeditiously as possible and an endeavour is to be made by the Court to conclude the trial within six months from the date of filing of....
2022 0 Supreme(MP) 1158 • India - Madhya Pradesh
SATYENDRA KUMAR SINGH
N.I.Act - Cheque Bounce - The court held that the provisions of Section 143A of the Negotiable Instruments Act will be prospective ... be applied in cases where the offence under Section 138 of the Act was committed after the introduction of Section 143A. ... The trial court directed the applicant to deposit 20% of the cheque amount under Section 143A of the Negotiable Instruments Act. ... of Negotiable Instruments (Amendment) Act, 2018. ... of said Section#....
2019 Supreme(Online)(KER) 48314 • India - Kerala
This Court finds it apposite to extract Section 143 A N.I Acthereunder:“[143A. ... The argument of learned counsel for the petitionerthat Section 143 A is applicable to the above accused sincethe plea of not guilty of accused was recorded after Section143 A came into operation ... Section 143 A of N.IAct imposes a new obligation on the drawer of a cheque top....
2022 0 Supreme(Kar) 16 • India - Karnataka
M. NAGAPRASANNA
Negotiable Instruments Act, 1881 - Section 143-A and 138 – Criminal Procedure Code, 1973 - Section 200, ... 143-A grants interim compensation of Rupees forty lakhs to be paid by accused to complainant - whether the Criminal Court hearing ... cheque alleged to have issued by accused is dishonoured - In respect of rupees two crores transaction in cash, trial Court invoking Section ... Point No.2: For the above said reasons and discussion, I proceed to pass the following:ORDERInterim appl....
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