Direct answer
Section 143A of the Negotiable Instruments Act permits a trial court to order interim compensation in a Section 138 prosecution. The ceiling is twenty per cent of the cheque amount; it is not a fixed payment automatically imposed on every accused. Obtain the application, reply and order, identify the payment deadline and assess the available challenge. Disagreeing with the order is not a reason to ignore it.
Understand the stage and purpose
In a summary trial or summons case, the power arises after the accused pleads not guilty; in another form of trial, it arises upon framing of charge. The order precedes a final determination of guilt. It differs from final fine or compensation and from a deposit under Section 148 during an appeal against conviction. The presence of a twenty-per-cent figure in both provisions does not make their legal tests identical.
What does the Supreme Court require?
In Rakesh Ranjan Shrivastava v. State of Jharkhand, decided on 15 March 2024, 2024 INSC 205, the Court held that Section 143A is discretionary. Paragraphs 14–16 and 19 require a prima facie evaluation of the complainant’s case and the defence raised in the accused’s reply. The rebuttable presumption under Section 139 is not, by itself, sufficient justification for the payment direction.
A prima facie plausible defence can justify refusing interim compensation. Financial distress, the nature of the transaction, the parties’ relationship and paying capacity can be relevant. Even where compensation is justified, the court must consider the amount and record brief reasons. This is not a final trial of guilt, but neither should the decision be mechanical.
Prepare a focused reply
- Address the statutory stage and any maintainability issue.
- Explain the transaction, alleged balance and disputed liability chronologically.
- Link a plausible defence to specific documents, such as payment records, correspondence or evidence of returned goods.
- Support financial hardship with credible income, liability and necessary-expense records.
- Seek rejection of the application, or an appropriately lower amount in the alternative, with reasons.
Simply calling a cheque a “security cheque” does not conclusively answer liability. Examine whether an enforceable debt existed at presentation. Keep the position on signatures, payments and communications accurate and consistent with the record.
Company cheques require a separate identity check
In Shri Gurudatta Sugars Marketing Pvt. Ltd. v. Prithviraj Sayajirao Deshmukh, decided on 24 July 2024, 2024 INSC 551, paragraphs 28–35 distinguish the company from its authorised signatory. Merely signing for the company does not make that individual the drawer for Section 143A. Potential criminal responsibility under Section 141 is not the same thing as personal interim-payment liability under Section 143A.
Identify whose bank account issued the cheque, who the drawer is and whom the order directs to pay. Conversely, a person issuing a cheque on their own account cannot automatically rely on a company-signatory principle without matching the facts.
Payment time, recovery and adjustment
The statutory payment period is sixty days from the order. On sufficient cause, the court may allow a further period not exceeding thirty days. The additional period is not automatic; apply promptly if it is needed. The provision permits recovery as a fine. Paragraph 12 of Rakesh also makes clear that non-payment does not extinguish the accused’s right to defend the prosecution.
On acquittal, the Act requires repayment by the complainant with the specified RBI bank-rate interest. The interim amount paid or recovered is also relevant to adjustment against final fine or compensation. Preserve the payment receipt, order and compliance record so that credit or repayment can be sought accurately.
How should a challenge be assessed?
Collect the complaint, compensation application, reply, relevant annexures and certified order. Check whether the court addressed the prima facie defence and amount, or merely directed the maximum percentage. The appropriate route may involve revision or inherent jurisdiction, depending on maintainability, local precedent and the applicable procedural code. Do not assume a uniform appeal exists from every such order.
A challenge does not automatically stop the payment clock or recovery. Seek appropriate interim protection separately and explain urgency. An application for more time is also distinct from a challenge to the legal basis of the order.
Older offences and an illustration
G.J. Raja v. Tejraj Surana, decided on 30 July 2019, paragraph 22, holds Section 143A prospective. The date on which the offence was completed matters; it should not be assumed to be simply the date printed on the cheque.
Suppose a ₹10 lakh cheque results in a ₹2 lakh order without discussion of the reply. Although ₹2 lakh is within the statutory ceiling, being within the ceiling does not replace reasoned discretion. A supported payment dispute or hardship argument may be relevant to a challenge. The result still depends on the record and the court’s assessment.
Common questions
Is twenty per cent compulsory in every case?
No. Section 143A provides discretion and a ceiling. Section 148 at the appellate stage has a different framework.
Does the order establish guilt?
No. It is an interim decision; the prosecution and defence remain to be adjudicated.
What should be checked first?
The correct payer, statutory stage, recorded reasons and deadline, along with every payment already made.
Official sources and relevant provisions
- Negotiable Instruments Act, 1881 — India Code — Sections 7, 138–143A and 148; drawer, company offences, limitation, interim compensation and appellate deposit.
- Rakesh Ranjan Shrivastava v. State of Jharkhand & Anr., 2024 INSC 205 — Paragraphs 12, 14–16, 18–20; discretionary Section 143A power, prima facie defence, quantum, reasons and reconsideration.
- Shri Gurudatta Sugars Marketing Pvt. Ltd. v. Prithviraj Sayajirao Deshmukh & Ors., 2024 INSC 551 — Paragraphs 28–36, especially 30 and 33–35; company/signatory distinction and Section 143A. Appeals dismissed.
- G.J. Raja v. Tejraj Surana — Supreme Court of India — Paragraphs 22–24; prospective operation of Section 143A, distinguished from Section 148.
Related published articles
Legal disclaimer
This article provides general legal information and the author’s general analysis, not advice for an individual case. Reading it does not create an advocate–client relationship or guarantee an outcome. Laws, rules, policies and decisions can change. Obtain qualified advice on your documents, material dates, jurisdiction and deadlines before acting. This disclaimer does not claim blanket exemption from responsibilities imposed by applicable law.
Sources checked: 3 November 2026.