Section 143A interim compensation: the 20% order in a cheque bounce case

How much

Up to 20% of the cheque amount, at the court's discretion.

When

In a summary or summons trial, once the drawer pleads not guilty; otherwise on framing of charge.

Paying it

Within 60 days of the order, extendable by 30 more for sufficient cause. Recoverable as a fine.

On acquittal

Repaid by the complainant with interest at the RBI bank rate.

Until 2018 a drawer who contested a cheque bounce case paid nothing until the judgment, and the complainant carried the cost of the delay. Section 143A of the Negotiable Instruments Act, inserted by the 2018 amendment, moved part of the money to the start of the trial. The cheque bounce page covers the case as a whole; this article is about the one order that most often decides whether a case is fought or settled.

What the section provides

Section 143A allows the court trying a Section 138 offence to order the drawer to pay interim compensation to the complainant. The amount cannot exceed 20% of the cheque amount. The order can be made at two points: in a summary trial or a summons case, when the accused pleads not guilty to the accusation; in any other case, when the charge is framed. Almost every Section 138 case in Ghaziabad is a summons case, so the practical moment is the plea.

The drawer gets 60 days from the date of the order to pay. The court can extend that by up to 30 days if the drawer shows sufficient cause, and the application for extension should be made before the first 60 days end. If the amount is not paid, it is recovered as if it were a fine imposed by the court, which brings in attachment and sale of property and recovery through the district collector.

A discretion, not a rule

The section says the court "may" order interim compensation, and the Supreme Court has read that as a real discretion to be exercised with reasons. The Magistrate looks at the complaint and the affidavit, at the reply to the notice if there was one, at the drawer's stated defence, and at the drawer's means. A drawer whose defence is on paper from the start, who has filed a reply saying the cheque was security and attached the agreement, is in a different position from a drawer who said nothing until the plea.

This is the reason the chamber treats the reply to the notice as the first step of the trial. The 143A hearing is the first time the Magistrate weighs the two sides, and the only material the drawer has at that stage is what was written before the complaint and what is said at the plea.

For the complainant the application is made at the plea, in writing, with the return memo, the notice and the proof of service attached. A short application that asks for the full 20% without addressing the defence invites a lower figure. One that shows the debt on documents and the absence of any reply usually gets close to the ceiling.

How the amount is recovered

Interim compensation is recovered as a fine. The court can issue a warrant for attachment and sale of the drawer's movable property, and it can send a certificate to the collector for recovery as arrears of land revenue, which reaches immovable property and bank accounts. The drawer who lets the 60 days pass without paying or applying for time faces recovery proceedings running alongside the trial, and the court is entitled to take non-payment into account when dealing with bail and with later applications for time.

Where the drawer genuinely cannot pay, the right application is one for a lower figure at the hearing itself, or for the 30-day extension with an affidavit of means. Both are heard; silence is not.

On acquittal, conviction and compounding

• Acquittal. The court directs the complainant to repay the interim compensation with interest at the bank rate published by the Reserve Bank of India at the start of the relevant financial year, within 60 days, extendable by 30. The repayment is enforced as a fine in the same way.
• Conviction. The amount already paid is deducted from the fine or compensation awarded. The sentence under Section 138 can be imprisonment of up to two years, or a fine of up to twice the cheque amount, or both, and in practice the Ghaziabad courts order compensation to the complainant out of the fine.
• Compounding. Under Section 147 the parties can settle at any stage. The interim compensation already paid is treated as part of the settlement unless the parties agree otherwise, and the court records the compromise and acquits the drawer.

Section 148: the deposit in appeal

The 2018 amendment added a second provision with the same logic. When a drawer convicted under Section 138 appeals to the Sessions Court, Section 148 allows the appellate court to order deposit of a minimum of 20% of the fine or compensation awarded by the trial court, in addition to any interim compensation already paid, within 60 days extendable by 30. In Surinder Singh Deswal v. Virender Gandhi, (2019) 11 SCC 341, the Supreme Court held that the appellate court should ordinarily order the deposit, departing from it only for reasons recorded in writing, and that Section 148 applies to appeals filed after the amendment even where the complaint was filed before it. The deposit is released to the complainant or returned to the appellant depending on the outcome of the appeal.

The effect of the two sections together is that a drawer who contests a strong complaint pays up to 20% at the plea and a further 20% or more to appeal a conviction. That is the arithmetic the chamber puts on the table at the first meeting, on both sides of the case.

What this means for your case

For the complainant: file in time, prove service of the notice, and ask for 143A at the plea with the documents attached. The Section 138 deadline calculator fixes the dates. For the drawer: put the defence in the reply to the notice, appear on the first date, and come to the 143A hearing with the agreement or the proof of payment, not with a request for time. The rest of the trial, from affidavit evidence to judgment, is on the cheque bounce page.

Read next

• Cheque bounce case timeline in the Ghaziabad court
• Received a cheque bounce notice in Ghaziabad: the 15-day reply
• Missed the cheque bounce deadline

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