Interim compensation (s.143A) and appeal deposit (s.148) in cheque bounce

Two provisions added by the 2018 amendment let a cheque holder recover part of the money before the case ends. Under section 143A the trial court may order the drawer to pay interim compensation of up to 20% of the cheque amount. Under section 148 an appellate court may order a convicted drawer to deposit at least 20% of the fine or compensation while appealing. Both are discretionary in practice, and both are refundable with interest if the drawer is finally acquitted.

The problem these sections solve

A cheque bounce trial can take years. Before 2018, a complainant who had already waited for the debt, the notice and the complaint might wait years more, with the accused delaying through appeals. The Negotiable Instruments (Amendment) Act, 2018, in force from 1 September 2018, added sections 143A and 148 to give the complainant some money earlier. The guide on compounding under section 147 covers how the case can end by settlement instead.

Interim compensation under section 143A

Section 143A lets the Magistrate direct the drawer to pay the complainant interim compensation. The main features are:

• Stage. In a summary trial or summons case, once the accused pleads not guilty to the accusation. In any other case, when charge is framed.
• Amount. Not more than 20% of the amount of the cheque.
• Time. Payable within 60 days of the order. The court may extend this by up to 30 days if there is sufficient cause.
• Recovery. If it is not paid, the amount can be recovered as if it were a fine.
• Adjustment. Whatever has been paid is adjusted against the final fine or compensation.
• Refund. If the drawer is acquitted, the court directs the complainant to repay the interim compensation with interest at the bank rate published by the RBI, prevailing at the beginning of the relevant financial year. The time to repay is 60 days, extendable by 30.

Is it automatic?

No. In Rakesh Ranjan Shrivastava v. State of Jharkhand (15 March 2024) the Supreme Court held that the word “may” in section 143A(1) makes the power discretionary and not mandatory. The Magistrate should look at the facts, including whether the complainant has a prima facie case, the defence the accused takes, and the accused’s financial position, and should record short reasons. Ordering 20% in every case, mechanically, is not what the section intends.

Only for offences after 1 September 2018

In G.J. Raja v. Tejraj Surana (2019) the Supreme Court held that section 143A is prospective. It applies only where the offence was committed after the section came into force. For a cheque that bounced earlier, an application under section 143A will not succeed.

Deposit on appeal under section 148

If the Magistrate convicts the drawer, he can appeal to the Court of Session. Section 148 allows the appellate court, when it hears the appeal, to order the appellant to deposit a sum that is a minimum of 20% of the fine or compensation awarded by the trial court. This is in addition to any amount already paid as interim compensation under section 143A. The deposit is to be made within 60 days, extendable by 30, and the court may release it to the complainant during the appeal. If the appellant is finally acquitted, the complainant has to refund it with interest at the RBI bank rate.

Two rulings explain how courts use it:

• Surinder Singh Deswal v. Virender Gandhi (2019): section 148 applies to appeals filed after the amendment even where the complaint was filed earlier, and the deposit is the normal rule.
• Jamboo Bhandari v. M.P. State Industrial Development Corporation (4 September 2023): the 20% is not an absolute rule. An appellate court may in an exceptional case, for reasons recorded, reduce or waive the deposit, for example where the condition would effectively deny the right of appeal.

An appeal against conviction by a Magistrate lies to the Court of Session. The usual limitation is 30 days from the order, but check the current provision with your lawyer. While admitting the appeal the court often suspends the sentence, and the section 148 deposit is often the condition for that.

How the money flows: a worked example

Suresh, a cement dealer in Indore, files a case on a ₹4,00,000 cheque. The accused pleads not guilty. Suresh applies under section 143A, and the court, finding a strong prima facie case, orders ₹60,000, which is 15% of the cheque amount, to be paid in 60 days. The trial ends in conviction, and the Magistrate orders compensation of ₹5,00,000. The drawer appeals. The Sessions Court suspends the sentence on condition that he deposits 20% of ₹5,00,000, that is ₹1,00,000. The figures are a teaching example. Whether the appellate court counts the ₹60,000 already paid toward the deposit is something to ask the court, since section 148 says the deposit is in addition to what was paid under section 143A.

What a complainant should do

1. Check that the cheque was issued and dishonoured after 1 September 2018.
2. Wait for the plea of not guilty (or charge), then file a short written application for interim compensation.
3. Attach what shows a prima facie case: cheque, memo, notice, postal proof and proof of the debt.
4. Argue the amount: courts often fix less than 20% where the defence is plausible.
5. If it is paid, keep a receipt and note the repayment risk if the accused is acquitted.
6. On appeal by the accused, ask the Sessions Court to apply section 148.

What an accused person should do

1. Oppose the application with specific reasons: no debt, paid, security cheque, financial hardship.
2. If ordered, pay on time. Non-payment allows recovery as a fine and weakens your position.
3. Ask for the amount to be reduced or the time extended if there is genuine inability.
4. On appeal, apply for waiver or reduction of the deposit by pointing to exceptional circumstances.

Common mistakes

• Assuming a court must grant 20% on request.
• Applying under section 143A for a cheque that bounced before 1 September 2018.
• Treating interim compensation as final money and spending it, without planning for refund on acquittal.
• Confusing section 143A (trial court) with section 148 (appellate court).

The cheque bounce law certificate course explains each stage of the money orders. The certificate is a certificate of completion issued by Lexfolio and is not a professional qualification.

Frequently asked questions

Is interim compensation of 20% automatic?

No. It is a maximum and the court has discretion (Rakesh Ranjan Shrivastava, 2024).

Does section 143A apply to old cheques?

Only for offences committed after 1 September 2018 (G.J. Raja, 2019).

What if I am acquitted after paying?

The complainant is directed to repay the amount with interest at the RBI bank rate prevailing at the beginning of the relevant financial year, within 60 days (extendable by 30).

Is the section 148 deposit compulsory?

It is the normal condition, but an appellate court can waive it in exceptional cases with recorded reasons (Jamboo Bhandari, 2023).

Which court hears the appeal against a Magistrate’s conviction?

The Court of Session.

Quick quiz

Sources

• Negotiable Instruments Act, 1881: ss.138, 143A, 148 (inserted by the Negotiable Instruments (Amendment) Act, 2018, in force 1 September 2018)
• Rakesh Ranjan Shrivastava v. State of Jharkhand (Supreme Court, 15 March 2024)
• G.J. Raja v. Tejraj Surana (2019); Surinder Singh Deswal v. Virender Gandhi (2019)
• Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd (Supreme Court, 4 September 2023)

This page is for education and general information, not legal advice for a specific case. Law as on 7 November 2026.