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How To Get Interim Compensation Under Section 143A Of NI Act?

A mere cheque bounce can attract criminal proceedings as under Section 138 of the Negotiable Instruments Act, 1881. The person in whose favour the cheque was drawn files a complaint against the person who drew the cheque but the payment did not succeed as provided under Section 138 of NI Act.

There is a provision under Section 143A of NI Act to provide financial relief to the complainant even before the matter is decided. So here, we are discussing how a complainant can get interim compensation under Section 143A of NI Act, and the accompanying rules which lay the path for interim relief to the complainant in a cheque bounce matter.

Amended Cheque Bounce Provisions- 143A & 148…what is it?

  • Section 143A: It empowers the Court to order the drawer of the cheque to pay Interim Compensation - 20% - Without depositing this amount the accused cannot defend the case.
  • Section 148: It empowers the Appellate Court to order payment pending the appeal against conviction
The Appellate Court may order the appellant to deposit an amount which shall be a minimum of 20% of the fine or compensation awarded by the trial Court.

This amount shall be in addition to the amount already paid by the appellant under Section 143A.

It received the assent of the President and was notified in the Official Gazette on 02.08.2018

  1. Insertion of a new Section 143(A) related to interim compensation:
    • The Amendment Bill inserts a new Section 143(A) in the NIA Act of 1881 to provide that the court trying an offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant:
      • In a summary trial or a summon case, where the drawer pleads not guilty to the accusation made in the complaint.
      • In any other case, upon framing of charge.
    • The interim compensation payable shall not exceed 20% of the amount of the cheque.
    • The said interim compensation has to be paid within 60 days from the date on which the order is made.
    • The interim compensation so recovered shall be deductible from the amount of fine imposed under Section 138 by the Magistrate upon conviction of the drawer or any compensation directed to be paid under Section 357 of the Code of Criminal Procedure (CrPC), 1973 (Section 395 of BNSS, 2023).
    • Section 138 of the Act of 1881 provides for imposition of a sentence of imprisonment not exceeding a period of 2 years or a fine extending to twice the amount of the dishonoured cheque, or both.
    • The said amount of interim compensation may be recovered in the manner provided under Section 421 of CrPC, i.e., Section 463 of the Bharatiya Nagarik Suraksha Sanhita, 2023, by:
      • Attachment and sale of any movable property of the drawer, or
      • A warrant to the Collector of the concerned district to recover the same as arrears of land revenue from the movable or immovable property of the drawer.
         
  2. Insertion of a new Section 148 related to Deposit in case of appeal:
    • The insertion of Section 148 in the Act of 1881 empowers the Appellate court, in an appeal by the drawer against conviction under Section 138, to order the appellant to deposit a sum that is a minimum of 20% of the fine or compensation awarded by the trial court.
    • The amount payable shall be in addition to any interim compensation paid by the appellant under Section 143A.
    • The deposit must be made within 60 days from the date of the order or within an extended period not exceeding 30 days if directed by the Court based on sufficient reasons shown by the appellant.
       
  3. Returning the interim compensation/deposit:
    • If the drawer is acquitted (during trial or by the Appellate court), the court will direct the complainant to return the interim compensation (or deposit in case of an appeal case), along with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year.
    • This amount must be repaid within 60 days of the court's order or within an extended period not exceeding 30 days as may be directed by the Court on sufficient grounds shown by the complainant.

Section 143A of Negotiable Instruments Act, 1881

The provision regarding interim compensation for a Cheque bounce case under Section 138 of NI Act was not there in the original law, but has been recently inserted through an amendment in the year 2018. The Section 143A of NI Act gives liberty to the Trial Court to direct drawer of the cheque, the accused in this case, to pay interim compensation to the complainant when he pleads not guilty or after framing of charges, as the case may be. There is a bar on compensation to be restricted to 20% of the amount involved under Section 138 of Negotiable Instruments Act.

How to get 20% compensation under Section 143A of NI Act?

After filing of complaint under Section 138 of Negotiable Instruments Act, 1881, the next date usually happens to be when the drawer of the cheque appears before the Trial Court, gets bail, and the Court frames charges against him/her. The Court may itself direct the accused to pay compensation of part amount to the complainant, which may not be more than 20% of the amount involved in cheque.

At this point, the complainant may present an application under Section 143A of the NI Act, stating that notice was issued after filing of a complaint under Section 138 of NI Act, however, the accused/drawer of cheque has not paid any amount to the complainant in furtherance of the amount involved in the cheque, which is subject matter of the case.

The Court may therefore direct the accused to pay compensation of 20% or less of the amount of the cheque involved. Such an accused has 60 days to pay the said compensation. The term may be extended for another 30 days if the accused is able to convince the Court for the existence of sufficient reasons for his inability to pay compensation within 60 days. In total, the accused gets 90 days to pay the compensation under Section 143A of NI Act.

It may be noted that if the accused person fails to pay the said amount of compensation as directed by the Court under Section 143A of NI Act, the Court may issue warrant for recovery of the said amount in accordance with Section 421 of CrPC, i.e., Section 463 of the Bharatiya Nagarik Suraksha Sanhita, 2023. The said provision provides for recovery through attachment and sale of property. If guilt of the accused is proved at the end of trial, the said 20% amount is adjusted in the final amount payable in cheque bounce case.

How to withdraw Interim Compensation under Section 143A of NI Act?

Once a Court has ordered in favour of the complainant and directed the accused to pay interim compensation of 20% or less to the complainant, the Court itself specifies the mode through which such amount shall be paid. The said Court orders may direct the accused to deposit the amount in the favour of the District Judge in the form of a Demand Draft.

In such case, the complainant in turn has to apply to the said judge for withdrawal of the interim compensation. In some cases, the Court may order payment in favour of the NAZARAT branch of the Court, and the complainant may later withdraw the amount from there. As per recent trends, the Court may order an interim compensation amount to be directly transferred in the complainant's bank account. In any case, it is the Court which decides the mode through which interim compensation under Section 138 of NI Act has to be paid.

What happens if a person is acquitted in a Cheque Bounce Case?

If the person is acquitted by the Court in a Cheque Bounce Case under Section 138 of Negotiable Instruments Act, he/she is entitled to get back the amount paid earlier in the name of compensation under Section 143A of NI Act along with interest in accordance with the rate decided under the RBI Rules. The said amount can be legally recovered from the complainant.


Award Winning Article Is Written By: Mr.Kishan Dutt Kalaskar
Certificate Of Excellence - Legal Service India
Authentication No: OT429340287930-19-1024

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