Interim Compensation in Cheque Bounce Cases (Section 143A): How to Apply and Defend in Hyderabad

Introduction

Interim compensation in cheque bounce cases under Section 143A of the Negotiable Instruments Act is one of the most used — and most misunderstood — tools in a Section 138 trial.

Many complainants assume that once the accused pleads not guilty, the court must order 20% of the cheque amount. Many accused assume they must pay first or they cannot defend the case. Both assumptions are wrong.

Section 143A was added by the 2018 amendment and came into force on 1 September 2018. It allows the trial court to order the drawer to pay interim compensation up to 20% of the cheque amount while the case is still pending. The Supreme Court has made two points clear. First, the provision applies only to offences committed after it came into force. Second, the power is discretionary. The magistrate must look at the complainant’s prima facie case and the accused’s defence, and must record brief reasons. A mechanical 20% order will not stand.

This guide explains when Section 143A applies, how a payee in Hyderabad or Telangana should apply, how a drawer should oppose it, what documents matter, what happens if the amount is not paid, and when to take the order in revision to the Sessions Court or the Telangana High Court.

What Section 143A actually does

Section 143A gives the court trying a Section 138 complaint a limited power: it may direct the drawer of the cheque to pay interim compensation to the complainant during the trial.

Three limits are built into the provision:

• The amount cannot exceed 20% of the cheque amount. The court can award less.
• Payment is normally due within 60 days of the order. The court may grant one further period of up to 30 days if the drawer shows sufficient cause.
• If the drawer is later acquitted, the complainant must refund the amount with interest at the RBI bank rate published at the beginning of the relevant financial year, within 60 days (extendable by 30 days).

If the drawer is convicted, the interim amount is adjusted against the fine under Section 138 or compensation awarded under the criminal procedure law (Section 357 of the old CrPC / Section 395 of the BNSS).

The provision is meant to give the payee some money while the trial crawls. It is not a mini-decree and it is not a finding of guilt.

When the court can pass a Section 143A order

The statute itself ties the power to a stage of the case:

• In a summary trial or a summons case, after the accused pleads not guilty.
• In any other case, after charge is framed.

In practice, most Hyderabad cheque bounce matters are tried as summons cases before the Metropolitan Magistrate or Judicial Magistrate First Class. The usual window is after appearance, after the accusation is explained, and after a not-guilty plea.

The court can act on an application by the complainant or, in some cases, of its own motion. Filing a proper application is still the safer course. It puts the facts, the cheque amount and the prayer on record and forces a reply from the other side.

Prospective only: old cheques are outside Section 143A

The Supreme Court in G.J. Raja v. Tejraj Surana (2019) held that Section 143A is prospective. It can be used only where the Section 138 offence was committed after 1 September 2018.

For a complainant, that means you must check the dates of dishonour and the statutory notice period before you file the application. For an accused, a pre-amendment offence is a complete answer to a 143A claim. Do not treat this as a technicality. Magistrates still receive applications on older files.

Discretionary, not automatic: the Rakesh Ranjan test

The controlling Supreme Court decision is Rakesh Ranjan Shrivastava v. State of Jharkhand, (2024) 4 SCC 419 (2024 INSC 205).

The Court held:

• The word “may” in Section 143A(1) is directory, not mandatory.
• The magistrate must record brief reasons.
• The court must make a prima facie assessment of the complainant’s case and of the defence pleaded in the reply.
• The presumption under Section 139, by itself, is not enough to order interim compensation. That presumption is rebuttable and is tested at trial.
• Interim compensation can be directed only if the complainant makes out a prima facie case.
• If the accused’s defence is prima facie plausible, the court may refuse the application.
• Financial distress of the accused can be a relevant factor.
• Non-payment of interim compensation does not take away the right to defend the prosecution. The amount can be recovered as if it were a fine.

The Telangana High Court has applied this test. In Gujja Sudhakar Reddy v. Thiruvarangam Sridhar (Criminal Petition No. 7327 of 2025, decided 16 September 2025), the High Court set aside orders that awarded 20% without reasons and without the enquiry the Supreme Court required.

If you are the complainant, do not file a two-line application asking for “20% as a matter of right.” If you are the accused, do not stay silent and then complain after a mechanical order.

How a complainant should apply (Hyderabad practice)

Forum

File the application in the same Section 138 complaint. Territorial jurisdiction follows Section 142(2): usually the court within whose local limits the payee’s collecting-bank branch lies.

In Hyderabad and surrounding districts that typically means:

• Special Magistrate / MM courts dealing with NI Act cases at Nampally and other city courts
• Cyberabad and Rachakonda magistrate courts, depending on the bank branch and police district map

Name the exact court already seized of the complaint. Do not file a fresh case only for 143A.

Stage

Wait until the accused has appeared and pleaded not guilty (or charge has been framed, if that is the mode of trial). An application filed on the first listing, before plea, is often deferred.

What the application should contain

Keep it short and factual:

1. Complaint number, court, date of cognizance and date of not-guilty plea.
2. Cheque number, date, amount and bank.
3. Date of presentation, date of dishonour and reason on the return memo.
4. Date of statutory notice, mode of service and expiry of the 15-day period.
5. A short statement of the legally enforceable debt or liability (loan, invoice, settlement, security cheque converted by subsequent default — state the actual case).
6. Why a prima facie case exists: original cheque, signatures not denied, return memo, notice proof, no payment.
7. Conduct of the accused, if relevant: repeated absence, delay tactics, admitted signature with only liability disputed.
8. Exact prayer: a sum not exceeding 20% of the cheque amount (calculate the figure), payable within 60 days, in a mode the court can supervise (demand draft in court / deposit to court account / payment to complainant through court).
9. Supporting affidavit and a list of annexures already on the complaint file.

You do not need to prove the entire case at this stage. You do need to show that this is not a bare or speculative complaint.

Documents that help

• Original cheque and bank return memo (or certified copies already exhibited)
• Statutory demand notice and proof of service (postal receipt, tracking, acknowledgement, or deemed service material)
• Complaint, sworn statement and list of witnesses
• Bank statement or loan / invoice papers that show the debt, if already filed
• Any reply of the accused to the statutory notice
• Calculation sheet of 20% and of any lesser figure you are willing to accept

Hearing

The accused must get a chance to file a reply. Ask the court to fix a short date. After reply, press for a reasoned order, not a one-line “20% granted.”

How an accused should defend a Section 143A application

A reply under Section 143A is not the written statement of a civil suit. It is a focused note on why interim payment should be refused or reduced.

Useful lines of defence, depending on facts:

1. Prospectivity. Offence committed before 1 September 2018.
2. Wrong stage. Plea not recorded / charge not framed.
3. No prima facie case. Cheque not produced, notice not served, complaint out of time under Section 142, or basic ingredients missing.
4. Plausible defence on liability. Blank cheque given as security; account settled; material alteration; stop-payment with contemporaneous correspondence; cheque not issued towards a legally enforceable debt.
5. Signature or account disputed. Forgery or “not my account” is a trial issue. Some High Courts have held that where these disputes are live, interim compensation may be refused at this stage.
6. Not the drawer. Authorised signatory of a company is generally not treated as the “drawer” for Section 143A. The Supreme Court in Shri Gurudatta Sugars Marketing and Bijay Agarwal v. Medilines took a strict view. A later bench in Bharat Mittal v. State of Rajasthan (December 2025) doubted a blanket exemption for directors under the related deposit provision in Section 148 and referred a question to a larger Bench. Until that reference is decided, argue the existing “drawer” text and flag the pending issue for the court. This point should be verified against the latest Supreme Court status before you file.
7. Quantum. Even if some amount is justified, 20% is the ceiling, not the default. Ask the court to scale the figure to the strength of the papers and your means.
8. Financial distress. Produce ITR, bank statements, medical bills or insolvency papers if you rely on this. A bare plea of poverty is weak.
9. Natural justice. No notice of the application, no time to reply, or order copied from a template.

Do not use the 143A reply as a full trial brief. Keep it tight. Attach only the documents that make the defence look plausible on a first look.

Payment timeline and what “sufficient cause” means

Once an order is passed:

• Pay within 60 days, or
• File an application before the deadline seeking up to 30 more days, with a real reason (bank freeze, genuine liquidity gap, pending stay application already listed).

“I need more time” without papers is not sufficient cause.

Mode of payment is usually a demand draft in the name directed by the court, or deposit into the court account. Keep the receipt. Ask for an endorsement on the order sheet that payment has been made. That endorsement is what you will need if you are later acquitted and want a refund.

If the accused does not pay

Non-payment does not close the defence. The Supreme Court said so in Rakesh Ranjan Shrivastava.

The complainant’s remedy is recovery of the ordered amount as if it were a fine, under Section 421 of the CrPC / Section 461 of the BNSS. Typical steps:

1. Application before the same magistrate reporting default.
2. Warrant for attachment and sale of movable property.
3. In appropriate cases, a warrant to the District Collector to recover the amount as arrears of land revenue from movable or immovable property.

The proviso to the levy-of-fine provision restricts execution of such a warrant by arrest and detention in prison. Recovery is mainly against property, not a shortcut to jail for the 143A default itself.

A complainant who sits on an unpaid order and does nothing will not get the money. File the recovery application with a calculation and the order.

If the accused is acquitted: refund with interest

Section 143A(4) is mandatory in structure. On acquittal, the court shall direct the complainant to repay the interim amount with interest at the RBI bank rate prevalent at the beginning of that financial year, within 60 days (plus 30 days on sufficient cause).

If you are the accused and you win, do not leave the court without a specific refund direction, the rate, and a time limit. If you are the complainant, treat interim compensation as money you may have to return. Do not spend it as if the trial is over.

Section 143A is not Section 148

These two provisions are often mixed up.

Point	Section 143A	Section 148
Stage	During trial, before conviction	During appeal against conviction
Who pays	Drawer, if so ordered	Appellant (subject to the “drawer” debate)
Cap / floor	Up to 20% of cheque amount	Minimum 20% of the fine or compensation awarded by the trial court
Nature	Discretionary	Different statutory setting; courts treat the appeal deposit more strictly
Purpose	Interim relief to payee during trial	Condition often linked to suspension of sentence on appeal

Winning or losing a 143A application does not decide the appeal deposit. Plan both separately.

How to challenge a Section 143A order

A 143A order is an intermediate order. Typical routes in Telangana:

1. Review / recall before the same magistrate — only for a clear error on the face of the record or if you were not heard. Do not use this as a second innings.
2. Criminal revision before the Sessions Court that has revisional jurisdiction over that magistrate (in Hyderabad / Ranga Reddy this is the concerned Additional District and Sessions Judge).
3. Criminal petition before the Telangana High Court under Section 528 of the BNSS (old Section 482 CrPC) where the order is without jurisdiction, without reasons, or contrary to Rakesh Ranjan. The High Court will not re-try facts.
4. Writ — only in a rare case of patent lack of jurisdiction or violation of natural justice. It is not the ordinary remedy.

Ask for stay of recovery while the revision is pending. File the challenge quickly. Recovery applications move in parallel.

Hyderabad and Telangana practice notes

• Special NI Act magistrates in the city often hear 143A applications on a short date after plea. Come prepared with the calculation and the reply.
• Mechanical 20% orders are now vulnerable after Rakesh Ranjan and after Gujja Sudhakar Reddy. Quote both.
• If the collecting branch is in Cyberabad or Rachakonda, file and argue there. Jurisdiction under Section 142(2) is not a matter of convenience.
• Compounding under Section 147 remains available at any stage. Interim compensation already paid can be adjusted in a settlement. The Supreme Court in Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158, revised the cost structure for compounding; use the latest scale when you settle.
• Do not ignore a parallel civil suit or arbitration. It does not bar Section 138, but it can support a “plausible defence” argument at the 143A stage if the debt itself is being adjudicated.

Common mistakes

Complainants

• Treating 20% as a right
• Filing before plea
• No affidavit, no calculation, no notice proof
• Relying only on Section 139
• Not pressing recovery after default
• Spending the money without planning for a possible refund

Accused

• Not filing a reply
• Raising the entire trial defence in five pages and attaching nothing
• Assuming non-payment ends the case or ends the defence
• Missing the 60-day clock and then asking for 30 days without cause
• Confusing 143A with the Section 148 appeal deposit
• Approaching the High Court first when a Sessions revision would have been enough

When to consult an advocate

Speak to a cheque-bounce counsel in Hyderabad before you file or oppose a 143A application if:

• the cheque is large, or there are multiple cheques
• the drawer is a company and you need a “drawer versus signatory” argument
• the complaint itself has a limitation or notice defect
• the magistrate has already passed a 20% order without reasons
• you need a stay of attachment
• you want to compound and adjust the interim amount

Facts decide these applications. A template will not.

Bullet-point checklist

For the complainant

• Confirm the offence date is after 1 September 2018
• Wait for not-guilty plea (or framing of charge)
• File a short application with affidavit and exact 20% figure
• Annex cheque, return memo, notice and service proof
• Show a prima facie debt, not only the Section 139 presumption
• Seek a reasoned order and a clear payment mode
• Diary the 60-day deadline
• If unpaid, file a recovery application as if the sum were a fine
• Keep accounts for a possible refund with RBI bank-rate interest

For the accused

• Check prospectivity and stage
• File a reply within the time granted
• Plead a specific, document-backed defence
• Produce financial papers only if you rely on distress
• If you are a company signatory, raise the “drawer” point and note the pending larger-Bench reference
• If ordered to pay, either pay in time, seek 30 days, or move revision with a stay
• Do not skip trial dates because 143A is pending
• On acquittal, insist on a refund order with rate and time

Conclusion

Section 143A is a useful but narrow tool. For the payee, it can unlock part of the cheque amount while the Section 138 case is pending. For the drawer, it is not a conviction and it is not an automatic 20% bill.

The applications that succeed in Hyderabad courts are the ones that stay inside the statute and inside Rakesh Ranjan: right stage, prima facie papers, a real defence on the other side, a reasoned percentage, and a workable payment or recovery plan. The applications that fail are the ones that treat 143A as a rubber stamp.

If a 143A order has already been passed against you, or if you need one passed before the next listing, have the complaint file reviewed against the dates, the plea, and the defence documents before the next date of hearing.

Short disclaimer

This article is for general information for readers in India, including litigants in Hyderabad and Telangana. It is not legal advice and it does not create an advocate–client relationship. Cheque bounce outcomes turn on dates, documents, the exact order, and the latest case law. The “drawer” question for company signatories is subject to further Supreme Court clarification. Have a practising advocate verify the current position before you file or oppose an application.

Related reading

• Section 138 Demand Notice — Draft, Service Proofs and Deadlines
• Compounding Cheque Bounce Offences (Section 147 NI Act): Procedure and Case Law
• How to File a DRT Stay to Stop Bank Auction (Section 17 SARFAESI) — Hyderabad Practice
• Bank Account Frozen by Cyber Police or DRT? Steps to Unfreeze in Telangana
• One Time Settlement (OTS) 2026: How to Negotiate with Banks — Checklist

Facing a Section 143A application, or need to file one in a Hyderabad or Telangana cheque bounce case? Share the complaint number, cheque amount, plea date and the order (if any). We will review whether a prima facie case exists, whether the defence is strong enough to resist payment, and the correct forum for revision or recovery.