Section 143A NI Act: Interim Compensation in Cheque Bounce Cases Explained

Introduction to Section 143A

Section 143A of the Negotiable Instruments Act, introduced by the Negotiable Instruments (Amendment) Act, 2018, is a powerful provision that allows courts to direct the drawer of a dishonoured cheque to pay interim compensation to the complainant during the pendency of the case. This provision was introduced to address the problem of prolonged litigation and ensure that complainants receive at least partial relief while the case is being adjudicated.

Key Provisions of Section 143A

Under Section 143A, in a summary trial or summons case under Section 138, the court may order the drawer to pay interim compensation not exceeding 20% of the cheque amount at any time after the plea of not guilty is recorded. The court may also direct interim compensation in appeal cases. The interim compensation must be paid within 60 days of the court’s order, or within such further period as the court may allow (not exceeding 30 additional days).

If the drawer is ultimately acquitted, the complainant must return the interim compensation with interest at the bank rate as published by the Reserve Bank of India from the date of payment to the date of return.

Judicial Interpretation and Practical Implications

Courts have generally adopted a purposive interpretation of Section 143A, recognizing its objective of providing timely relief to complainants. The Supreme Court has clarified that the power to grant interim compensation is discretionary and not mandatory, and courts should consider the facts and circumstances of each case while exercising this discretion.

In practice, Section 143A has proven to be a significant deterrent against frivolous defenses and delay tactics by accused persons. The requirement to pay up to 20% of the cheque amount during the pendency of the case creates a strong incentive for settlement and prompt resolution.

Strategic Considerations for Complainants

Complainants should specifically plead for interim compensation under Section 143A in their complaint and pursue the application actively. The early grant of interim compensation can serve as a catalyst for settlement negotiations and can also help offset the costs of prolonged litigation. Given the nuances involved in seeking and obtaining interim compensation, experienced legal representation is essential to maximize the benefit of this provision.