Negotiable Instruments Act, 1881

Negotiable Instruments (Amendment) Act, 2018: Interim Compensation under Section 143A and Appeal Deposit under Section 148

The Negotiable Instruments (Amendment) Act, 2018 (Act 20 of 2018) introduced Section 143A and Section 148 into the Negotiable Instruments Act, 1881. These provisions deal respectively with interim compensation during a cheque-dishonour trial and deposit during an appeal against conviction under Section 138.

Current legal position: Section 143A does not make interim compensation automatic. The Supreme Court has held that the power is discretionary and must be exercised judicially. Section 148 operates at the appellate stage; a deposit of at least 20% is ordinarily contemplated, although a court may make a reasoned exception where insisting on the deposit would be unjust or would effectively deprive the appellant of the right of appeal.

What the Negotiable Instruments (Amendment) Act, 2018 changed

The Amendment Act received assent in 2018 and the inserted provisions came into force on 1 September 2018. Its practical focus is cheque-dishonour litigation under Section 138 of the Negotiable Instruments Act, 1881.

  • Section 143A enables the trial court, in specified circumstances, to order the drawer to pay interim compensation to the complainant.
  • Section 148 enables the appellate court to require a convicted drawer who files an appeal to deposit an amount of at least 20% of the fine or compensation awarded by the trial court.
  • The amount directed under Section 148 is in addition to any interim compensation already paid under Section 143A.

Negotiable Instruments (Amendment) Act, 2018

Act No. 20 of 2018 - 2 August 2018

An Act further to amend the Negotiable Instruments Act, 1881.

Section 1 - Short title and commencement

1. (1) This Act may be called the Negotiable Instruments (Amendment) Act, 2018.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Section 143A - Power to direct interim compensation

Section 2 of the 2018 Amendment inserted Section 143A after Section 143 of the principal Act.

143A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant-

(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and

(b) in any other case, upon framing of charge.

(2) The interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque.

(3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.

(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973.

(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973, shall be reduced by the amount paid or recovered as interim compensation under this section.

Supreme Court - Rakesh Ranjan Shrivastava v. State of Jharkhand (2024 INSC 205): the word "may" in Section 143A(1) gives the court discretion. Before directing interim compensation, the court must consider the merits and relevant circumstances instead of treating payment as an automatic consequence of the accused pleading not guilty.

Earlier, in G.J. Raja v. Tejraj Surana, the Supreme Court held that Section 143A is prospective and is confined to cases where the offence was committed after Section 143A came into force on 1 September 2018.

Section 148 - Deposit by drawer during appeal against conviction

Section 3 of the 2018 Amendment inserted Section 148 after Section 147 of the principal Act.

148. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court:

Provided that the amount payable under this sub-section shall be in addition to any interim compensation paid by the appellant under section 143A.

(2) The amount referred to in sub-section (1) shall be deposited within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the appellant.

(3) The Appellate Court may direct the release of the amount deposited by the appellant to the complainant at any time during the pendency of the appeal:

Provided that if the appellant is acquitted, the Court shall direct the complainant to repay to the appellant the amount so released, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

Important Supreme Court principles on Sections 143A and 148

1. Section 143A is discretionary, not mandatory

In Rakesh Ranjan Shrivastava v. State of Jharkhand (2024), the Supreme Court held that the trial court must exercise discretion under Section 143A. The provision does not require an interim-compensation order in every Section 138 case merely because the accused has pleaded not guilty.

2. Section 143A applies prospectively

In G.J. Raja v. Tejraj Surana (2019), the Supreme Court held that Section 143A is prospective and applies where the offence was committed after the provision came into force on 1 September 2018.

3. Section 148 can apply to appeals arising from older complaints

In Surinder Singh Deswal v. Virender Gandhi, the Supreme Court held that Section 148 can operate in appeals against convictions even where the underlying Section 138 complaint had been filed before the 2018 amendment.

4. Twenty per cent deposit is the normal rule, but not inflexible

The Supreme Court has clarified that an appellate court will normally be justified in directing the statutory deposit under Section 148. However, where requiring the deposit would be unjust or would effectively deprive the appellant of the right of appeal, an exception may be made for reasons specifically recorded by the court.

CrPC references after commencement of the BNSS, 2023

The text of Sections 143A and 148 continues to contain references to the Code of Criminal Procedure, 1973 because those references form part of the enacted Negotiable Instruments Act text. The Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) came into force on 1 July 2024 and repealed the CrPC subject to the savings in Section 531.

For example, the CrPC provision on warrant for levy of fine was Section 421; the corresponding BNSS provision is Section 461. Pending proceedings and other saved matters remain governed by Section 531 of the BNSS according to its terms.

Practical points for a Section 138 cheque-dishonour case

  • A complainant may request interim compensation under Section 143A at the appropriate trial stage, but the court must decide the request judicially.
  • The amount under Section 143A cannot exceed 20% of the cheque amount.
  • The ordinary payment period is 60 days, with a possible extension of up to 30 further days on sufficient cause.
  • If the drawer is acquitted, repayment with applicable RBI bank-rate interest is contemplated by the statute.
  • After conviction, the appellate court may order a Section 148 deposit of at least 20% of the fine or compensation awarded by the trial court.
  • A Section 148 deposit is additional to any amount already paid as interim compensation under Section 143A.

Frequently asked questions

Is 20% interim compensation compulsory under Section 143A?

No. Twenty per cent is the statutory ceiling, not an automatic amount. The Supreme Court has held that the court's power to award interim compensation under Section 143A(1) is discretionary.

When can Section 143A be invoked?

In a summary trial or summons case, the statutory stage is when the drawer pleads not guilty. In any other case, the statutory stage is upon framing of charge.

Can Section 143A be applied to an offence committed before 1 September 2018?

No, according to the Supreme Court ruling in G.J. Raja v. Tejraj Surana, Section 143A is prospective.

Is a 20% deposit under Section 148 always mandatory in appeal?

The Supreme Court treats the deposit contemplated by Section 148 as the normal rule. A reasoned exception may be made where imposing the condition would be unjust or would effectively deprive the appellant of the right of appeal.

Can the complainant receive the Section 148 deposit while the appeal is pending?

Yes. Section 148(3) permits the appellate court to direct release of the deposited amount during the pendency of the appeal, subject to repayment with the prescribed interest if the appellant is later acquitted.

Disclaimer: This page provides general legal information. Court procedure and the effect of precedent depend on the facts and procedural stage of each case. For case-specific advice, consult a qualified legal professional.