Indian cheque dishonour law | Updated October 2026

Negotiable Instruments Amendment Act 2018: Sections 143A and 148 Explained

The Negotiable Instruments (Amendment) Act, 2018 introduced two significant remedies in cheque dishonour cases: interim compensation during trial under Section 143A and a deposit requirement in appeals against conviction under Section 148. These provisions came into force on 1 September 2018, not on the date of parliamentary passage.

At a glance: Section 143A permits, but does not automatically require, interim compensation of up to 20% of the cheque amount before conviction. Section 148 permits an appellate court to direct a convicted drawer to deposit at least 20% of the fine or compensation awarded by the trial court, subject to judicial interpretation and exceptions.

Background and purpose of the 2018 amendment

The Negotiable Instruments Act, 1881 governs instruments such as promissory notes, bills of exchange and cheques. Section 138 creates criminal liability for dishonour of a cheque issued towards a legally enforceable debt or other liability, subject to statutory conditions. The 2018 amendment (Act 20 of 2018) was enacted to address delays and strengthen the effectiveness of cheque dishonour proceedings.

The amendment inserted Section 143A after Section 143 and Section 148 after Section 147. The law received presidential assent in August 2018 and was brought into force on 1 September 2018. Consult the India Code official legislation database for the consolidated Act and the e-Gazette for the amending Act and commencement notification.

Section 138: What constitutes cheque dishonour?

Section 138 deals with dishonour of a cheque for insufficiency of funds or where the amount exceeds the arrangement with the bank, when the cheque was issued in discharge, wholly or partly, of a legally enforceable debt or liability. The principal statutory conditions include:

The cheque must be presented within its validity period (generally three months under prevailing RBI banking directions).
The payee or holder in due course must send a written demand notice within 30 days of receiving information of dishonour from the bank.
The drawer must fail to pay within 15 days after receiving the notice.
The complaint is ordinarily filed within one month after the cause of action arises, subject to the court's power to condone delay under Section 142.

On conviction, Section 138 provides for imprisonment up to two years, a fine up to twice the cheque amount, or both. Sections 139 and 118 establish rebuttable statutory presumptions relevant to cheque liability.

Section 143A: Interim compensation during trial

Section 143A(1): When can the court order payment?

A court trying an offence under Section 138 may direct the drawer to pay interim compensation to the complainant: (a) in a summary trial or summons case, when the accused pleads not guilty; or (b) in another type of case, upon framing of charge. This power is discretionary, not an automatic entitlement.

Section 143A(2): Maximum amount

Interim compensation cannot exceed 20% of the cheque amount. For example, on a cheque for Rs. 5,00,000, the statutory ceiling is Rs. 1,00,000; the court may award less or decline relief based on the circumstances.

Section 143A(3): Time allowed for payment

The drawer must pay within 60 days from the order. On sufficient cause shown, the court may allow an additional period not exceeding 30 days.

Section 143A(4): Refund after acquittal

If the drawer is acquitted, the court must direct the complainant to repay interim compensation with interest calculated at the Reserve Bank of India bank rate prevailing at the beginning of the relevant financial year. Repayment is due within 60 days of the order, extendable by up to 30 days on sufficient cause.

Section 143A(5): Recovery

Unpaid interim compensation may be recovered as if it were a fine, under the recovery mechanism referenced in Section 421 of the former Code of Criminal Procedure, 1973. For proceedings governed by the Bharatiya Nagarik Suraksha Sanhita, 2023, the corresponding recovery provision is Section 461, subject to applicable commencement and saving provisions.

Section 143A(6): Adjustment against final award

Any interim compensation paid or recovered is deducted from the fine imposed under Section 138 or compensation awarded under the applicable criminal procedure provision. This prevents double recovery of the same amount.

Section 148: Deposit during appeal against conviction

Section 148 applies when a cheque drawer appeals against a conviction under Section 138. The appellate court may direct the appellant to deposit a sum that is at least 20% of the fine or compensation awarded by the trial court. This is distinct from the Section 143A ceiling of 20% of the cheque amount.

Section 148(1): Amount and relationship to interim compensation

The appellate deposit is in addition to any interim compensation already paid under Section 143A. Supreme Court decisions explain that ordinarily the appellate deposit should be ordered, but a reasoned exception may be justified where the requirement would be unjust or would effectively deprive the appellant of the right to appeal.

Section 148(2): Deposit deadline

The deposit must be made within 60 days of the order, with a possible extension of up to 30 days for sufficient cause.

Section 148(3): Release and refund

The appellate court may release the deposited amount to the complainant while the appeal is pending. If the appellant is acquitted, the court must order repayment of the amount released, with interest at the applicable RBI bank rate, within 60 days, extendable by up to 30 days for sufficient cause.

Section 143A and Section 148 compared

Feature	Section 143A	Section 148
Stage	Trial, before conviction	Appeal against conviction
Basis of amount	Cheque amount	Trial court fine or compensation
Percentage	Up to 20%	Ordinarily at least 20%, subject to judicially recognised exceptions
Payment deadline	60 days + up to 30 days	60 days + up to 30 days
Refund	On acquittal, with prescribed interest	On acquittal, if amount was released, with prescribed interest

Important Supreme Court interpretations

Rakesh Ranjan Shrivastava v. State of Jharkhand (2024 INSC 205)

The Supreme Court held that Section 143A is directory and discretionary. Courts must record brief reasons, assess the complainant's prima facie case and the accused's defence, and consider relevant circumstances including the transaction, financial capacity and appropriate amount. The statutory presumption alone does not justify automatic interim compensation. Read the official Supreme Court judgment (PDF).

G. J. Raja v. Tejraj Surana (2019)

The Supreme Court held that Section 143A operates prospectively and applies where the Section 138 offence was committed after the provision was introduced. It distinguished Section 148, which governs appeals after conviction. Judgments can be searched on the Supreme Court of India website.

Surinder Singh Deswal v. Virender Gandhi (2019)

The Supreme Court treated Section 148 as applicable to appeals even where the underlying Section 138 complaint predated the 2018 amendment. Subsequent decisions have clarified the discretion available in exceptional circumstances when ordering appellate deposits.

Effect of the new criminal procedure law

The Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) came into force on 1 July 2024, replacing the Code of Criminal Procedure, 1973 for proceedings governed by the new law. The Negotiable Instruments Act continues to contain references to the former Code in certain provisions. Their application must be read with the BNSS repeal, saving and corresponding-provision rules, including Section 531, and the procedural status of the particular case. The 2018 amendment itself remains part of the Negotiable Instruments Act.

Official legal resources and related reading

Legal information only. The applicable statutory text, transitional rules and binding judgments should be checked against the facts and date of the particular proceeding.