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  • Writer's pictureChambers of Daksha Kumar

In Cases of Cheque Dishonour: Ordering Interim Compensation Post Accused's Declaration of Not Guilty

In a legal pronouncement, the Supreme Court has ruled that pursuant to Section 143A(1) of the Negotiable Instruments Act, 1881, the payment of interim compensation in the case of a dishonoured cheque may be directed only after the accused has entered a plea of not guilty. In the present case, it came to the Court's attention that the magistrate had ordered the payment of 10% of the cheque amount before the accused had entered such a plea. The Court declared that such orders issued prior to the plea being entered are legally untenable.


Therefore, the Supreme Court observed that “In the present case, the Magistrate did not issue the order after the plea of the accused was entered, but before that i.e. after he answered the summons. The party's counsels were present at an intermediate stage of proceedings but before the plea of “not guilty” was entered. In these circumstances, clearly, there is an infraction of Section 143A (1).”


The Supreme Court bench was presided over by Justices Ravindra Bhat and Justice Aravind Kumar and involved a Special Leave Petition filed by the petitioners against the Allahabad High Court's order, which had found no legal infirmity in the summoning order. However, the Supreme Court allowed the appeal and annulled the Chief Judicial Magistrate's order on the grounds of being legally unsustainable.


After a thorough analysis of Section 143A(1), the Supreme Court held that the direction for payment of interim compensation could only be issued after the accused had pleaded not guilty. As a result, the trial court's order was found to be legally untenable and was set aside.


Nonetheless, the Supreme Court also recognised that the trial was at an advanced stage. Consequently, the complainant retained the right to seek relief under Section 143A, as it is applicable at any stage of the proceedings.

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