Proposed and Recent Amendments to Negotiable Instruments Act

The Negotiable Instruments Act, 1881  was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. It has been amended from time to time so as to provide speedy disposal of cases relating to the offence of dishonour of cheques. Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 included a cheque in the electronic form and a truncated cheque within the definition of the cheque. It introduced summary trial relating to dishonour of cheques (Section 143) and made the offences under the said Chapter compoundable.

Negotiable Instruments (Amendment) Act, 2015

Following changes were introduced in 2015-

  • It modified the definition of a cheque in electronic form.
  • The offence under Section 138 shall be inquired into and tried only by a Court within whose local jurisdiction –
    (a) if the cheque is delivered for collection through an account, the branch of the Bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
    (b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee Bank where the drawer maintains the account is situated.
  • If the payee has filed a complaint against the drawer in a court with the appropriate jurisdiction, all subsequent complaints against that person regarding cheque bouncing will be filed in the same court. It will be irrespective of whether the cheque was delivered for collection or presented at a bank within the territorial jurisdiction of that court.
  •  If more than one case is filed by the same payee against the same drawer before different
    Courts, the case will be transferred to the court with the appropriate jurisdiction before which the first case was filed.

However, the Central Government has been receiving several representations from the public including trading community relating to the pendency of cheque dishonour cases. With this background, Negotiable Instruments (Amendment) Bill, 2017 has been proposed.

Negotiable Instruments (Amendment) Act, 2017 seeks to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation. The proposed amendments will strengthen the credibility of cheques and help trade and commerce in general by allowing lending institutions, including banks, to continue to extend financing to the productive sectors of the economy.

It was introduced during the Winter Session of Parliament in January 2018 and further listed for consideration during the Budget Session. It has two major features discussed under –

Power of Court to direct interim compensation to the complainant

  • Such interim compensation shall not exceed twenty per cent of the amount of the cheque.
  •  The interim compensation shall be paid 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 drawer of the cheque.
  • 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.

Power of Appellate Court to order payment pending appeal against conviction

  • 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.
  • It 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.
  • 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.

See here to know how to file a case under section 138 NI Act.

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Bhumika Sharma

She is currently a Research Scholar, (PhD) at Himachal Pradesh University, Shimla. She finds peace in writing and researching on a variety of social issues. She believes in the power of education and awareness to deal with various problems.

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