Cabinet approves proposal to introduce Negotiable Instruments (Amendment) Bill, 2015 in Parliament

The amendments are focused on clarifying jurisdiction related issues for filing cases of offence committed under Section 138 the Negotiable Instruments Act,1881 (NI Act). 

 

The main amendment included in this is the stipulation that the offence of rejection/return of cheque u/s 138 of NI Act will be enquired into and tried only by a Court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment is situated, a government statement said.

 

"Section 138 of the NI Act deals with the offence pertaining to dishonour of cheque for insufficiency, etc., of funds in the drawer’s account on which the cheque is drawn for the discharge of any legally enforceable debt or other liability. Section 138 provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. The object of the NI Act is to encourage the usage of the cheque and enhancing the credibility of the instrument so that normal business transactions and settlement of liabilities could be ensured," it said. 

 

The clarification of jurisdictional issues may be desirable from the equity point of view as this would be in the interests of the complainant and would also ensure a fair trial. 

 

The clarity on jurisdictional issue for trying cases of cheque bouncing would increase the credibility of the cheque as a financial instrument. This would help trade and commerce in general and allow lending institutions, including banks, to continue to extend financing to the economy, without the apprehension of the loan default on account of bouncing of a cheque. 

 

Action will be initiated to introduce the Negotiable instruments (Amendment) Bill, 2015 in Parliament in the second phase of the current Session of Parliament.