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Legislative Corner

The Negotiable Instruments (Amendment) Bill to strengthen the credibility of cheques

By LawStreet News Network      25 July, 2018 12:00 AM      0 Comments
The Negotiable Instruments (Amendment) Bill to strengthen the credibility of cheques

In this business-oriented age, cheques including post-dated cheques are in a frequent use to make and receive payments from vendors, suppliers, and customers. In most of the cases, the matter ends up in the court with respect to offences of dishonor of cheque which lingers on for years. This reduces the credibility of cheques in the world of business.

On Monday, July 23rd, 2018 Lok Sabha passed the Negotiable Instruments (Amendment) Bill, 2017 providing for a speedy disposal of cases relating to the offence of dishonor of cheques.

The amendment was introduced “with a view to address the issue of undue delay in final resolution of cheque dishonor cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money. 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,” said the statement of objects and reason of the Bill.

Here is all you need to know about the proposed changes in the Negotiable Instruments Act on cheque bouncing:

  • The Bill inserts a new section 143A in the said Act to provide the Court trying an offence under section 138 to order the drawer of the cheque to pay interim compensation to the complainant, in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and in any other case, upon framing of charge.

The interim compensation so payable shall be such sum not exceeding twenty percent of the amount of the cheque; and

  • The Bill also inserts another section 148 in the said Act so as to provide that 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 percent of the fine or compensation awarded by the trial court


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