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Govt may bring ordinance to amend Negotiable Instruments Act

By PTI
04 June, 2015

To check piling up of cheque bounce cases in courts, the government is mulling an ordinance to amend the Negotiable Instruments Act, which provides for filing of such cases in place where the cheque is presented.

An amendment bill, already passed in the lower house of Indian Parliament, Lok Sabha, also seeks to overturn a 2014 Supreme Court ruling, which said that the case has to be initiated where the cheque-issuing branch was located.

Sources in the government said if the ordinance is issued, it may carry certain suggestions made by the Reserve Bank of India and will be different from the bill now pending in the upper house, Rajya Sabha.

The amendment provides that cases of bouncing of cheques can be filed only in a court in whose jurisdiction the bank branch of the payee (person who receives the cheque) lies. If a complaint against a person issuing a cheque has been filed in the court with the appropriate jurisdiction, then all subsequent complaints against that person will be filed in the same court, irrespective of the relevant jurisdiction area.

When the lower house passed the bill in the Budget session, The National Democratic Alliance (NDA) government had faced tough questions from its own members with some Bharatiya Janata Party (BJP) Members of Parliament(MPs) wondering if it would be used by corporates to harass the common man.

“To address the difficulties faced by the payee or the lender of the money in filing the case under Section 138 (of the Act), because of which large number of cases are stuck, the jurisdiction for offence has been clearly defined keeping in view the interest of complainants,” Finance Minister Arun Jaitley had said while introducing the bill.

The Statement of Objects of the bill states that following the apex court ruling, representations have been made to the government by various stakeholders, including industry associations and financial institutions, expressing concerns about the wide impact the judgment would have on the business interests as it will offer undue protection to defaulters at the expense of the aggrieved complainant.

Minister of State for Finance Jayant Sinha had told the Lok Sabha during the passage of the bill that the courts were currently dealing with 21 lakh cheque-bounce cases with 259 courts hearing them exclusively and the new law would help consolidate the cases and aid the judicial system.


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Govt may bring ordinance to amend Negotiable Instruments Act

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