Lok Sabha passes bill to deal with cheque bounce cases

A bill providing for filing of cheque bounce cases at the place where a cheque is presented for clearance and not the place of issue, was approved by the Lok Sabha today.

The amendments in the Negotiable Instruments Act will have implications for over 18 lakh cheque bounce cases pending in various courts, Minister of State for Finance Jayant Sinha said while piloting the Negotiable Instruments (Amendment) Bill 2015 in the House.

The bill seeks to replace an ordinance which was re-promulgated earlier. Though the bill was passed by the Lok Sabha in the Budget Session, it could not be approved by the Rajya Sabha, leading to the re-promulgation of the ordinance.

"It is a small bill but has profound implications for the will further enable enforcement of contract," Sinha said, adding that the measure will help small traders, large corporates especially telecom companies which are facing a large backlog of cheque bounce cases.

Responding to members' concerns for setting a time-frame to deal with cheque bounce cases, Finance Minister Arun Jaitley intervened during the discussion to say that though there was no time-frame, the Act did provide procedures for resolution of such disputes and the onus on following them was on the courts.

He further said that the courts could send summons or notices through e-mails or any other speedier mode of communication to expedite resolution of disputes.

Jaitley was responding to concerns expressed by some members that the practice of issuing summons through the postal department was resulting in delay in resolution of cheque bounce cases.

With regard to the demand of members for attachment of properties of defaulters, Jaitley said it was possible in civil cases but could not be done in criminal cases.

The members who participated in the debate and sought speedy disposal of cases and stricter punishment for defaulters included B Senguttuvan (AIADMK), Tathagata Satpathy (BJD), Anandrao Adsul (SS), Jayadev Galla (TDP), Boora Narsaiah Goud (TRS), Rama Devi (BJP) and Varaprasad Rao Velagapalli (YSR Congress).

Members of Congress and several other opposition parties boycotted the Lok Sabha for the third day.

The amendment, which enables filing of cheque bounce cases in the place where the cheque was presented for clearance or payment and not the place of issue, seeks to overturn a Supreme Court ruling which said the cases have to be initiated where the cheque-issuing branch was located.

There are an estimated 18 lakh cheque bounce cases across the country, of which about 38,000 are pending in High Courts.

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.

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

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