Recent Amendments to The Negotiable Instruments Act, 1881

Cheque Bounce has become a common phenomenon with the advent of technological advancements. With the increase in cheque bounce cases, there is a need to change the lenient laws for cheque bouncing. To address this issue, the Indian government introduced The Negotiable Instrument (Amendment) Bill, 2017 was introduced on January 2, 2018. These amendments will help to get compensations for cheque bounce quickly.

In this update, we’ll look into the recent amendments made to The Negotiable Instrument Act and the after-effects of such amendments.

The Negotiable Instrument Act, 1881

The basic purpose for the enactment of The Negotiable Instrument Act, 1881 is to categorize and define promissory notes, bills of exchange and cheques etc. It also mentions the punishment for the dishonor of cheque or for any other violations under the Act. 

Over the years, there is a need for amendments for quick disposal of cheque bounce cases. In addition to this, the pendency ratio for cheque bounce cases is still high. Recently the Negotiable Instruments Act was amended by the introduction of The Negotiable Instrument (Amendment) Bill, 2018. Furthermore, this was done to curb the malpractices related to cheque bounce plaguing our society.

Recent amendment in the Negotiable Instrument (Amendment) Bill, 2018

• The amended provision provides interim compensation. Furthermore, in section 143A of the Negotiable Instrument Act, the court grants interim compensation to the complainant. The Court can also direct the drawer to pay an interim compensation to the complainant. The payment can be done if the drawer pleads that he is not guilty.
• Under The Negotiable Instrument (Amendment) Bill, 2018, the interim compensation should not exceed 20% of the total amount in the cheque. Further, the payment is to be made within 60 days of the order of the Trial Court, which is extendable to 30 days.
• Additionally, the Bill has inserted a provision for deposit in matters of appeal by the convicted person. It states that on conviction if the drawer files an appeal, the Appellate Court has the authority to direct him to deposit a minimum of 20% of the fine awarded by the Trial Court during the conviction. This amount is in addition to the interim compensation, which is paid during the previous trial under section 143A.
• Further, if the drawer is acquitted, then the Court has to direct the complainant to return the interim compensation with interest. Payment needs to be done within 60 days from the Order of the Court.

The New Amendments of Negotiable Instruments- a Relief for the Society

While replying to a debate on the Negotiable Instrument Bill, Minister of State for Finance Shiv Pratap Shukla stated-

The amendments are a welcome move for the market players as it will facilitate the recovery of the amount faster. Moreover, it will help the banks and the financial institutions as the recovery of amount is made easier. Further, it will also help them to finance the business, which will, in turn, lead to the overall development of trade and commerce.

Shashi Tharoor stated during presentation of the Bill that “In France, a person who defaults on his cheque payment s is added to a central register known as the FCC and he is banned from issuing any cheque for a period of five years. We could have put that to the law. It has proven to be an effective deterrent in France.”

Similarly here also we need a stringent provision. We cannot ignore the fact that dishonour of cheque is a bailable offence with punishment up to two years. We need further introspection additionally and a more stringent law to protect our people.

Conclusion

In Conclusion, we can state that the recent Negotiable Instrument Act Amendment, 2018 caters in expediting the disposal of cheque bounce cases. Additionally, it also provides relief for the payee who has invested his heart and soul in the Court for the recovery of money. We can further say that the Indian government has of late introduced stringent laws to strengthen the business community and safeguard the right of people.

For more information regarding the recent amendments to the Negotiable Instrument Act and assistance in filing cheque bounce case, contact us at LawyerINC.