Cabinet clears proposal to introduce revised Negotiable Instruments Bill

With mounting cases relating to prosecution under Negotiable Instruments (NI) Act, the Union cabinet chaired by the PM Narendra Modi on Thursday approved a proposal to introduce the 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 NI Act,1881. Under the amendment, offence of rejection, return of cheque under Section 138 of the NI Act will be enquired into and tried only by a court within whose jurisdiction the bank branch of the payee, where the payee presents the cheque for payment is situated. 

Section 138 of the Act deals with 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 also provides for penalty 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.

This would also 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.

Minister of Law and Justice DV Sadananda Gowda on Thursday said in Lok Sabha it was mentioned that as per information furnished by Supreme Court, there is only one matter relating to prosecution under Negotiable Instruments Act pending with them. “As per information furnished by High Courts, 8,932 cases relating to Cheque dishonour under section 138 of Negotiable Instruments Act, 1881 were pending for more than five years as on December 31, 2014,” he said.