Govt likely to amend Negotiable Instruments Act in monsoon session

The government is looking to amend the Negotiable Instruments Act (NIA) in the upcoming monsoon session in a push for less-cash economy, and a draft Bill in this regard is being readied.

"We have worked out something. It will go for Cabinet approval and we are hoping to introduce it in the monsoon session," a senior Finance Ministry official said.

However, the official did not share details.

Finance Minister Arun Jaitley had made an announcement to this effect in the Budget 2016-17.

"As we move faster on the path of digital transactions and cheque payments, we need to ensure the payees of dishonoured cheques are able to realise the payments. The government is, therefore, considering the option of amending the Negotiable Instruments Act suitably," Jaitley had said.

In 2015, Parliament passed an amendment to the Negotiable Instrument Act, providing for the filing of cheque bounce cases at the place where a cheque is presented for clearance and not the place of issuance.

The amendments in the Act had implications for over 18 lakh cheque bounce cases pending in various courts.

Jaitley had said that "after cheque bounce, the litigation process is very complex and takes time. So, for traders with a bounced cheque, litigation takes a long time to recover the money".

There were some suggestions that the persons whose cheques bounce should be allowed to defend the case only after depositing the money in the court first, according to the minister.