Cabinet nod for ordinance to amend Negotiable Instruments Act

The union cabinet chaired by Prime Minister Narendra Modi on Wednesday decided to promulgate the Negotiable Instruments (Amendment) Ordinance, 2015 to clarify the jurisdictional issue for filing of cheque dishonour cases.

The proposed amendments to the Negotiable Instruments Act, 1881 are focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 138 of the act, said a cabinet communique.

The ordinance provides the jurisdiction for filing of cheque dishonour cases will only be a court within whose local jurisdiction the bank branch of the payee where he delivers the cheque for payment is located.

Further, where a complaint has been filed against the drawer of a cheque in the court having jurisdiction under the new scheme of jurisdiction, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court, irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court or not.

It has also been provided that if there are more than one prosecution cases against the same drawer of cheques before different courts, the court shall transfer the case to the court having jurisdiction.

The government is resorting to the ordinance route as though the Negotiable Instruments (Amendment) Bill, 2015 was passed in the Lok Sabha this May, but not by the Rajya Sabha which was adjourned sine die on May 13, thus meaning it could not be enacted.

According to the government, the clarity on jurisdictional issues for trying cheque bouncing cases would increase the credibility of the cheque as a financial instrument.

While the substantive portion of the Bill for determination of the jurisdiction under section 138 remains the same that two distinct situations of payment of cheque (i) by submitting the same for collection through an account or (ii) payment of a cheque otherwise through an account, that is, when cheques are presented across the counter of any branch of drawee bank for payment, are covered under the ordinance.