Govt notifies new norms to deal with cheque bounce cases

Under the new norms, a case can be filed where the cheque was presented, instead of where it was issued

The government has notified the Negotiable Instruments (Amendment) Bill, 2015 which allows filing cheque bounce cases in a court at a place where the cheque was presented for clearance and not the place of issue.

The Negotiable Instruments (Amendment) Bill, 2015 was passed by Parliament in the recently concluded Winter Session.

"The provisions of the Negotiable Instruments (Amendment) Act, 2015 shall be deemed to have come into force on the 15th Day of June, 2015, the day on which the Negotiable Instruments (Amendment) Ordinance, 2015 was promulgated to further amend the Negotiable Instruments Act, 1881," the Finance Ministry said.

There are an estimated 18 lakh cases of bounced cheques across the country, of which about 38,000 are pending in High Courts. Some litigants have to travel to different places from where the cheques were issued and not honoured.

The law 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. It will also result in fast prosecution of offenders.

The legislation also mandates centralisation of cases against the same drawer.

The Act has also repealed an ordinance which was re-promulgated earlier. The President had promulgated the ordinance twice - in June and September last year.

"The Negotiable Instruments (Amendment) Act, 2015 is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 138 of the Negotiable Instruments Act, 1881," the statement said.

The clarification of jurisdictional issues may be desirable from the equity point of view as this would be in the interests of the complainant and would also ensure a fair trial.

Further, the clarity on jurisdictional issue for trying the cases of cheque bouncing would increase the credibility of the cheque as a financial instrument.

"This is expected to help the trade and commerce in general and allow the lending institutions, including banks, to continue to extend financing to the productive sectors of economy, as the process of pursuing the cheque bouncing cases relating to loan default has been made simpler and efficient...," it added.

Section 138 of the Negotiable Instruments Act, 1881 deals with the offence pertaining to dishonor of cheque on account of insufficiency of funds in the drawer's account.