The union cabinet on Wednesday said it has approved the proposal to introduce the Negotiable Instruments (Amendment) Bill, 2015 in the parliament.
The Bill is focused on clarifying jurisdiction related issues for filing cases of offence committed under Section 138 the Negotiable Instruments Act,1881 (NI Act).
"The main amendment included in this is the stipulation that the offence of rejection or return of cheque under section 138 of NI Act will be enquired into and tried only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment is situated," the government said in a statement.
Section 138 of the NI Act deals with offences pertaining to dishonour of cheque for insufficient bank balance of the account holder and others.
It provides for penalties 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," the statement said.
As per the government, the clarity on jurisdictional issue for trying cases of cheque bouncing would increase the credibility of the cheque as a financial instrument.
This would 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.
Action will be initiated to introduce the Negotiable instruments (Amendment) Bill, 2015 in Parliament in the second phase of the current Session of Parliament.
"Further, it has been provided that if more than one prosecution is filed against the same drawer of cheques before different courts, when this fact is brought to the notice of the court, the court shall transfer the case to the court having jurisdiction as per the new scheme of jurisdiction," the statement added.