The Cabinet today decided to bring in an ordinance to amend the Negotiable Instruments Act, which provides for filing of cheque bounce cases in place where the cheque was issued, a move that will benefit 18 lakh people.
"As you are aware of the Negotiable Instrument Amendment Ordinance, the Supreme Court had passed a judgement that if you receive a cheque from someone and the cheque gets bounced, then the jurisdiction for initiating action lies in the state where it was issued," Road Transport and Highways Minister Nitin Gadkari said after the Cabinet meeting.
"18 lakh such cases in various courts...Government had brought a Bill in this regard in Parliament. Rajya Sabha could not pass it, so to give relief to these people government has brought this ordinance," he said.
"So the Ordinance will benefit 18 lakh people," he added.
Also, if there were three cases of bounced cheque against one person, then all these cases could be brought in one place and clubbed, Gadkari said.
Negotiable Instruments (Amendment) Act, 2015 was passed in the Lok Sabha in May seeking to overturn a Supreme Court 2014 ruling said the case has to be initiated where the cheque-issuing branch was located.
The amendment passed by the Lok Sabha 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. If a complaint against a person issuing a cheque has been filed in the court with the appropriate jurisdiction, then all subsequent complaints against that person will be filed in the same court, irrespective of the relevant jurisdiction area.
When the lower house passed the bill in the Budget session, The NDA government had faced tough questions from its own members with some BJP MPs wondering if it would be used by corporates to harass the common man.
The Statement of Objects of the bill stated that following the apex court ruling, representations have been made to the government by various stakeholders, including industry associations and financial institutions, expressing concerns about the wide impact the judgement would have on the business interests as it will offer undue protection to defaulters at the expense of the aggrieved complainant.