Union Cabinet approved proposal to promulgate the Negotiable Instruments (Amendment) Ordinance

The Union Cabinet, chaired by the Prime Minister Narendra Modi, on 10 June 2015 gave its approval for the proposal to promulgate the Negotiable Instruments (Amendment) Ordinance, 2015.

The intended ordinance will amend the Negotiable Instruments Act, 1881 (The NI Act) that is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 138 of the NI Act.

Earlier on 13 May 2015, the Negotiable Instruments (Amendment) Bill, 2015 was passed in Lok Sabha with a voice vote, but was not introduced in the Rajya Sabha.

Key Features of Negotiable Instruments (Amendment) Bill, 2015
• 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.
• If more than one case is filed against the same person before different courts, the cases will be transferred to the court with the appropriate jurisdiction.
• It seeks to amend the definition of cheque in the electronic form. While the parent act defines it as a cheque containing the exact mirror image of a paper cheque and generated in a secure system using a digital signature, the amendment bill re-defines it as a cheque drawn in electronic medium using any computer resource and which is signed in a secure system with a digital signature, or electronic system.

Necessity for Negotiable Instruments (Amendment) Bill, 2015
The Negotiable Instruments Act, 1881 defines promissory notes, bills of exchange, cheques and creates penalties for issues such as bouncing of cheques. Though, the act specifies circumstances under which complaints for cheque bouncing can be filed (Section 138) but does not specify the territorial jurisdiction of the courts where such a complaint is to be filed.

In a bid to overcome the legal lacunae, the Supreme Court of India (SC) in August 2014 issued an order stating that cases against those having defaulted on their cheque payments could only be filed in courts under which jurisdiction of the bank account of the accused fell. However, since this order is not Payee-friendly (who happens to be the victim) the government has brought the present amendment bill to by-pass the court’s order.

The new law is also intended to help consolidate the cases and aid the judicial system, which is currently dealing with 21 lakh cheque-bounce cases with 259 courts hearing them, exclusively.

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