Lok Sabha passes Negotiable Instruments (Amendment) Bill, 2017

Jul 25, 2018 15:36 IST
Lok Sabha passes Negotiable Instruments (Amendment) Bill, 2017

The Lok Sabha on July 23, 2018 passed the Negotiable Instruments (Amendment) Bill, 2017 that seeks to amend the Negotiable Instruments Act, 1881.  The Act has amended to deal firmly with cheque bounce cases.

The Bill was introduced in Lok Sabha on January 2, 2018.   

Provisions of the Bill

The Bill defines promissory notes, bills of exchange, and cheques.  

It also specifies penalties for bouncing of cheques and other violations with respect to such negotiable instruments.

• Interim compensation:  The Bill inserts a provision allowing a court trying an offence related to cheque bouncing, to direct the drawer to pay interim compensation to the complainant. The interim compensation will not exceed 20 percent of the cheque amount.

• Deposit in case of appeal:
  The Bill inserts a provision specifying that if a drawer convicted in a cheque bouncing case files an appeal, the appellate court may direct him to deposit a minimum of 20 percent of the fine or compensation awarded by the trial court during conviction.  

• Returning the interim compensation: 
In case the drawer is acquitted (during trial or by the appellate court), the court will direct the complainant to return the interim compensation (or deposit in case of an appeal case), along with an interest.  This amount will be repaid within 60 days of the court’s order.

Important Terms

Negotiable Instruments

Negotiable Instruments refers to any legal documents like cheques, promissory notes, bill of exchange etc that promise to pay specific amount of money to bearer or holder of instrument or person whose name is written on instrument, either on demand or on specified time.

Promissory Note

A promissory note is that written document by way of which a written promise to pay a certain amount of money taken/levied from the payee is made.

Bill of Exchange

A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money to the bearer of the instrument at a predetermined future date.


A cheque is a bill of exchange drawn on a specified banker, and not expressed to be payable otherwise than on demand             


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