India: Statutory Penalties for Cheque Bouncing Cases: The Negotiable Instruments (Amendment) Bill

August 22, 2018
Parliament of an India

Recently, the Negotiable Instruments (Amendment) Bill, 2018 was passed by both the houses of Parliament, the Rajya Sabha and the Lok Sabha. The amendment was introduced ‘with a view to address the issue of undue delay in final resolution of cheque dishonor cases so as to provide relief to payees of dishonored cheques and to discourage frivolous and unnecessary litigation which would save time and money’.

The amendment enables filing of cheque bounce cases in the place where the cheque was presented for clearance or payment and not the place of issue, and thereby, seeks to overturn a Supreme Court ruling, which said that the cases have to be initiated where the cheque-issuing branch was located. [1]

Section 143A was added in the new Act, which will empower the Court to order payment of interim compensation by the drawer of the cheque to the complainant. Not exceeding more than 20% of the cheque amount can be now paid as an interim compensation in cases where the accused does not plead guilty in a summary trial or summons case. The provision requires the interim compensation to be paid within a period of 60 days of the order. The provision further states that the interim compensation so received has to be returned by the complainant along with interest at bank rates as prescribed by the Reserve Bank of India, if the accused is acquitted after trial.

The amendment further empowered the Appellate Court, by adding another Section 148, to direct a deposit of a minimum of 20% of the cheque amount in appeal by the drawer against conviction, within a period of 60 days. The provision also states that, the amount can later be released to the complainant, and if the appeal would be allowed it would be returned to the accused with interest.

The amendment is foreseen to have strong implications on the various pending cheque bouncing cases.



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