Cabinet approves changes in Negotiable Instruments Act

NEW DELHI: To check piling up of cheque bounce cases in various courts, the Cabinet today approved changes in Negotiable Instruments Act to provide for filing of such cases only in places where cheque is presented.

The move is aimed at fast tracking of resolution of cheque bounce cases while removing the ambiguities on jurisdictional issues.

"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," an official statement said.

The Negotiable instruments (Amendment) Bill, 2015 will be pursued in the ongoing session of Parliament, it added.

"The amendments are focused on clarifying jurisdiction related issues for filing cases of offence committed under Section 138 the Negotiable Instruments Act,1881 (NI Act)," the release after the Cabinet meeting said.

The main amendment included is the stipulation that the offence of rejection/return of cheque "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.

Section 138 of the NI Act deals with the offence pertaining to dishonour of cheque for insufficiency of funds in the drawer's account. It also provides for penalties in case of dishonour of cheques.

The amendments have been proposed in the backdrop of difficulties expressed by various stakeholders arising out of the recent legal interpretation of the place of jurisdiction for filing cases under the Section to be the place of drawers' bank by the Supreme Court.