September,23,2015: In a big relief to about 18 lakh people who have to travel long distances to deal with cheque bounce cases, President has re-promulgated an ordinance that will make prosecution easier by allowing filing of cases where cheques are presented for receiving payments.
This is for the second time in over three months that President Pranab Mukherjee has promulgated the Negotiable Instruments (Amendment) Second Ordinance, 2015, a notification issued by the government on Tuesday said.
As Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action, the ordinance was re-promulgated, it said.
There are an estimated 18 lakh people battling cheque bounce cases across the country. Some of them have to travel to different places from where the cheques were issued and not honoured.
The Union Cabinet had on September 16 approved the re-promulgation of the ordinance. Earlier, the President had on June 15 promulgated the ordinance.
The ordinance was necessitated as an amendment bill-- Negotiable Instruments (Amendment) Bill, 2015-- to help the litigants in the cheque bounce case was passed by Lok Sabha in May this year but it could not go through Rajya Sabha in the Monsoon session.
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.
"The clarity on jurisdictional issues 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 the lending institution, including banks, to continue to extend financing to the economy, without the apprehension of loan default on account of bouncing of a cheque," a statement issued by the government had said.
On 22 September 2015, when President of India promulgated a new ordinance, namely, the Negotiable Instruments (Amendment) Second Ordinance, 2015, it was ordered to be deemed to have come into existence with effect from 15 June 2015, i.e., the date from which the first such Ordinance had come into effect. This will ensure continuity from the first such ordinance issued on 15 June 2015. This means that the period from 31 August 2015 to 22 September 2015, during which there was no such Ordinance in operation, shall also be deemed to have been covered under this new Ordinance issued on 22 September 2015
The provisions of this new Ordinance lay down as to where (i.e., in which court) a cheque dishonour case is required to be filed and also about the transfer of the existing cheque bounce cases registered under Section 138 of the Negotiable Instruments Act, 1881. The provisions under the new Ordinance are the same as under the first such ordinance issued on 15 June 2015
This means that the jurisdiction of filing cheque dishonour cases under Section 138 of the N.I. Act will now be governed by the provisions of this new Ordinance as under:
Now a cheque bouncing case can be filed only in the court at the place where the bank in which the payee has account is located. For example, if you are based at Delhi and you have an account in a bank in a particular area of Delhi. You receive a cheque from someone in Mumbai. You present your cheque in Delhi in the bank where you have your account. Now, if this cheque is dishonoured, then the cheque bounce case can be filed only in Delhi in the court which has jurisdiction over the area where your bank is located.
Secondly, once you have filed a cheque bounce case in one particular court at a place in this manner, subsequently if there is any other cheque of the same party (drawer) which has also bounced, then all such subsequent cheque bounce cases against the same drawer will also have to filed in the same court (even if you present them in some bank in some other city or area). This will ensure that the drawer of cheques is not harassed by filing multiple cheque bounce cases at different locations. So, even multiple cheque bounce cases against the same party can be filed only in one court even if you present the cheques in different banks at different locations.
Thirdly, all cheque bounce cases which are pending as on 15 June 2015 in different courts in India, will be transferred to the court which has jurisdiction to try such case in the manner mentioned above, i.e., such pending cases will be transferred to the court which has jurisdiction over the place where the bank of the payee is located. If there are multiple cheque bounce cases pending between the same parties as on 15 June 2015, then all such multiple cases will be transferred to the court where the first case has jurisdiction as per above principle.
The new Ordinance specifically mentions that the first such ordinance came into existence with effect from 15 June 2015, that the Bill to replace this first ordinance has been passed by the Lok Sabha but it is still pending before the Rajya Sabha, and that the Parliament is not in session due to which it is necessary to promulgate this new Ordinance.
Though the Government has delayed this new Ordinance by about 22 days, it is expected to bring some clarity on the issue of territorial jurisdiction for filing cheque bouncing cases under Section 138 of the N.I. Act.
NI Act Ordinance Notification
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