President has promulgated Negotiable Instruments (Amendment) Ordinance, 2015

June,17,2015: After the Union Cabinet, chaired by the Prime Minister Narendra Modi, had given its approval for the proposal, President of India has promulgated Negotiable Instruments (Amendment) Ordinance, 2015 (6 of 2015).

The amendments to the Negotiable Instruments Act, 1881 (“The NI Act”) are focused on clarifying the jurisdiction related issues for filing cases for offence committed under Section 138 of the NI Act post the three Judge Bench of the Supreme Court judgment titled Dashrath Rupsingh Rathod vs. State of Maharashtra.

The clarification of jurisdictional issues was needed to safeguard the interests of the complainant.

Facts 

• Section 138 of the NI Act concerns offence pertaining to dishonour of cheque for insufficiency of funds in drawer’s account on which cheque is drawn for discharge of legally enforceable debt or liability

• This section provides penalties in case of cheque bouncing due to insufficiency of funds 

The Ordinance matches the Bill whereby determination of the jurisdiction of the cases under section 138 of the NI Act are identical, except that that two distinct situations:

- Payment of cheque by submitting the same for collection through an account

- Payment of a cheque otherwise through an account, that is, when cheques are given across the counter of any branch of drawee bank for payment.

 The Bill provides for the following conveniences:

• Filing of cases only by a court within whose local jurisdiction the bank branch of the payee, where the payee delivers the cheque for payment is situated.  
• When a complaint has been filed against the drawer of a cheque in the court having jurisdiction under the new scheme of jurisdiction, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court, regardless of whether those cheques were presented for payment inside the territorial jurisdiction of that court.
• If more than one prosecution is filed against the same drawer of cheques in front of different courts, the courts shall transfer the case to court possessing jurisdiction under the new scheme when it is brought to their notice.
• Proposed amendments to Negotiable Instruments, 1881 has focused on clarification of jurisdiction pertaining to issues for filing cases for offences committed under S138 of the NI Act
•  Clarification of jurisdictional issues is ideal from the equity viewpoint
•  It is in the interests of the complainant
•  It will also ensure fair trial
•  It will increase the credibility of the cheque as a financial instrument 
•  It will help trade and commerce and allow lending banks to extend financing to the economy
•  This will ensure financing without apprehension of loan default on account of a bouncing cheque
•  This will also facilitate normal business transactions and settlement of liabilities
•  Numerous financial institutions and industry associations will be benefited by this ordinance
•  It also addresses the difficulties faced by the Payee or Lender of the money in filing a case under S138 of the NI Act

Ordinance  proposes to insert-  a new sub-clause to the existing Section 142 [sub-clause (2)]. It reads as follows,

“(2) The offence under Section 138 shall be inquired 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“

The Bill also introduces a new Section [142A] in the N.I Act. It reads as follows;

“(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any other judgment, decree, order or directions of any court, all cases arising out of section 138 which were pending in any court, whether filed before it, or transferred to it, before the commencement of the Negotiable Instruments (Amendment) Act, 2015, shall be transferred to the court having jurisdiction under sub-section (2) of section 142 as if that sub-section had been in force at all material times.

(2) Notwithstanding anything contained in sub-section (2) of section 142 of sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1), all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court.

(3) If, on the date of commencement of the Negotiable Instruments (Amendment) Act, 2015, more than one prosecution filed by the same person against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section 142(2) before which the first case was filed as if that sub-section had been in force at all material times.”
 

Negotiable Instruments (Amendment) Ordinance, 2015

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