December,31,2015: People can now file cheque bounce cases at the place where the cheque is presented for clearance and not at the place of issue, as per the new law which got President Pranab Mukherjee’s assent recently.
According to the notification published in the official Gazette dated 29.12.2015 the Amendment shall be deemed to have come into force on the 15th day of June, 2015. The Negotiable Instruments (Amendment) Act 2015 came in to force with retrospective effect.
There are an estimated 18 lakh cheque bounce cases across the country, of which about 38,000 are pending in High Courts. Some litigants have to travel to different places from where the cheques were issued and not honoured.
The legislation 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. It will also result in fast prosecution of offenders. 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.
As per the Amendment, ‘The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,—
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated’.
The Negotiable Instruments (Amendment) Bill, 2015 was passed by the Parliament in the recently concluded Winter Session. The Act has also repealed an ordinance which was re-promulgated earlier.
The President had promulgated the ordinance twice – in June and September this year. 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 institutions, 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.
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- Negotiable Instruments (Amendment and Miscellaneous Provisions) Act,2002
- Negotiable Instruments (Amendment) Act,2015
Read Full Text of the Notification here-