Complainant friendly amendment to S138 of NI Act is introduced in Loksabha

Bank branch where payee presents cheque will be jurisdiction of offence in the new Bill introduced in Lok Sabha

NEW DELHI, MAY 6:  

A Bill to amend the Negotiable Instruments Act to ensure “fair trial” of cheque-bounce cases was introduced in the Lok Sabha on Wednesday.

Keeping in view the interests of complainants, the Negotiable Instruments (amendment) Bill, 2015 has clarified the territorial jurisdiction for trying cases of cheque dishonour.

Once this Bill is enacted into law, all cheque-bounce cases can be filed only by a court within whose local jurisdiction the bank branch of the payee is situated, and where the payee presents the cheque for payment.

The amendment is expected to help fast-track resolution of cheque-bounce cases while removing the ambiguity on territorial jurisdiction for dishonour of cheques.

Apex court ruling

The Bill seeks to address the difficulties arising out of the Supreme Court judgment in the Dashrath Rupsingh Rathod versus State of Maharashtra case.

In this ruling, the apex court held that the territorial jurisdiction for dishonour of cheques is restricted to the court within whose local jurisdiction the offence was committed — which in the present context is where the cheque is dishonoured by the bank on which it is drawn.

Following this judgment, representations had been made to the Government by various stakeholders, including industry associations and financial institutions, expressing concerns about the impact the judgment will have on business interests.

It was submitted that the apex court judgment would offer undue protection to defaulters at the expense of the aggrieved complainant; will give a complete go-by to the practice of ‘payable at par cheques’; and would ignore the current realities of cheque clearing with the introduction of cheque truncation system.

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