The Union Cabinet on Wednesday approved a proposal to amend the Negotiable Instruments Act so as to clarify on jurisdictional issues for trying cheque bouncing cases. The main amendment is the stipulation that the offence of rejection/return of cheque under section 138 of Negotiable Instruments Act 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.

The clarity on jurisdictional issue for trying cases of cheque bouncing would increase the credibility of the cheque as a financial instrument, said an official release. 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, the release added.

Section 138 of the NI Act deals with the offence pertaining to dishonour of cheque for insufficiency, etc of funds in the drawer’s account on which the cheque is drawn for the discharge of any legally enforceable debt or other liability.

Action will be initiated to introduce the Negotiable instruments (Amendment) Bill, 2015 in Parliament in the second phase of the current session, the release said.

Section 138 provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. The object of the NI Act is to encourage the usage of the cheque and enhancing the credibility of the instrument so that normal business transactions and settlement of liabilities could be ensured.

comment COMMENT NOW