Negotiable Instrument Amendment Act 2018

As we all knows that dishonor of cheque is a criminal offence and punishable by imprisonment up to 2 years or with fine which may extend to twice the amount of the cheque or with both. Chapter XVII (which criminalize cheque bounce) was incorporated for penalties in case of dishonor of cheque due to insufficiency of funds in the account of the drawer of the cheque in the year 1989, since provisions have been found deficient in dealing with dishonor of cheque, Government further amended Section 138, 141 & 142 of the Negotiable Instruments Act, 1881 in the year 2002 wherein 2 years imprisonment or fine upto twice the amount of cheque or with both was provided. 

As Central Government received several representations from the public including trading community relating to pendency of cheque dishoured cases in the Courts and delay tactics adopted by the unscrupulous drawers of the dishonoured cheque which is causing injustice to the payee and who has to spend considerable time and resources in court proceedings to realize the value of cheque. Further such delays compromise the sanctity of cheque transaction, thus, Government to give impetus to business had introduced a Bill inserting Section 143A in the Principal Act in Lok Sabha in the year 2017 which was passed by the Parliament on 26.07.2018. The Bill upon receipt of president accent was notified in the Gazette on 02.08.2018.

Section 143A provides that Court trying an offence under Section 138 may order the drawer of the cheque (Accused) to pay interim compensation of upto 20% of cheque amount to the Payee (Complainant) wherein the drawer (Accused) pleads to be "not guilty" upon framing of Notice/Charges. The interim compensation to be paid within 60 days from the date of the order by the court and Court may further extend this period by an additional time of 30 days' subject to the sufficient reasons being shown by the Accused. 

It also provides that in case of acquittal of the drawer (Accused) by the Court, the Payee/Complainant is required to repay the interim compensation as received during the pendency of the case to the drawer (Accused) along with such interest as may be fixed by the Reserve Bank of India at the beginning of the relevant financial year. This amount shall be repaid within 60 days of the court's order and this period may be further extended by another 30 days' subject to sufficient reasons being shown by the Complainant.

Therefore, if a cheque of Rs.100000/-  is returned due to “funds insufficient”, Payee has to sent a Demand Notice within 30 days of receipt of return memo from Bank, if Drawer fails to pay the cheque amount within 15 days of receipt of Notice, Payee has to present a Complaint with the jurisdictional Magistrate within 30 days after expiry of 15 day’s time to drawer to make payment (means within 45 days from service of notice to Drawer). Upon presentation of the Complaint with the Court, when Drawer appears before the Court and plead “not guilty”, Court can direct Drawer to pay interim compensation of Rs.20000 (Upto 20% of Cheque amount) to the Payee. If Court find drawer guilty, Court can sent him for imprisonment or impose fine or both. The fine amount shall be reduced by Rs.20000/- and if Court acquit the Drawer, Complaint has to return the amount to drawer within 60 days with interest as directed by the Court.

#ChequeBouncing #IndianCourts #NiAmendment2018

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