Latest amendments in the Negotiable Instruments Act.

The Negotiable Instruments Act, 1881 (the Act) was enacted to define and amend  laws relating to Promissory Notes, Bills of Exchange and Cheques. The said Act has been evolving from time to time so as to provide, inter alia, speedy disposal of cases relating to the offence of dishonour of cheques.

However, there has been an issue of pendency of cheque dishonour cases. This is because of the delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and the practice of obtaining stay on proceedings. As a result of this, injustice was being caused to the payee of a dishonoured cheque who had to spend considerable time and resources in court proceedings to realise the value of the cheque. Such delays compromised the sanctity of cheque transactions. Therefore in order to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money, the Negotiable Instruments (Amendment) Bill, 2017 which was passed by the Lok Sabha on July 23, 2018 and by Rajya Sabha on 27th, July 2018 was drafted. The new additions include:

Section 143A – Power to Direct Interim Compensation 

According to this new section,

  • Where the drawer of the cheque pleads not guilty to the accusation(s) made in the complaint in case of a summary trial or in a summons case.
  • Or, in any other case, upon framing of charge.

The court trying an offence under Section 138 (dishonour of cheque) may order the drawer of the cheque to pay interim compensation (only upto 20 percent of the amount of the cheque) to the complainant within 60 days from the date of order (maximum extension of 30 days by permission of court if there is a sufficient cause for delay)

In case the drawer of the cheque is acquitted, the court shall direct the complainant to repay the drawer, the amount of interim compensation, with interest (at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year) within 60 days from the date of the order (maximum extension of 30 days by permission of court if there is a sufficient cause for delay).

Also, the amount of fine imposed under Section 138 or compensation awarded under Section 357 of the Code of Criminal Procedure, 1973, shall be deducted from the amount already paid or recovered as compensation under this section.

Furthermore the interim compensation payable under this section may be recoverable as if it was a fine under Section 421 of the Code of Criminal Procedure, 1973.

Section 148 – Power of Appellate Court to order payment pending appeal against conviction.

Notwithstanding any of the provisions contained in the Code of Criminal Procedure, 1973, in case of an appeal by the drawer against the order of conviction under Section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of 20 percent of the fine or compensation awarded by the Trial Court. This amount shall be in addition to any interim compensation paid by the appellant under Section 143A.

This amount shall be deposited within 60 days (maximum extension of 30 days by permission of court if there is a sufficient cause of delay). The Appellate court may direct the release of the amount deposited by the appellant to the complainant at any time during the pendency of the appeal. Where the appellant is acquitted, the court shall direct the complainant to repay to the appellant, the amount so released, with interest (at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year) within 60 days from the date of the order (maximum extension of 30 days by permission of court if there is a sufficient cause for delay).

-Tushar Kaushik

 

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