Union Government gives nod to promulgation of Ordinance to amend Negotiable Instruments Act, 1881

Union Government has given nod for promulgation of Ordinance to amend Negotiable Instruments Act, 1881.

Decision in this regard was Union Cabinet meet chaired by Prime Minister Narendra Modi in New Delhi.

The ordinance paves way for filing of cheque bounce cases in place where the cheque was issued. This move that will benefit around 18 lakh people involved in such cheque bounce cases.

In May 2015, The Negotiable Instruments (Amendment) Bill, 2015 was passed in Lok Sabha. However the bill was not able pass in Rajya Sabha where ruling NDA government is in minority.

Background

  • In 2014, Supreme Court had ruled that cases against those having defaulted on their cheque payments only need be filed in courts under which jurisdiction of the bank account of the accused fell.
  • However, this ruling was not payee-friendly. So in order to protect of payee Union government brought amendment bill to by-pass the court’s order.

About Negotiable Instruments (Amendment) Bill, 2015

  • The amendment bill adds provision to specify the territorial jurisdiction of the courts in cases related to bouncing of cheques which was not present in the parent Act.
  • It says that cases in this regard need to be filed only in a court in whose jurisdiction the bank branch of the payee lies.
  • It also adds provision related to more than one case is filed against the same person before different courts for bouncing of cheques.
  • In this matter, the case will be transferred to the court that has appropriate jurisdiction. The bill also amends the definition of cheque.
  • Now it defines it as cheque in the electronic form which is signed in a secure system with a digital signature or using electronic system and drawn in electronic medium using any computer resource.

About Negotiable Instruments Act, 1881

The Act defines bills of exchange, promissory notes, cheques and creates penalties for issues such as bouncing of cheques. It also specifies circumstances under which complaints for cheque bouncing can be filed.

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