Breaking; Union Cabinet approves the promulgation of Negotiable Instrument (Amendment) Ordinance 2015

Union Cabinet Today has approved to promulgate the Negotiable Instruments (Amendment) Ordinance 2015 which redefined the Jurisdiction Clause in the Negotiable Instrument Act.A judicial limbo has covered courts of the nation as the Negotiable Instruments (Amendment) Ordinance, 2015, which was promulgated by the President of India on June 15 2015 at the instance of the Central Government, has lapsed on August 31 2015. It has caused a limbo in a large number of cheque bouncing (Dishonour of cheques) cases pending before various courts apart from a large number of cases that are in the process of being filed. The uncertainty is with regard to jurisdictional competency of a court to entertain a cheque dishonour case u/s 138 of the Negotiable Instruments Act, 1881.The Ordinances were promulgated u/a 123 of the Constitution. It wits as - “123. Power of President to promulgate Ordinances during recess of Parliament.—(1) If at any time, except when both Houses of Parliament are in session, the President is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him to require.(2) An Ordinance promulgated under this article shall have the same force and effect as an Act of Parliament, but every such Ordinance—(a) shall be laid before both Houses of Parliament and shall cease to operate at the expiration of six weeks from the reassembly of Parliament, or, if before the expiration of that period resolutions disapproving it are passed by both Houses, upon the passing of the second of those resolutions; and(b) may be withdrawn at any time by the President.Explanation.—Where the Houses of Parliament are summoned to reassemble on different dates, the period of six weeks shall be reckoned from the later of those dates for the purposes of this clause.(3) If and so far as an Ordinance under this article makes any provision which Parliament would not under this Constitution be competent to enact, it shall be void.”Dispute TimelineChronologically speaking, in the case of the Negotiable Instruments (Amendment) Ordinance, 2015, it was promulgated by the President of India on June 15 2015. The Parliament reassembled on July 21 2015 for the Monsoon session. Therefore, as per Art 123, this Ordinance shall cease to operate on the expiration of a period of 6 weeks w.e.f. July 21 2015. This means that this Ordinance lapsed on August 31 2015. During the Monsoon Session, the Negotiable Instruments (Amendment) Bill, 2015, that was based on the above Ordinance, was passed by the Lok Sabha on August 6 2015. However, this Bill was not passed by the Rajya Sabha. Therefore, the said Ordinance could not be replaced by the Parliament by passing the related Amendment Bill and a subsequent legislation.Judicial pronouncementsOn August 1 2014 the Supreme Court in Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129 delivered a landmark judgment on territorial jurisdiction as to dishonor of cheque cases. It was held that a cheque bouncing case can be filed only in a court which has the territorial jurisdiction over the place where the cheque is dishonoured by the bank on which it is drawn. Thus, if a cheque is drawn by a person on his bank account at Jaipur, the cheque dishonour case in respect of this cheque can be filed only in a court at Jaipur within whose territorial jurisdiction the said bank is located. Such a case cannot be filed in any other court at any other place. For example, if you are the payee of the cheque and if you present this cheque for clearing at Delhi, it cannot be filed at Delhi. Thus, the uncertainty about the place where such a case can be filed was removed. Further, as per this judgment, the payee of a cheque could not unnecessarily harass the drawer of the cheque by filing the cheque bouncing case at the place of his choice by deliberately choosing a different place for presenting the cheque or for sending the notice, etc.Subsequently, difficulties had cropped up about Dashrath Singh. This is so because the payee of the cheque had to file the case at the place where the drawer of the cheque has a bank account. Thus, if one resides at Jaipur and has a bank account in Jaipur, and he gets a cheque from a person from his bank account in Delhi, he’ll have to go to Delhi to file the case, even though the fault for cheque dishonour may be that of the person who gave him the cheque. Moreover, Dashrath Singh was also not clear on another issue as to what would happen in the case of a cheque which is “at par payable at all branches of the bank”. Within one month of the above SC decision, a decision of the Bombay High Court in the case of Ramanbhai Mathurbhai Patel v. State of Maharashtra [in Criminal Writ Petition No. 2362 of 2014] had created the same uncertainty again in respect of multiple-city cheques payable at par in all branches of the bank. This Bombay HC decision had laid down that the payee of a...

Breaking; Union Cabinet approves the promulgation of Negotiable Instrument (Amendment) Ordinance 2015

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