Government proposes to bring ordinance to enact the Negotiable Instruments (Amendment) Act 2015

In order to prevent the piling up of cheque bounce cases, the government is mulling to promulgate an ordinance to make amendment in the governing act of the Negotiable Instruments Act, 1881. The proposed amendment will provide for filing of such cases in place where the cheque is presented. An amendment bill, already passed in the Loksabha, seeks to overturn a 2014 Supreme Court ruling, which said that the case has to be initiated where the cheque-issuing branch was located. Sources in the government said if the ordinance is issued, it may carry certain suggestions made by the Reserve Bank of India which will be different from the bill now pending in the upper house, Rajya Sabha."To address the difficulties faced by the payee or the lender of the money in filing the case under Section 138 (of the Act), because of which large number of cases are stuck, the jurisdiction for offence has been clearly defined keeping in view the interest of complainants," to quote Finance Minister Arun Jaitley while introducing the bill.The Statement of Objects of the bill states that following the apex court ruling, representations have been made to the government by various stakeholders, including industry associations and financial institutions, expressing concerns about the wide impact the judgment would have on the business interests as it will offer undue protection to defaulters at the expense of the aggrieved complainant. Minister of State for Finance Jayant Sinha had told the Lok Sabha during the passage of the bill that the courts were currently dealing with 21 lakh cheque-bounce cases with 259 courts hearing them exclusively and the new law would help consolidate the cases and aid the judicial system.The Bill proposes to inserts a new sub-clause to the existing Section 142 [sub-clause (2)]. It reads as follows,“(2) The offence under Section 138 shall be inquired 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 Bill also introduces a new Section [142A] in the N.I Act. It reads as follows;“(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any other judgment, decree, order or directions of any court, all cases arising out of section 138 which were pending in any court, whether filed before it, or transferred to it, before the commencement of the Negotiable Instruments (Amendment) Act, 2015, shall be transferred to the court having jurisdiction under sub-section (2) of section 142 as if that sub-section had been in force at all material times.(2) Notwithstanding anything contained in sub-section (2) of section 142 of sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1), all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court.(3) If, on the date of commencement of the Negotiable Instruments (Amendment) Act, 2015, more than one prosecution filed by the same person against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section 142(2) before which the first case was filed as if that sub-section had been in force at all material times.”It was in Dashrath Rupsingh Rathod vs. State of Maharashtra a three Judge Bench of the Supreme Court held that a Complaint of Dis-honour of Cheque can be filed only to the Court within whose local jurisdiction the offence was committed, which in the present context is where the cheque is dishonoured by the bank on which it is drawn. The Court clarified that the Complainant is statutorily bound to comply with Section 177 etc. of the CrPC and therefore the place or situs where the Section 138 Complaint is to be filed is not of his choosing. Supreme Court in Dashrath Rupsingh Rathod Vs. State of Maharashtra & Anr. Overruled the two Judge Bench Judgment in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 wherein it was held that “the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts.A two Judge Bench of the Supreme Court recently dismissed the Special Leave Petition as withdrawn, filed against the Bombay High Court Judgment which held that dis-honour of “AT PAR” Cheque cases can be filed to the Court within whose local jurisdiction the nearest available branch of bank of the drawer situated explaining the Apex Court Judgment in Dashrath Rupsingh Rathod vs. State of Maharashtra. Earlier Supreme Court had stayed the Bombay High Court...

Government proposes to bring ordinance to enact the Negotiable Instruments (Amendment) Act 2015

Aishwarya Dhakarey

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Government proposes to bring ordinance to enact the Negotiable Instruments (Amendment) Act 2015

Aishwarya Dhakarey

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