After being passed by the Lok Sabha, the Negotiable Instruments (Amendment) Bill, 2017, is a step closer to becoming law. In the age of net banking, businesses across India use cheques, including post-dated ones, to make and receive payments from vendors, suppliers, and customers. In some cases, such cheques bounce and the matter ends up in court.
It is easy for the drawer of a dishonored cheque to file an appeal and obtain a stay on court proceedings. This reduces the credibility of cheques in the world of business.
Key Features of Bill:
The Bill inserts new Section 143 A in parent Act to allow court trying offense related to cheque bouncing to the direct drawer (a person who writes a cheque) to pay interim compensation to the complainant. This compensation may be paid under certain circumstances, including where drawer pleads not guilty of the accusation. It will not exceed 20% of cheque amount and will be paid by drawer within 60 days of trial court’s order to pay such compensation.
The Bill inserts another new Section 148-A in the parent act specifying that if drawer convicted in cheque bouncing case files appeal, the appellate court may direct him to deposit a minimum of 20% of fine or compensation awarded by the trial court during conviction. This amount will be in addition to any interim compensation paid by drawer during earlier trial proceedings.
In case drawer is acquitted during the trial or by an appellate court, then the court will direct the complainant to return interim compensation (or deposit in case of an appeal case), along with interest. This amount will be repaid within 60 days of court’s order.
It refers to any legal documents like cheques, promissory notes, bill of exchange etc which promises to pay bearer or holder of instrument or person whose name is written on the instrument-specific amount of money either on demand or after specified time i.e. on some future date.
The Negotiable Instruments Act, 1881 defines promissory notes, bills of exchange and cheques. It also specifies penalties for bouncing of cheques and other violations with respect to such negotiable instruments.