oppn parties Cheque Bouncing: Parl Adds More Teeth to NI Act

News Snippets

  • Former Pakistani cricketer Shoaib Akhtar proposes an Indo-Pak ODI series to raise funds for fighting coronavirus
  • Maharashtra government says many Tablighi Jamaat members who attended the Markaz and returned have gone into hiding
  • West Bengal government identifies hotspots in Kolkata and the rest of the state, inclined to extend the lockdown in those places only
  • Prime Minister Modi holds a video conference with floor leaders of opposition parties, hints at extending the lockdown
  • UP seals hotspots and makes masks mandatory
  • Masks made compulsory in Mumbai, violators will be arrested
  • ICMR says an infected person can infect 406 people in 30 days without social distancing and lockdown
  • Stock markets make a smart recovery. Sensex up by record 2476 points on global cues
  • Schools, colleges and shopping malls likely to remain closed for a further period of one month, says empowered group of ministers
  • PM Modi tells BJP workers that India is in for a long battle against the coronavirus and there is no scope to feel tired or defeated
  • PM Modi asks ministers to focus on exports and new areas and sectors
  • PM Modi asks ministers to prepare business continuity plan post the lifting of the lockdown
  • Corona cases in India cross 4000 and the death toll stands at 124
  • The government decides to double the testing of corona suspects from 10000 now to 20000 in the next three days
  • Flipkart assures employees that there will be no job or salary cuts due to the COVID-19 pandemic
COVID-19: 773 new cases and 32 deaths in the last 24 hours, reports the health ministry
oppn parties
Cheque Bouncing: Parl Adds More Teeth to NI Act

By Sunil Garodia
First publised on 2015-12-08 17:59:33

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
The Rajya Sabha has passed a new bill that tweaks the Negotiable Instruments Act, bringing relief to millions of people who accept cheque payments in good faith for goods sold or services rendered, only to find them returned unpaid. The Lok Sabha had earlier passed the bill.

This bill provides that a cheque bouncing case can now be initiated in a court in the place where the branch of the bank of the payee is located. These cases are filed under Sec. 138 of the NI Act if the payee is an individual and Sec. 141 of the same Act against the managing director, if the payee is a limited company. Earlier, such cases were to be filed in the city where the branch of the bank of the issuer was located.

This resulted in huge problems for the creditor company or individual as they had to engage lawyers in a city or town they were not familiar with and had to send a representative with all papers and authority on each date of the case. This caused immense harassment and entailed uncalled for expenditure for people already suffering from non-payment of dues. The Supreme Court had earlier refused to change the law. The current bill was necessitated by the government view that the law needed change.

This is a welcome change that will add teeth to what is generally called the cheque bouncing law – meaning cases filed under Secs. 138 & 141. Previously, despite being at fault, the cheque issuer had the luxury of contesting the case from his own city. It was the payee who had to do all the running around, especially if he was from out of town. Now the shoe will be on the other foot, as it should be.

There are hundreds of reasons why a cheque can bounce. While it is very embarrassing for genuine businessmen when a cheque issued by them gets returned, the issue is amicably settled in most cases by either presenting the cheque once again or by paying cash against the bounced instrument. But it is the unscrupulous traders who cause immense harm to the system.

If a cheque bouncing issue reaches the courts under the above sections, it means that all the avenues of amicable settlement and payment were exhausted. The payer seemed intent on avoiding the payment and hence the payee was forced to file this criminal case. Otherwise, no businessman will ever think of suing a business partner for payment related issues.

Thus, if the intent of the payer is malafide, it makes sense that the payee should be able to file the case from his own city. That way, he can handle the case better and the payer will always think of settling the case early to avoid harassment, expenses and maybe subsequent arrest and hefty fines. The new bill will act as a good deterrent to habitual offenders.