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Lok Sabha Passes Bill Amending Negotiable Instruments Act

Loksabha passed a bill aiming at allowing a court to try offences related to cheque bounce expeditiously and direct the drawee to pay a minimum of 20 percent of the cheque amount as interim compensation.

Parliament Passes Negotiable Instruments Amendment Bill With Provision For Interim Compensation.

The Negotiable Instruments (Amendment) Bill, 2018, which was passed in the Lok Sabha on July 23, was passed by the Rajya Sabha by a voice vote.

The Bill has a provision for allowing a court trying an offence related to cheque bouncing to direct the drawer (person who writes the cheque) to pay interim compensation to the complainant.

This interim compensation may be paid under certain circumstances, including where the drawer pleads not guilty of the accusation, will not exceed 20 per cent of the cheque amount, and will have to be paid by the drawer within 60 days of the trial court’s order to pay such compensation.

The government has said that the Bill is intended to address the issue of undue delay in final resolution of cheque dishonour cases arising out of “delay tactics of unscrupulous drawers of dishonoured cheques” due to easy filing of appeals and obtaining stay on proceedings.

Moving the bill for consideration and passage, Minister of State for Finance Shiv Pratap Shukla said presently over 16 lakh cases of cheque bounce are pending in subordinate courts.

Moreover, 34,000 such cases have gone to the high courts following appeal.

“We have brought the amendments to ensure that people have trust and faith on issuing cheques,” the Minister said, adding that 1881 law on negotiable instruments has been amended from time to time.

The latest amendments aims to insert Section 143A and Section 148 in the Act to provide that a court trying a cheque bounce offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant.

The drawer, who pleads not guilty of the accusation, will have to pay at least 20 per cent of the cheque amount as interim compensation within 60 days of the trial court’s order.

An additional 20 per cent compensation will have to be paid if the drawer goes for an appeal.

If the drawer is acquitted, the court may direct the payee to repay the amount paid as interim compensation with interest.

Cutting across the party line, members of opposition parties including Congress supported the bill but suggested stringent penalties to curb cheque payment defaults.

They said the government should come out with laws like in France and the UAE where a person who defaults on cheque payments is barred from issuing a cheque for five years.

This has proved to be an effective deterrent in these countries, they said.

The members also suggested that the government make cheque payment default a non-bailable offence.

Participating in the debate on the bill, Congress leader Madhusudan Mistry said the penalty proposed was not that deterrent to curb fraudulent practices.

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