The government today approved a proposal to promulgate the Negotiable Instruments (Amendment) Ordinance, 2015 -- which provides for filing of cheque bounce cases at the place where the cheque was issued -- in a move likely to benefit 18 lakh people.
"The Union Cabinet, chaired by Prime Minister Narendra Modi, has given its approval for the proposal to promulgate the Negotiable Instruments (Amendment) Ordinance, 2015," an official statement said.
Negotiable Instruments (Amendment) Act, 2015 was passed in the Lok Sabha in May, seeking to overturn a Supreme Court ruling of 2014 which said that the case has to be initiated where the cheque-issuing branch was located.
However, it could not be approved by Rajya Sabha, necessitating an ordinance.
It said that the clarity on jurisdictional issues for trying cases of cheque bouncing would increase the credibility of the cheque as a financial instrument.
"This would help trade and commerce in general and allow the lending institution, including banks, to continue to extend financing to the economy, without the apprehension of loan default on account of bouncing of a cheque," it added.
In view of the urgency to create a suitable legal framework for determination of the place of jurisdiction for trying cases of dishonour of cheques under section 138 of the Negotiable Instruments (NI) Act, the government has decided to amend the law through the Negotiable Instruments (Amendment) Ordinance, 2015, it said.
"The objective is to ensure that a fair trial is conducted keeping in view the interests of the complainant by clarifying the territorial jurisdiction for trying the cases for dishonour of cheques," it said.
Section 138 of the NI Act deals with the offence pertaining to dishonour of cheque for insufficiency etc, of funds in the drawer's account on which the cheque is drawn for the discharge of any legally enforceable debt or other liability.
The objective of the Act is to encourage the usage of cheques and enhancing the credibility of the instrument so that the normal business transactions and settlement of liabilities can be ensured.
