Negotiable Instruments Act

The Central government has notified the Negotiable Instruments (Amendment) Bill, 2015 which allows filing cheque bounce cases in a court at a place where the cheque was presented for clearance and not the place of issue. A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document.

The Negotiable Instruments (Amendment) Bill, 2015, was passed by the Parliament in the recently concluded Winter Session of the Parliament. The Negotiable Instruments (Amendment) Act, 2015, received the assent of the President on the 26th December, 2015, and has been published in the Gazette of India. It is deemed to have come into force on the 15th Day of June, 2015, the day on which the Negotiable Instruments (Amendment) Ordinance, 2015, was promulgated to further amend the Negotiable Instruments Act, 1881.

The Negotiable Instruments (Amendment) Act, 2015, is focused on clarifying the jurisdiction related issues for filing cases for offence committed under Section 138 of the Negotiable Instruments Act, 1881. It facilitates filing of cases only in a court within whose local jurisdiction the bank branch of the payee, where the payee delivers the cheque for payment through his account, is situated, except in case of bearer cheques, which are presented to the branch of the drawee bank and in that case the local court of that branch would get jurisdiction.

It provides for retrospective validation for the new scheme of determining the jurisdiction of a court to try a case under Section 138 of the Negotiable Instruments Act, 1881. It also mandates centralisation of cases against the same drawer. The object of the Negotiable Instruments Act, 1881 is to encourage the usage of cheque and enhance the credibility of the instrument so that the normal business transactions and settlement of liabilities could be ensured.

Section 138 of the Negotiable Instruments Act, 1881 deals with the offence pertaining to dishonor of cheque, drawn for discharge of any debt or other liability, on account of insufficiency of funds in the drawer’s account or on account of the fact that the cheque amount is more than the amount agreed to be paid by the bank, and provides for penalties for such dishonour.