Introduction
The Negotiable Instruments (Amendment) Bill was introduced in the Lok Sabha on January 2nd, 2018. It was notified in the official gazette after the assent of the President on August 2nd, 2018. The insertion of new provisions in the Negotiable Instruments Act aims at reducing the undue delay in cheque dishonor cases. It creates a provision for payment of interim compensation to the complainant. It is believed that this amendment will strengthen the credibility of cheques and promote ease of trade.
The reason behind the Amendment
The Negotiable Instruments Act was enacted to consolidate the legal provisions pertaining to:
(i) Cheques
(ii) Bills of exchange and
(iii) Promissory notes and to provide swift disposal of cases relating to dishonor of cheques. Under the provisions of this act, if cheque drawn by an individual on an account with a bank maintained by him is declined by it, then the drawee (receiver of the cheque) has the right to initiate criminal proceedings against the drawer of the cheque before the judicial magistrate of the first class in accordance to the Code of Criminal Procedure, 1973.
The Act aimed to protect the interests of the recipients of cheques, but it failed to have a deterrent effect on the drawers. Reprobate issuers of the cheques utilized the absence of an effective mechanism to prevent dishonor of cheques and were also able to easily adapt delaying tactics. The pendency of the countless number of cheque bounce cases resulted in the legislative introducing an amendment with stringent measures to address delays in resolution claims and prevention of dishonor of cheques.
Also Read: What are the legal remedies available for a false case of Section 138 NI Act?
Amendments:
The Negotiable Instruments Amendment Act, 2018 consists of two new significant additions to the original act i.e. Section 143A and 148.
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Section 143A– Empowers the Court to order the issuer to pay interim relief to the complainant.
The Court empowered to order the drawer of the cheque to pay a maximum interim compensation of 20% of the amount of the cheque. This compensation must be paid in 60 days from the date of the order which may be extended by another 30 days subject to adequate reasons. In the case where the issuer of the cheque gets an acquittal, the payee may be directed to refund the amount along with the prevailing interest rate. No such relief was available to the drawee prior to this amendment.
In this way, the legislation protects not only the rights of the drawee but also those of the innocent issuers. By the deduction of the interim relief, it would make the final compensation.
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Section 148–This provision extends protection to the appeal period.
The Appellate Court is given the authority to order the issuer of the cheque to deposit an amount, a minimum of 20% of the compensation awarded by the magistrate. This is not a prerequisite to the filing of an appeal but can be ordered anytime during the pendency. This amount will be in addition to the amount already paid under section 143A. However, the Court must direct the complainant to repay the amount with interest if it acquits the appellant. This deposit must be paid within 60 days from the date of the order. However, an extension of 30 days with subject to adequate justification can be granted.
Conclusion
This is a great attempt to provide relief to the payee who is stuck amidst long litigation battles. The percentage of interim relief although low is beneficial to the drawee. It is a positive step by the legislature to protect the rights of drawees of cheques. Also, it promotes ease of doing business.
By Aryan Dhingra,
B.B.A LLB, 2nd Year student of OP Jindal Global University