Amendments in NI Act come into force thru Ordinance
THE President has promulgated the Negotiable Instruments (Amendment) Ordinance, 2015.
The Negotiable Instruments Act is one of our oldest existing statutes, having been enacted in 1881. Some years ago when I was in possession of a dishonoured cheque, the first problem was to find the jurisdictional court where I could file the complaint under Section 138 of the NI Act.
The Supreme Court in a major decision last year held that once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case would be determined by reference to the place where the cheque is dishonoured.
Pursuant to the judgment of the Supreme Court, representations have been made to the Government by various stakeholders, including industry associations and financial institutions, expressing concerns about the wide impact this judgment would have on the business interests as:
1. it will offer undue protection to defaulters at the expense of the aggrieved complainant;
2. it will give a complete go-by to the practice /concept of 'Payable at Par cheques' and would ignore the current realities of cheque clearing with the introduction of CTS (Cheque Truncation System) where cheque clearance happens only through scanned image in electronic form and cheques are not physically required to be presented to the issuing branch (drawee bank branch) but are settled between the service branches of the drawee and payee banks;
3. it will give rise to multiplicity of cases covering several cheques drawn on bank(s) at different places; and
4. adhering to it is impracticable for a single window agency with customers spread all over India.
To address the difficulties faced by the payee or the lender of the money in filing the case under section 138 of the Act, because of which, large number of cases are stuck, the jurisdiction for offence under section 138 has been now clearly defined.
The Negotiable Instruments (Amendment) Ordinance, 2015 provides for the following, namely:-
1. Trial of cases only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated;
2. Stipulating that where a complaint has been filed against the drawer of a cheque in the court having jurisdiction under the new scheme of jurisdiction, all subsequent complaints arising out of section 138 of the said Act against the same drawer shall be filed before the same court, irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court;
3. Stipulating that if more than one prosecution is filed against the same drawer of cheques before different courts, upon the said fact having been brought to the notice of the court, the court shall transfer the case to the court having jurisdiction as per the new scheme of jurisdiction; and
4. Amending Explanation I under section 6 of the said Act relating to the meaning of expression "a cheque in the electronic form", as the said meaning is found to be deficient because it presumes drawing of a physical cheque, which is not the objective in preparing "a cheque in the electronic form" and inserting a new Explanation III in the said section giving reference of the expressions contained in the Information Technology Act, 2000.
The Government expects that the amendments to the Negotiable Instruments Act, 1881 would help in ensuring that a fair trial of cases under section 138 of the said Act is conducted keeping in view the interests of the complainant by clarifying the territorial jurisdiction for trying the cases for dishonour of cheques.
And as the President is satisfied that circumstances exist which render it necessary for him to take immediate action, he has promulgated the Ordinance.