Cabinet approves amendment in the law relating to cheque bounce cases

The Cabinet has on Friday approved an amendment in the Negotiable Instruments Act 1881, to allow payment of compensation to the payee in a cheque dishonor case. The amendment is proposed with a view to disallow unscrupulous elements holding payments and to prevent long pending trials. This amendment is likely to enable the courts to provide interim compensation to the payee of a cheque. The amount of compensation will be a portion of cheque that is bounced due to insufficient funds in the account of the drawer. However, if the case is decided in favour of the drawer, then the court may ask the payee to repay the amount that has been paid to him as a part of interim compensation. Similarly, if the case goes to the appellate board, it may ask the payee to deposit a part compensation amount so awarded by the trial courts. Union Law Minister, Ravi Shankar Prasad said that the present amendment will address various representations made by the public and trading companies. It would provide justice to the payees who spend a lot of time and resources to get their money back in cheque bounce case. The minister also said that a mechanism will be set up that will expeditiously deal with the cheque dishonor cases in a fast track manner. And the repeated offenders will have to undergo severe punishments. Cheque dishonour cases occur when the person in whose name the cheque is issued is refused the payment of money by the bank due to insufficient funds in the bank account of the person issuing the cheque. The offence of cheque bounce is covered under Section 138 of the Negotiable Instruments Act. However, the entire process of getting back the money is quite long, were the payee has to first give a notice to the drawer and if the drawer fails to pay the money within the stipulated time then the payee can file a case against him. The whole process causes incurable loss and inconvenience to the payee and erodes the credibility of the cheques to a large extent. Thus, the proposed amendment will act as a sense of relief to the payees and it is also in line with the government's effort to make India a cashless economy. The amendment will be presented in the winter session of the Parliament.