#Negotiable #Instruments (Amendment) Bill, 2015 brings important #amendment shortly

This is the third major amendment in recent times to the Negotiable Instruments Act 1881, prompted by dishonour of cheques in lakhs, shaking the credibility of the instrument, confidence of stakeholders and choking courts.

Present Amendment:

The amendment adopts the basic principles laid down by the Supreme Court in the above case regarding jurisdiction of courts and improves upon it in the light of the representations made by various stakeholders, including industry associations and financial institutions. Complications had arisen because a cheque was issued in one place on one bank, and presented in another place to another bank. The payer company might be in one corner of the country and the payee might be in another. The payee therefore had to chase the accused in distant places and even if he won, appeals would be filed in another court and arguments will continue for years. The Supreme Court found that even high courts had differed on the question of the choice of courts which should try the case. The present amendment removes such legal obstacles and speeds up the trial.

Procedure:

The new provision states that the holder of the cheque can file a criminal complaint before a magistrate where he resides and tendered the cheque. He need not go to the place where the cheque was issued or other courts. After this clarification, there is a single place to file the complaint. Litigation expenses will come down, and the drawers of cheques, including company directors will be more careful while signing such cheques. The government feels that these procedural changes will be fair to both parties.

Status of the cases already pending:

According to the newly introduced Section 142A of the Act, all cases which were pending in any court, whether filed before it or transferred to it shall go before the court having jurisdiction under the new procedure.

Other important change in the amendment:

The new law also cures a deficiency in the definition of “a cheque in the electronic form”. The law as it stood presumed drawing of a physical cheque and signature. With the advance in technology it needed to be updated. Therefore, it is explains that “a cheque in the electronic form” means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature. The Negotiable Instruments Act draws colour from definitions of technical expressions from the Information Technology Act, 2000.