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New norms to deal with cheque bounce cases

The 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. The Negotiable Instruments (Amendment) Bill, 2015 was passed by Parliament in the recently concluded Winter Session. “The provisions of the Negotiable Instruments (Amendment) Act, 2015 shall be 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 Finance Ministry said.

There are an estimated 18 lakh cheque bounce cases across the country, of which about 38,000 are pending in High Courts. Some litigants have to travel to different places from where the cheques were issued and not honoured.

The law provides that cases of bouncing of cheques can be filed only in a court in whose jurisdiction the bank branch of the payee (person who receives the cheque) lies. It will also result in fast prosecution of offenders.

The legislation also mandates centralisation of cases against the same drawer.

The Act has also repealed an ordinance which was re-promulgated earlier. The President had promulgated the ordinance twice — in June and September last year. “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,” the statement said.

The clarification of jurisdictional issues may be desirable from the equity point of view as this would be in the interests of the complainant and would also ensure a fair trial.

Source: The Times of India

RBI to move to CTS for clearing government’s cheques

RBI has decided to dispense with the requirement of physically forwarding paid central government cheques to the departments for clearance.

With a view to enhancing efficiency in cheque clearing, Reserve Bank has introduced Cheque Truncation System (CTS) for clearance of cheques, facilitating the presentation and payment of cheques without their physical movement.

Taking this initiative forward, it has now been decided in consultation with the Office of the Controller General of Accounts (CGA), Ministry of Finance, Government of India,  to dispense with current requirement of forwarding the paid Central Government cheques in physical form to the Government departments.

The practice of presenting cheques in physical form is commonly known as P2F.

The revised guidelines would be effective in respect of cheques issued by the Central Government and Union Territories (UTs) from February 1, 2016.

Click here to view the notification issues by RBI.

Cheque bounce cases can now be filed where it is presented

Parliament has passed a law allowing cheque bounce cases to be filed at the place where the cheque is presented for clearance and not the place of issue, a change that is expected to go a long way in improving legal recourse in such cases.

The Rajya Sabha passed the Negotiable Instruments (Amendment) Bill  without any debate. The Minister of State for Finance Jayant Sinha moved the bill for passage that had been passed by the Lok Sabha earlier.

The amendments to the Negotiable Instruments Act will impact over 18 lakh cheque bounce cases pending in various courts, Sinha said while moving the bill.

The amendments overturn a Supreme Court ruling which said the cases have to be initiated where the cheque-issuing branch was located.

The court had reasoned that the territorial jurisdiction for dishonour of cheques is restricted to the court within whose local jurisdiction the offence was committed, where the cheque is dishonoured by the bank on which it is drawn.

Subsequently, stakeholders made representations to the government, pointing out the wide impact this judgment would have on the business interests offering undue protection to defaulters at the expense of the aggrieved complainant.

The government decided to amend the Negotiable Instruments Act, 1881. As per the amendment cases involving bounced cheques can be filed only in a court in whose jurisdiction the bank branch of the payee, the person who receives the cheque, lies.

“The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated,” the new provision says.

Under this rule, the aggrieved person can file a cheque bounce case in his area and the defendant will have to travel to defend himself, enhancing the strength of the legal recourse.

The amended law also provides that if a complaint against a person issuing a cheque has been filed in the court with the appropriate jurisdiction, then all subsequent complaints against that person will be filed in the same court, irrespective of the relevant jurisdiction area.

Source: The Economic Times

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