Cheque bounce case drawer to pay 20% interim compensation immediately

Cheque bounce case latest amendments in law

JULY 2018

Parliament today passed a bill aiming at allowing a court to try offences related to cheque bounce expeditiously and direct the DRAWER to pay a minimum of 20 per cent of the cheque amount as interim compensation.

The Negotiable Instruments (Amendment) Bill, 2018, which was passed in the Lok Sabha on July 23, was passed by the Rajya Sabha by a voice vote.

Moving the bill for consideration and passage, Minister of State for Finance Shiv Pratap Shukla said presently over 16 lakh cases of cheque bounce are pending in subordinate courts.

Moreover, 34,000 such cases have gone to the high courts following appeal.

“We have brought the amendments to ensure that people have trust and faith on issuing cheques,” the Minister said, adding that 1881 law on negotiable instruments has been amended from time to time.

The latest amendments aims to insert Section 143A and Section 148 in the Act to provide that a court trying a cheque bounce offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant.

The drawer, who pleads not guilty of the accusation, will have to pay at least 20 per cent of the cheque amount as interim compensation within 60 days of the trial court’s order.

An additional 20 per cent compensation will have to be paid if the drawer goes for an appeal.

If the drawer is acquitted, the court may direct the payee to repay the amount paid as interim compensation with interest.

Cutting across the party line, members of opposition parties including Congress supported the bill but suggested stringent penalties to curb cheque payment defaults.

They said the government should come out with laws like in France and the UAE where a person who defaults on cheque payments is barred from issuing a cheque for five years.

This has proved to be an effective deterrent in these countries, they said.

The members also suggested that the government make cheque payment default a non-bailable offence.

Participating in the debate on the bill, Congress leader Madhusudan Mistry said the penalty proposed was not that deterrent to curb fraudulent practices.

A Navneethakrishnana (AIADMK) said the bill allows a court to try an offence and direct the drawer to pay 20 per cent of the cheque amount as interim compensation to the complainant.

“20 per cent payment is not good and not sustainable.”

Manish Gupta (TMC) said the amendments will not have any great impact but a step towards improvement.

“Payment of 20 per cent of the cheque amount as interim compensation is not sufficient. It should be 30-40 per cent,” he said, adding there was a need to identify the cause of pendency of cases in courts.

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