The Negotiable Instruments Act Ordinance, 2015 is passed by the President on immediate basis whereas it has been passed by the Lok Sabha and is pending in the Rajya Sabha as the parliament is not yet in session. The basic reason as to why this amendment is brought in is to resolve/clarify the jurisdiction issues for the offences committed under the Section 138 of the Negotiable Instruments Act, 1881 i.e., Dishonour of Cheque for insufficiency of funds in the account. The Act earlier, for the complaints of cheque bouncing had not given any specific territorial jurisdiction as to where such a complaint is to be filed but through this bill it is has amended the Section 142 (Cognizance of Offences) of the Act so as that such offences committed now should only be filed in a court under whose the jurisdiction the bank of the person who receives the cheque is.

In the case, Dashrat Rupsing Rathod v. State of Maharastra the Supreme court held that the complaints relating to dishonour of cheque is to be filed within the local jurisdiction of the bank which has received the cheque and have asked to return the complaints u/s 138 of the Negotiable Instruments Act, 1881 and told that from the date of such return in a time period of 30 days, this complaint can be presented to the court having its jurisdiction.

There is another amendment made, the bill has inserted sub-section (2) in Section 142 of the Act. This sub section tells that all the cases pending before any court on the complaints of dishonour of cheque shall be transferred to the courts which have their jurisdiction before the commencement of the Act, second thing this sub-section talks about is, if the person either receiving or giving the cheque has filed the complaint as per section 142(2), then all the other matters are to be brought to the court  where the complaint has been filed but this can happen only when the complaints are brought against the drawer. The third thing this sub-section talk about is, even on the date of commencement of the Act if there are complaints between the same parties in different courts then the cases must be transferred u/s 142 (2) of the NI Act.

The third amendment made, is the definition of ‘cheque in electronic form’. The definition has been amended to mean a cheque drawn in electronic medium using any computer resource and which is signed in a secure system with a digital signature, or electronic system.

The definitions of ‘computer resource’, ‘digital signature’, ‘electronic system’ and ‘asymmetric crypto system’ have also been amended to be the same as those assigned to them in the Information Technology Act, 2000.

The change in the existing law shifts the inconvenience and hardship on the payer because now he would have to travel to the place of the drawee bank where the cheque gets dishonored due to insufficiency of funds. Hence, guaranteeing more precaution by the payer at the time of issuing the cheque.

Tags: AmendmentNegotiable Instrumentsection 138section 142

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