Lok Sabha Passes Amendment To Negotiable Instruments Act;- Provision For Interim Compensation to Payee Introduced
1. WHAT IS NEGOTIABLE INSTRUMENTS-ALL ABOUT
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer usually named on the document. More specifically, it is a document contemplated by or consisting of a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date. The term can have different meanings, depending on what law is being applied and what country and context it is used in. for example Cheque, Hundies, Bills and Promissory Notes etc.
2. BACKGROUND OF NEGOTIABLE INSTRUMENTS
The Negotiable Instruments Act, 1881 initially formed and implemented in 1881 with the preamble of “Whereas it is expedient to define and amend the law relating to promissory notes, bills of exchange and cheques. An Act to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques”.
Afterward, it was amended time to time as per the requirement of time. Mainly it covers the payments of all the Negotiable Instruments.
3. THE LOK SABHA HAS PASSED NEGOTIABLE INSTRUMENTS (AMENDMENT) ACT ON JULY 23, 2018.
A. POWER TO COURT FOR ORDER OF INTERIM PAYMENT:
The amendment introduces a new provision, Section 143A in the Act, which gives power to the Court to order payment of interim compensation by the drawer of the cheque to the complainant.
As per this provision, interim compensation should not be exceeding twenty percent of the cheque amount can be ordered to be paid in cases where the accused does not plead guilty in a summary trial or summons case. The interim compensation has to pay within a period of sixty days of the order. It can be recovered in the manner of recovery of fine as provided in Section 421 of the Code of Criminal Procedure.
The provision further states that the interim compensation so received has to be returned by the complainant along with interest at bank rates as prescribed by the Reserve Bank of India if the accused is acquitted after trial.
B. POWER TO APPEALET COURT IN APPEAL FOR INTERIM PAYMENT.
The amendment also introduces Section 148 in the Act, empowering the appellate court to direct deposit of a minimum of 20% of the cheque amount in appeal by the drawer against conviction, within a period of sixty days. This amount can be released to the complainant and has to be returned to the accused if the appeal is allowed.
4. REASON FOR INCLUSION OF THE PROVISION.
According to the statement of objects and reasons, the amendment is introduced “with a view to addressing the issue of undue delay in final resolution of cheque dishonor cases so as to provide relief to payees of dishonored cheques and to discourage frivolous and unnecessary litigation which would save time and money”. It is also stated that the central government was receiving several representations from the trading community regarding the delay in cheque dishonor cases.
With a view to reduce delay in payments of Negotiable Instruments and to enhance the trust of traders in Negotiable instruments, the Government proposed an amendment in the Negotiable Instruments (Amendment) Act which later on 23rd July 2018 passes the bill in the Lok Sabha.
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