Last Updated on June 15, 2024 by Satish Mishra
In this era, where the internet, net banking, cashless economy, e-challan and card payment etc, are common and frequently used, cheques as a negotiable instrument are still used as being the convenient one in business transactions, trade and commerce. The cheques are issued for securing proof of payment and has to be deposited into payee’s bank account.The payeeisthe person in whose favour cheque is drawn and the author of the cheque is called drawer.With the frequent use of cheques, ‘cheque bounce’or ‘dishonour of cheque’ is also prevalent.
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In India,the Consumer Protection Act 1986 and the Negotiable Instrument Act 1998 deals with the cases of dishonour of cheques as being a most effective statute for it. Under consumer protection act, it was held in case Sankar v B.M. Vijaya bank, dishonour of cheque amounts to deficiency of service. According to section 92 of the Negotiable Instrument Act, a cheque is said to be dishonoured when the cheque is returned by the drawer’s bank unpaid due to the insufficiency of funds or other possible reasons as prescribed by or under the act. It is a cognizable offenceunder section 138 of the act, for which the punishment may extend to 2 years of imprisonment or fine upto twice of the cheque amount or with both. The reason behind dealing it as the cognizable offence is to avoid exhaustive civil proceedings which would take time in deciding the cases and causes a delay in rendering the justice.
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Dishonour of cheques cause incalculable loss and lots of inconvenience to the payee and erode the credibility of cheques to a large extent. Despite adopting the criminal procedure, courts are still taking 3 to 5 years in deciding the cases, which causes delay. There are a number of reasons for delay such as inadequacy in a number of magistrates, a collection of post-dated cheque by the bank and no online methods (email, fax, fast courier service etc.) are followed in serving the summons.
Finally, in 2017, the government approved the Negotiable Instrument (amendment) bill 2017, for amending the provision of section 138 to maintain the relevancy of cheque in business transactions.The main reason for the amendment is a delay in cheque bounce cases.
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The bill aims at allowing the payment of interim compensation which is 20% of the amount of cheque to the payee by both trial and appellate courts at trial stage in order to promote less cash economy.The bill proposing amendment aims at enhancing the credibility of cheques and reducing inordinate delay in cheque dishonour cases by discouraging frivolous and unnecessary litigation to save time and money. It also provides help particularly in mini, small and medium sectors to which huge distress is caused.
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The bill is still pending in the Lok Sabha. But when it will be passed it would help in improving the efficacy of court to facilitate the expedient disposal of cases because it will take down the number of cases of cheque bounce. Along with it, online methods should be adopted.
Written by Katyayani Shukla is a 3rd-year student of faculty of law, Allahabad University.
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