An Ordinance to amend the Negotiable Instruments Act, 1881 (‘NI Act’) has been promulgated by the President of India on June 15, 2015.

Section 138 of the NI Act deals with the offence of dishonour of cheques for insufficiency of the funds, etc. There are number of cases which have set a precedent on jurisdictional aspect to try an offence pertaining to dishonour of cheque. But, unfortunately, lakhs of cases are pending before the courts.

To address the difficulties faced by the payee or the lender of the money in filing the cases under Section 138 of the NI Act, because of which, large number of cases were stuck, the jurisdiction for offence under Section 138 has been proposed to be clearly defined.

The Ordinance provides for filing of cases only to a court within whose local jurisdiction the bank branch of the payee, where the payee delivers the cheque for payment is situated. Further, where a complaint has been filed against the drawer of a cheque in the court having jurisdiction under the new scheme of jurisdiction, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court, irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court.

Further, it has been provided that if more than one prosecution is filed against the same drawer of cheques before different courts, upon the said fact having been brought to the notice of the court, the court shall transfer the case to the court having jurisdiction as per the new scheme of jurisdiction.

Source: http://bombayhighcourt.nic.in/libweb/ordinc/2015/2015.06.pdf

VA View

The Negotiable Instruments (Amendment) Bill, 2015 was passed in the Lok Sabha last month but could not be taken up in the Rajya Sabha, hence an ordinance was passed by the Government. This ordinance has been brought to ensure fairness keeping in view the interests of the complainant by clarifying the territorial jurisdiction for trying the cases for dishonour of cheques. This would help the trade and commerce in general and allow the lending institution, including banks, to continue to extend finance to the economy, without the apprehension of lack of effective remedy on account of bouncing of a cheque.