Approval to introduce Negotiable Instruments (Amendment) Bill, 2015 in Parliament

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal to introduce the Negotiable Instruments (Amendment) Bill, 2015 in Parliament. The amendments are focused on clarifying jurisdiction related issues for filing cases of offence committed under Section 138 the Negotiable Instruments Act,1881 (NI Act).

The main amendment included in this is the stipulation that the offence of rejection/return of cheque u/s 138 of NI Act will be enquired into and tried only by a Court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment is situated.

Section 138 of the NI Act deals with the offence pertaining to dishonour of cheque for insufficiency, etc., of funds in the drawer’s account on which the cheque is drawn for the discharge of any legally enforceable debt or other liability. Section 138 provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. The object of the NI Act is to encourage the usage of the cheque and enhancing the credibility of the instrument so that normal business transactions and settlement of liabilities could be ensured.

The clarification of jurisdictional issues may be desirable from the equity point of view as this would be in the interests of the complainant and would also ensure a fair trial.

The clarity on jurisdictional issue for trying cases of cheque bouncing would increase the credibility of the cheque as a financial instrument. This would help trade and commerce in general and allow lending institutions, including banks, to continue to extend financing to the economy, without the apprehension of the loan default on account of bouncing of a cheque.

Action will be initiated to introduce the Negotiable instruments (Amendment) Bill, 2015 in Parliament in the second phase of the current Session of Parliament.


Various financial institutions and industry associations have expressed difficulties, arising out of the recent legal interpretation of the place of jurisdiction for filing cases under Section 138 to be the place of drawers’ bank by the Supreme Court. To address the difficulties faced by the payee or the lender of the money in filing the case 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 clearly defined. The Bill provides for filing of cases only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents 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, when this fact is 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.

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  1. Kalpesh Oza says:

    I thought this is welcome step towards the healthy financial market. One should not thought about post-cheque return implications. Relief should not be given to the defaulter. It should be given to the person having right against the defaulter.

  2. Jayaraj Dangre says:

    dear sir, 23.04.2015
    This is a thoughtless amendment. It is well known that lenders such as banks, NBFCs, cr. card co.’s who have multiple offices INTENTIONALLY go to far off centres away from the location of the borrower and deposit the PDCs there. The intent is to harass the borrower who is required to defend the proceedings in far away place from his location.
    I had a harrowing experience when A notice for dishonour of cheque was issued to me by advocate for Kotak Mahindra Bank from Calcutta though I am located in Vile Parle in Mumbai and the lenders office is just 4 km away in Santacruz (E). Not only that the loan had not yet been disbursed. when I sent a registered reply to the lawyer to first find out whether the loan has been availed of by me or not before executing the clients’ brief and issuing notices, the matter was dropped.
    I have documentary proofs of this attempt by the Kotak Mahindra Bank which has participation in equity from none less than IFC Washington. Such institutions can stoop to the lowest levels to harass customers.
    This was some 6 years back. The proposed amendment will give the lenders with presence throughout the country to harass customers.
    We need to point out that the lender must present the cheque from his branch which extended the loan. If I take a loan in Mumbai from Calcutta based lender with no branch presence in Mumbai then of course he has a right to present the cheque in Calcutta. Before that the jurisdiction of the loan agreement should be applied to the dispute.
    CS J.K.Dangre
    Practising Co. Secy.

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