Business

August 01, 2018

NEGOTIABLE INSTRUMENTS ACT AMENDED


Negotiable-Instruments-Bill

The Lok Sabha on July 23 passed an amendment to the Negotiable Instruments Bill (2017), introducing Sections 143A and 148 that strengthen Section 138’s compensation aspect in case of dishonoured cheques.

A Court hearing a case in connection with violation of Section 138 of the Negotiable Instruments Act can now allow the drawer to pay interim compensation to the complainant under Section 143A. However, the drawer may pay such compensation only under certain circumstances i.e. when he/she pleads “not guilty” to the charges levelled by the complainant. Further, interim compensation cannot be more than 20 per cent of the amount of the cheque, and must be paid within 60 days of the Court order. In the event of acquittal of the drawer however, the burden of repaying the interim compensation, along with bank interest as fixed by the Reserve Bank of India, falls on the complainant. The complainant must make the necessary payment within 60 days however a 30-day extension is permissible. As per Section 143A, interim compensation is treated as fine under the Criminal Procedure Code, and the amount of interim compensation is deducted from any further fine levied on the drawer.

Under Section 148, an accused under Section 138 of the Negotiable Instruments Act can be ordered by an Appellate Court to credit 20 per cent of the compensation or fine levied by the lower court. This amount - which is over and above any interim compensation paid by the complainant under Section 143A – must be deposited within 60 days of the Court order, with a grace period of 30 days allowed. In the event of acquittal of the drawer however, the burden of repaying this amount, coupled with bank interest as fixed by the Reserve Bank of India, falls on the complainant. And, the complainant must do the needful within 60 days, with a maximum extension of 30 days permitted.

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