Wednesday, 30 December 2015

Negotiable Instrument (Amendment) Act 2015

The Negotiable Instruments (Amendment) Act 2015 was give assent by the Hon’ble President onth December 2015 and was published in the Official Gazette on 29th December 2015. However, the Act has a retrospective effect and shall be deemed to have come into force on the 15th June 2015.
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The main highlight of this Amendment is the insertion of sub-section (2) in section 142 of Negotiable Instruments Act, 1881

"(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,—
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation — For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account".

The Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) (2 Judges Bench) held that “the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence: (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice”. Thus if the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done.

However, the K. Bhaskaran judgment was overruled by a 3 Judges Bench in the case of Dashrath Rupsingh Rathod v. State of Maharashtra & Anr. (2014) which held that  a Complaint of Dishonour of Cheque can be filed only  to  the  Court  within  whose  local jurisdiction the offence was committed, which  in  the  present  context  is where the cheque is dishonoured by the bank on which it is drawn. The Court clarified that the Complainant is statutorily bound to comply with Section 177 etc. of the CrPC and therefore the place or situs where the Section 138 Complaint is to be filed is not of his choosing.

The present 2015 amendment makes changes in provisions relating to the territorial jurisdiction for filing Cheque dishonour cases in the Negotiable Instrument Act. As per the 2015 Amendment the offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction—

(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.


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