Act tweaked to give relief in cheque bounce cases

The Union Cabinet on Friday is understood to have cleared a proposal to amend the Negotiable Instruments Act, 1881 to enable courts to order interim compensation to the payees of bounced cheques as recovering money takes a long time due to litigation.

The compensation will be a part of the cheque amount, which could be given both at the trial stage and the appellate state of the litigation, officials said.

If the drawer (one who wrote out the cheque) is acquitted, the court may direct the payee to repay the amount paid as interim compensation with interest.

Similarly, the appellate courts would be enabled to order the appellant to deposit a part of the compensation awarded by the trial courts at the time of filing appeal.

Dishonour of cheques due to inadequate funds in the account of the drawer of the cheque or for other reasons has often caused serious distress in the trade, business and MSME sectors, according to a study by the government.

More than 18 lakh cheque bounce cases are stated to be pending in various courts in the country.