Cabinet clears ordinance in cheque bounce cases

Cabinet clears ordinance in cheque bounce cases

An ordinance to help lakhs of persons battling cheque bounce cases far away from their place was today cleared by the Union Cabinet, which will be the 14th ordinance of the Modi government in a little over a year.

The ordinance, which will amend the Negotiable Instruments Act, will enable filing of cheque bounce cases in the place where the cheque was presented for clearance or payment and not the place of issue.

There are an estimated 18 lakh people facing cheque bounce cases across the country.
The ordinance was necessitated as a bill to help the litigants in the cheque bounce case was passed by Lok Sabha in earlier this year but it could not go through the other House.

Briefing reporters after the meeting chaired by Prime Minister Narendera Modi, Transport Minister Nitin Gadkari said the Supreme Court had passed a judgement that if a cheque was received from someone and it bounces, then the jurisdiction for initiating action lies in the state where it was issued.

"18 lakh such cases in various courts...Government had brought a Bill in this regard in Parliament. Rajya Sabha could not pass it. So to give relief to these people, government has brought this ordinance," he said adding it will benefit these people.

The land ordinance, which was issued for the third time last month, was the 13th executive order of the NDA government since it came to power in May last year.

Gadkari said if there were three cases of bounced cheques against one person, then all these cases could be brought to one place and clubbed.

The Negotiable Instruments (Amendment) Act, 2015 was passed in the Lok Sabha in May this year seeking to overturn a Supreme Court ruling last year which said the case has to be initiated where the cheque-issuing branch was located.

The amendment passed by the Lok Sabha provides that cases of bouncing of cheques can be filed only in a court in whose jurisdiction the bank branch of the payee (person who receives the cheque) lies.

If a complaint against a person issuing a cheque has been filed in the court with the appropriate jurisdiction, then all subsequent complaints against that person will be filed in the same court, irrespective of the relevant jurisdiction area.

When the lower house passed the bill in the last Budget session, the NDA government had faced tough questions from its own members with some BJP MPs wondering if it would be used by corporates to harass the common man.

The Statement of Objects of the bill stated that following the apex court ruling, representations have been made by  various stakeholders, including industry associations and financial institutions, expressing concern about the wide impact the judgement would have on the business interests as it will offer undue protection to defaulters at the expense of the aggrieved complainant. 

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