In India, close to 20 lakh cheques are bounced or dishonoured every year.
Traders’ Associations all over India has requested the Govt. to stop this menace of bounced cheques, and have asked for stricter rules. Hearing these pleas, Ministry of Law and Justice is all set to modify Negotiable Instruments Act, and make the cases of bounced cheques a non-bailable offense.
This means that if you don’t have funds in your bank account, and if you issue a cheque for payment, then it will land you in jail.
And shall be no bail for this offence now.
Dishonored Cheque = Dishonored Drawer
In legal terms, the author of a cheque is called a drawer, and the person to whom the cheque has been issued is called the payee.
A cheque is a negotiable instrument, and comes under the Negotiable Instruments Act, 1881, which has been modified a number of times.
As per present rules, under Section 138 of the Negotiable Instruments Act, a bounced cheque is a criminal offense, and is punishable till 2 years. However, bail can be asked for, currently.
Under the modified Negotiable Instruments Act, Govt. has proposed to make the bounced cheque as a non-bailable offense, and the person will have to be in jail for the period of the trial.
As per reports coming in, Govt. will put forward the modified Negotiable Instruments Act during the forthcoming Monsoon Session of the Parliament.
A person close to this development from the Ministry said, “We have finalised all amendments and now working on little modalities as suggested by various stakeholders and most likely we will introduce the same in the upcoming session of Parliament,”
Stricter Rules Under Negotiable Instruments Act
As per the proposed laws under this Act, the drawer of the cheque will be given just one chance to settle the dues, out of court, in case the cheque bounces. Currently, the drawer is given two chances, if the cheque bounces.
With the new laws, in case the case is not settled out of court, then the drawer will have to deposit the amount of the cheque to the court, and would be jailed for the period of the trial.
Bail can be given but in very special cases and scenarios. As per law experts, these special cases make this almost like a non-bailable offense.
Besides, the Metropolitan Magistrate will study any such case against the backdrop of Section 138 of the Negotiable Instruments Act, to determine whether the case falls under this category or not.
Under cashless drive, Govt. of India is attempting to make all non-cash modes of transactions safer, and these recently proposed amendments to Negotiable Instruments Act is one such step to make cheques as a dependable mode of transaction.
We will keep you updated as we receive more information.