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Lok Sabha Passes Negotiable Instruments (Amendment) Bill, 2017

Published on July 25, 2018
Government aims to reduce the burden of courts Lok Sabha has passed Negotiable Instruments (Amendment) Bill, 2017 to reduce the number of cheque dishonour cases pending in courts.

The bill amends Negotiable Instruments Act, 1881 to primarily address issues of dishonor of cheques and deal with unnecessary delay in disposal of such cases.

What is a Negotiable Instrument?

  • It refers to any legal documents like cheques, promissory notes, bill of exchange etc which promises to pay bearer or holder of instrument or person whose name is written on instrument, specific amount of money either on demand or after specified time i.e. on some future date.
  • The Negotiable Instruments Act, 1881 defines promissory notes, bills of exchange and cheques.
  • It also specifies penalties for bouncing of cheques and other violations with respect to such negotiable instruments.

Features of the Bill:

Interim compensation:

  • The Bill inserts new Section 143 A in parent Act to allow the court trying the offence related to cheque bouncing, to direct drawer (person who writes cheque) to pay interim compensation to complainant.
  • This compensation may be paid under certain circumstances, including where drawer pleads not guilty of accusation.
  • It will not exceed 20% of cheque amount and will be paid by drawer within 60 days of trial court’s order to pay such compensation.

Deposit in case of appeal:

  • The Bill inserts another new Section 148-A in the parent act specifying that if drawer convicted in cheque bouncing case files appeal, the appellate court may direct him to deposit minimum of 20% of fine or compensation awarded by trial court during conviction.
  • This amount will be in addition to any interim compensation paid by drawer during earlier trial proceedings.

Returning interim compensation:

  • In case the drawer is acquitted during trial by appellate court, then court will direct complainant to return interim compensation (or deposit in case of an appeal case), along with interest. 
  • This amount will be repaid within 60 days of court’s order.


Q. To reduce the number of which pending cases in courts has the Lok Sabha passed Negotiable Instruments (Amendment) Bill, 2017?
a. Bail Jump Cases
b. Cheque Dishonour Cases
c. Property Dispute Cases
d. None of the above
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