The Negotiable Instruments Act, 1981 was introduced with objective to define and amend laws relating to Promissory Notes, Bills of Exchange and Cheques while envisaging that it will assist in increasing the credibility of these instruments. Time and again this Act has been amended in order to make necessary and relevant changes in accordance with the changing circumstances as well as to curb the misuse of litigation process.

The House of People of India i.e. Lok Sabha passed the Bill numbered as 281 of 2017 and named as The Negotiable Instruments (Amendment) Act, 2017 via which two sections i.e. 143A and 148 has been introduced in the original Act. The Bill asserted the following to be the reason behind passing this Amendment Act:

“The said [The Negotiable Instruments Act 1981] Act has been amended from time to time so as to provide, inter alia, speedy disposal of cases relating to the offence of dishonor of cheques. However, the Central Government has been receiving several representations from the public including trading community relating to pendency of cheque dishonor cases. This is because of delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings. . . . injustice is caused to the payee of the dishonoured cheque who has to spend considerable time and resources in court proceeding to realise the value of the cheque. Such delays compromise the sanctity of cheque transactions.”

With the abovementioned objectives and circumstantial background, two sections with similar provisions but at different stages are introduced. Section 143A provides for the power of the court to order the drawer of the cheque who is being tried under section 138 of the Negotiable Instruments Act 1981 and pleading not guilty either in a summons case or summary trial or in any other case pose framing of charges to pay interim compensation amount which cannot exceed 20 percent of the amount of the cheque. Time limit for depositing such interim compensation is within 60 days from the date of order to pay such compensation. The delay condonation period with respect to paying this interim compensation amount is yet another 30 days, which depends upon the discretion of the Court. A safeguard to misuse this provision has been created in sub-section 4 of section 143A wherein, in case of acquittal of the accused the complainant has to repay the compensation amount with interest at the bank rate as prescribed by the Reserve Bank of India at the beginning of the relevant financial year, within 60 days from the date of acquittal order. The procedure to recover this compensation amount has to be dealt in accordance with section 421 of the Code of Criminal Procedure, 1973.

Similar is the provision at the appellate stage, as provided by section 148, wherein if the drawer of the cheque has preferred an appeal against the order of trial court then the appellate court has the power to order the appellant to deposit interim compensation which is twenty percent of the amount of compensation/fine ordered by the trial court.   The crux of this section is also that the said amount will be in addition to any interim compensation paid by the appellant under section 143A. The period of paying the said compensation amount, the provision regarding the complainant to repay the compensation amount with interest is the same as that of section 143A.

Lok Sabha has passed this Bill on 23rd July 2018 with an objective to curb the delay caused in disposal of cheque dishonor cases and to revive the importance of cheque transactions.


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Amendment Link: Negotiable Instruments Amendment Bill 2017