Provision for Interim Compensation in Cheque Dishonour Cases - Negotiable Instruments (Amendment) Act, 2018

Recently, the Parliament of India enacted the Negotiable Instruments (Amendment) Act, 2018. The said Amendment Act inserts following important provisions in the Negotiable Instruments Act, 1881 (in short, ‘NI Act’): -

1. Section 143A has been inserted in the NI Act providing power to the Courts to order the drawer of the Cheque to pay interim compensation to the Complainant. Such interim compensation, if ordered by the Court, must be paid within sixty days from the date of the Order.

2. If the drawer of the Cheque is acquitted, the Court shall direct the Complainant to repay the drawer the amount of interim compensation, with interest at prevailing rates, within sixty days from the date of the Order of the acquittal.

3. In an appeal by the drawer against conviction under section 138, the Appellate Court may order the Appellant/Drawer to deposit such sum which shall be minimum of twenty per cent of the fine or compensation awarded by the trial Court. Such amount shall be in addition to the interim compensation. The Appellate Court has been conferred power under Section 148 to direct release of such amount deposited by the Appellant to the Complainant and in case of acquittal by the Appellate Court, the Complainant shall have to return the same with interest.

Comment

In my humble opinion, the Amendment Act is in stark contrast to the objective for which it was brought. According to the objective of the Amendment Bill: -

“It is proposed to amend the said Act with a view to address the issue of undue delay in final resolution of cheque dishonour cases so as to provide relief to payees of dishonoured cheques and to discourage frivolous and unnecessary litigation which would save time and money. The proposed amendments will strengthen the credibility of cheques and help trade and commerce in general by allowing lending institutions, including banks, to continue to extend financing to the productive sectors of the economy.”

I fail to understand how this Amendment will reduce the delay in litigation or volume of litigation, pertaining to Cheque Dishonour cases. The Amendment Act merely introduces the concept of interim compensation which may further complicate affairs in the Trials relating to Section 138. Not every case under Section 138 of NI Act is straightforward. The beauty of law lies in the fact that with changing situations, the interpretation of law may also change.

If the law-makers are thinking that by introducing the concept of interim compensation and pre-deposit or post-deposit, dishonour of cheques is going to stop or lessen, then they are under a very wrong impression. There are a number of laws that have the provision of deposit for preferring an appeal. Such provisions seem to have no effect on the volume of litigation at all. In fact, such provisions generate more litigation. Any new provision inserted in any law provides arsenal to the litigators to bend it to their benefit. Thus, it is my humble advice to the law-makers of this Country to be cautious while framing any law. Only when the pros outweigh the cons, a law should be introduced. I am really sorry to say that in the present case, the cons seem to outweigh the pros.