The Negotiable Instruments Act, 1881 (“NI Act”) has been amended from time to time to make the law relating to dishonor of the cheque more stringent against unscrupulous drawers of cheques. Repeated efforts have been made both by the Legislature and the Judiciary to curb the blatant abuse of the process of law by the accused who delay the proceedings for dishonor of cheques issued by them. However, despite several efforts, the law relating to dishonor of cheques have failed to give respite to the complainants (payees of the cheques). Accused not only delay the proceedings at the stage of trial but also harass the complainant by filing appeal against the order of the trial court thus leaving the complainant struggling with tedious, time-consuming and cumbersome court procedures without getting any timely relief.
Recently, amendments have been made to the NI Act to address this issue of undue delay in final resolution of cheque dishonour cases and discourage frivolous and unnecessary litigation to provide relief to payees of the dishonored cheques. Consequently, two new provisions, Section 143A and Section 148, have been inserted in the NI Act.
In accordance with the new Section 143A, the trial court may now direct the drawer of the cheque to pay an interim compensation to the payee/complainant, which shall not exceed 20% of the cheque amount in dispute. The drawer of the cheque has to pay the interim compensation within 60 days from the date of the order passed by the court, or further within the period not exceeding 30 days as may be directed by the court on showing sufficient cause by the drawer. If at the time of final disposal of the case, the drawer is acquitted by the court, the payee has to repay the amount of interim compensation to the drawer, with interest at the bank rate prevalent at the beginning of the relevant financial year within 60 days from the date of the order passed by the court, or further within the period not exceeding 30 days as may be directed by the court on showing sufficient cause by the payee. Further, if on the conviction of the drawer an amount of compensation is awarded by the court in favour of the payee, it shall be reduced by the amount paid as interim compensation. The intent of this new provision is to discourage the drawer/accused from contesting genuine claims, avoid delay tactics and resolve the matter with the complainant.
Further as per Section 148, the appellate court may direct the drawer in an appeal against the conviction under Section 138 to deposit before the appellate court a part of the fine or compensation as award by the trial court, which shall be a minimum of 20% of the fine or compensation, within 60 days from the date of the order passed by the appellate court, or further within the period not exceeding 30 days as may be directed by the appellate court on showing sufficient cause by the drawer. The above deposit shall be in addition to any interim compensation paid by the drawer under Section 143A, and the appellate court may direct to release the deposit amount in favour of the payee at any time during the pendency of the appeal. If at the time of final disposal of the appeal, the drawer is acquitted by the appellate court, the payee has to repay the amount so released to the drawer, with interest at the bank rate prevalent at the beginning of the relevant financial year within 60 days from the date of the order passed by the appellate court, or further within the period not exceeding 30 days as may be directed by the appellate court on showing sufficient cause by the payee. The intent of the new provision is to discourage the drawer/accused from frivolous litigation and easing the hardship of the complainant.
The above amendments to the NI Act are the steps in the right direction with an expectation that these provisions would strengthen the credibility of issued cheques and discourage unscrupulous drawers from evading liability by misusing legal processes. It however needs to be seen if the courts are prompt and eager to exercise the powers granted under these new provisions and bring relief to the harassed complainants.
