Cheque Bounce Jurisdiction of Payee U/s 138 & 142 of N.I.Act,1881
The Negotiable Instruments (Amendment) Ordinance, 2015 brought a relief to all sufferers of cheque bounce on O15th June 2015 . This ordinance has amended the provisions of Negotiable Instrument Act,1881.
Object of Ordinance The objective is to ensure that a fair trial is conducted keeping in view the interests of the complainant by clarifying the territorial jurisdiction for trying the cases for dishonour of cheques. The Ordinance is similar to the Bill in the sense that the substantive principle for determination of the jurisdiction of the cases under section 138 of the NI Act remains the same, except that that two distinct situations of payment of cheque (i) by submitting the same for collection through an account or (ii) payment of a cheque otherwise through an account, that is, when cheques are presented across the counter of any branch of drawee bank for payment, are covered under the Ordinance.
Jurisdiction Decided u/s 142 The place of jurisdiction for trying cases of dishonour of cheques ,under section 138 of the NI Act,1881, has been fixed by virtue of sub-section (2) of Section 142 as what it used to be before the Apex Court’s ruling in Dasrath Rupsingh Rathod .
Why Section 138 The section 138 of the N.I.Act,1881 provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque.
Amendments in N.I.Act,1881 Via Ordinance w.e.f 15.06.2015 Amendment of section 6 In the Negotiable Instruments Act,1881 (26 of 1881) (hereinafter referred to as the principal Act), in section 6,- (i) in the Explanation I, for clause (a), the following clause shall be substituted, namely:-
(a) ‘‘a cheque in the electronic form” means a cheque drawn in electronic medium by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or electronic signature, as the case may be;’;
Unquote – the expression ” a cheque in the electronic form ” has been defined . (ii) after Explanation II, the following Explanation shall be inserted, namely:- “Explanation III.-The expressions used in this section shall have the same meanings as assigned to those expressions in the Information Technology Act, 2000 (21 of 2000)”. Amendment of section 142
In the principal Act, section 142 shall be numbered as sub-section (1) thereof and after sub-section (1) as so numbered, the following sub-section shall be inserted, namely:-
“(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated.”.
Unquote – this is the most prominent and relieving provision which has been inserted in the N.I.Act,1881 in as much as it nullifies the ratio laid down by Apex court in the matter of Dasrath Rupsingh Rathod . The Payee or holder of a cheque can file case, under Section 138 of N.I.Act, in the jurisdictional court where the branch of bank is situated and in which the cheque was presented for clearence w.e.f 15 June 2015 . The said change has been effected with sub-section (2) of Section 142 of the act.
Insertion of new section 142A. In the principal Act, after section 142, the following section shall be inserted, namely:-