Negotiable instruments have been an integral part of the Indian commercial landscape for centuries. They are instruments that can be transferred from one person to another in exchange for a valuable consideration. In India, negotiable instruments are governed by the Negotiable Instruments Act, 1881 (NIA). The act has undergone several amendments over the years to keep up with changing times and practices. In this blog, we will explore the latest law on negotiable instruments in India.

Amendments to the NIA

The NIA has undergone several amendments over the years, with the latest being the Negotiable Instruments (Amendment) Act, 2018. The amendment came into effect from September 1, 2018. Some of the key changes brought about by the amendment are:

  1. Cheque bounce cases:

The amendment introduced a provision for the payment of interim compensation to the complainant in cheque bounce cases. The interim compensation is to be paid within 60 days of the filing of the complaint, and the amount is to be not more than 20% of the cheque amount.

  1. Jurisdiction:

The amendment also made changes to the jurisdiction of the courts hearing cheque bounce cases. The amendment states that the cases are to be filed in the court where the cheque was presented for payment, or where the bank branch of the payee is located. This is aimed at reducing the number of cheque bounce cases that are filed in distant courts.

  1. Time limit for filing complaints:

The amendment also introduced a time limit for filing complaints in cheque bounce cases. The complaint is to be filed within 30 days of the receipt of the memo of the return of the cheque from the bank. This is aimed at reducing the pendency of cases and ensuring that justice is delivered in a timely manner.

  1. Liability of directors:

The amendment also introduced a provision for the liability of directors in cheque bounce cases. The directors of a company can be held liable if they are responsible for the conduct of the company’s business and if the offence was committed with their consent or connivance.

  1. Digital transactions:

The amendment also made provisions for digital transactions. Electronic cheques, which are signed and sent in electronic form, are now recognized as valid instruments under the NIA.

Impact of the amendments

The amendments to the NIA have had a significant impact on the Indian commercial landscape. The introduction of interim compensation has helped reduce the number of cheque bounce cases and has ensured that complainants receive some relief. The changes to the jurisdiction of courts have also made it easier for complainants to file cases in their local courts.

The time limit for filing complaints has helped reduce the pendency of cases and has ensured that justice is delivered in a timely manner. The provision for the liability of directors has made it easier to hold those responsible for the company’s conduct accountable.

The recognition of electronic cheques as valid instruments has also helped make digital transactions more accessible and has reduced the need for physical documents.

Conclusion

The latest amendments to the NIA have helped bring the law up to date with the changing times and practices. The introduction of interim compensation, changes to the jurisdiction of courts, and the time limit for filing complaints have all helped reduce the pendency of cases and ensure that justice is delivered in a timely manner. The recognition of electronic cheques as valid instruments has also helped make digital transactions more accessible. Overall, the amendments have had a positive impact on the Indian commercial landscape and have helped make negotiable instruments more accessible to a wider range of people.