Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.
posted 7 years ago
Payment via cheque by issuer to the
payee is a long-standing mode of effecting payment through banks. Payment via
account payee cheques does strengthen the cashless campaign in India program.
However, this is just one side of a
coin.
On the other hand, a cheque issued by
issuer (with no / insufficient balance in such person’s bank account) to payee
with intent of committing default in payment and dishonor of such cheque by the
banks with the reason of absence of sufficient funds in the issuer bank account
is a common practice in existence in Indian financial and banking system for
quite long.
Due to dishonor of cheque, the payee
is severely affected as it receives no money as promised, is subjected to
penalty imposed by the bank in the first instance for return of cheque and then
has to spend money in courts to take the issuer to task and revolve around the
courts. Millions of cheque bounce cases are pending in different courts as of
now.
Due to this scenario, various quarters
have made representations to the government regarding prejudice grieved by
payees due to long standing unresolved cheque bounce cases. Such
representations include delay tactics by unscrupulous drawers of dishonoured
cheques, relatively easy filing of appeals and obtaining stay on proceedings.
After taking into consideration of
such representations, the government recognized the burning need to accord
protection to the payees and to bring stability to trade and commerce community
by reposing the credibility in the financial transactions via cheque as a
negotiable instrument.
Union cabinet promulgated an ordinance
to amend the existing Negotiable Instruments Act, 1881 (Act) to tackle cheque
bounce cases that are causing numerous hardships to payee and trading community.
The following are some of the
amendments to the existing Act:
· Empowerment
of courts to order for payment of an interim compensation to the affected
parties due to dishonor of the cheques.
· In
case of acquittal of drawer in a cheque bouncing case, the court may direct the
payee to repay the amount paid as interim compensation with interest, if any.
· Grant
of authority on appellate courts to order the appellant to deposit a part of
the compensation awarded by the trial court in appellant cases.
· Setting
up of a mechanism to fast track trials related to cheque bounce related matters
for speedy disposal of case at the shortest possible time to provide quick
relief to effected parties.
· Special
provisions to strictly deal with repeated offenders of cheque bounce cases to
prevent repetition of the same offence by the offenders.
It is hoped that a serious
implementation of the proposed amendments will provide speedy justice to the
effected parties in cheque bounce cases, quick disposal of cheque bounce cases
by punishing the culprits with rigorous punishment and certainly promote
cashless transactions.
Research and inputs by Paruchuri
Baswanth Mohan
******************************************************
Bhumesh Verma is a lawyer with over 2 decades of experience in advising domestic and international clients on corporate transactions (M&A, Venture Capital, Private Equity, Startups, corporate advisory, etc.) and features in “The A-List – India’s Top 100 Lawyers” by India Business Law Journal. He keeps writing frequently on FDI, M&A and other corporate matters and is a guest faculty as well. He can be reached at bhumesh.verma@corpcommlegal.com.
posted 13 hours ago
posted 2 days ago
posted 3 days ago
posted 3 days ago
posted 3 days ago
posted 4 days ago
posted 4 days ago
posted 4 days ago
No results available
ResetFind the right Legal Expert for your business
Global Law Experts is dedicated to providing exceptional legal services to clients around the world. With a vast network of highly skilled and experienced lawyers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.