Lawstreet Journal

Finance Ministry proposes Decriminalizing the Dishonor of Cheques under Section 138 of the NI Act, 1881

Lawstreet Journal 23 Jun 2020 6:32pm

Image courtesy: Lawstreet Journal Executive Finance Ministry proposes Decriminalizing the Dishonor of Cheques under Section 138 of the NI Act, 1881

Historically, cheque bounce cases have seen criminal consequences and punishment of up to 2 years along with fine. In the ongoing pandemic, a lot of businesses are observing hardships. This has led to the chain of agreements being breached. A significant amount of these businesses worked with post-dated cheques. Due to the financial losses, the probability of a cheque being dishonored has increased substantially. Considering these prevailing circumstances, the Union government has decided to provide relief to some extent to this economic stress faced by businesses, by relaxation of laws.

An amendment has been proposed by the Finance Ministry for the amendment of 19 acts. The objective of this amendment is to help overcome the new economic crisis, promote ease of doing business, make the functioning of courts and prison system smooth, decriminalize minor economic offenses including that of cheque bounce, which is currently punishable under Section 138 of the Negotiable Instruments Act, 1881.

The crux of the act is to provide credibility to negotiable instruments and promote their use. With this view in mind, the act has been amended multiple times to ensure that it has widespread attention and reach. The use of cheques is the most common among all the negotiable instruments. This was explicitly the reason for punishing its dishonor in the first place. This step was introduced in 1988 with the view to encourage the culture of using cheques and increasing the credibility of this instrument. Along with punitive measures, laws for speedy trials were also… Continue Reading...


Tagged: Negotiable Instruments Act  
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