Negotiable instruments are nothing but documents which have monetary value and are exchangeable. So financial worth and transfer-ability are the two main characteristics of Negotiable Instruments. Although the Negotiable Instrument Act does not contain a definition for this term, these features always remain constant in its relation.
As Indian law info, in India, the Negotiable Instruments Act, 1881 provides provision for governing negotiable instruments as law defines these instruments and also deals with each type of them individually as it governs the use of cheques, promissory notes, and bills of exchange.
Recently The Central Government has notified amendment to the Negotiable Instrument (Amendment) Act, 2018, provides for reducing the undue delay in the cheque dishonor cases and also for payment of interim compensation to the complainants.
Two new Sections i.e. 143A and 148 have been proposed to be inserted under the Negotiable Instruments Act, 1881 via the Amendment Act:
The Amendment 2018 inserted Section 143A in the Negotiable Instrument Act, 1881 which has provision relating Power of court to provide for interim compensation to the complainant. so Section 143A-empowers the Court to order the drawer of the cheque to pay Interim Compensation to the complainant in following cases-
Firstly in case of a summary trial or a summons case, where the drawer pleads not guilty to the allegations made in the complaint, and Secondly where upon framing of the charges in any other cases.
The interim compensation shall be paid within 60 days from the date of the order by the court which may be further extended by an additional period of 30 days, subject to the sufficient reasons being shown and the compensation amount shall not exceed 20% of the amount of the Cheque..
Further in case where the drawer is acquitted then the payee may be directed to refund the entire amount of interim compensation along with the RBI’s Prevailing interest rate, to the drawer.
In Section 148 – It empowers the Appellate Court to order payment pending the appeal against conviction under Section 138 of the Negotiable Instruments Act. The Appellate Court may give order to the appellant to deposit an amount minimum of 20% of the fine or compensation as what may be awarded by the trial Court. Also amount shall be in addition to the amount already paid by the appellant under Section 143A.
This deposit can be released by the order for payment to the complainant at anytime during the pendency of the appeal and the deposit amount should be paid within 60 days from the date of the order by the court which may be further extended by an additional period of 30 days, subject to the sufficient reasons being shown.
And in cases where appellant being acquitted the court may on its discretion direct the complainant to refund the entire deposit amount along with the RBI’s prevailing interest rate to the appellant.
The aim of insertion of new provisions in the negotiable instrument act 1881is to address the issue of undue delay in finality of cheque dishonor cases. It is seems that the amendment will strengthen the credibility of cheques and aid in trade and commerce in present scenario.
Supreme Court ruling in interim compensation In GJ Raja vs. Tejraj Surana, where Fast Track Court-II, Metropolitan Magistrate, Egmore, Chennai order the accused to pay the 20% of the cheques amount as interim compensation and the High Court partly upheld the order by modifying interim compensation to 15% of each cheque amounts to the complainant.
Recently, the Supreme Court held that Section 148 of the Negotiable Instruments Act,1881 as amended, shall be applicable in respect of the appeals against the order of conviction and sentence in the offence under Section 138 of the Negotiable instrument act 1881 even in a case where the criminal complaints for the offence under Section 138 of the Negotiable instrument act 1881 were filed prior to 01.09.2018.
The Supreme Court on 30th July 2018 in GJ Raja vs. Tejraj Surana , special leave petition held that Section 143A of the Negotiable Instruments Act on payment of interim compensation to the complainant during the pendency of the case has no retrospective application. That provides now Section 143A will apply to only those complaints filed after the 2018 amen amendment to the NI Act which inserted the provision.
Some high courts like Punjab and Haryana High Court also held that the Section 143A of the Negotiable Instruments Act has no retrospective effect and this Section 148 will apply to the pending appeals pending on date of enforcement of this provision.