Negotiable Instruments Act 1881 is “an Act to amend and define the law on promissory notes, bills of exchange, and cheques.’ The Negotiable Instruments (Amendment) Bill was presented in the Lok Sabha by the Finance Minister on January 2nd, 2018. It was approved by the President and was published in the Official Gazette on August 2 2nd, 2018, to be made into an Act known as the Negotiable Instruments (Amendment) Act of 2018. (No. 20 of 2018).

The Negotiable Instruments (Amendment) Act of 2018 introduces a new provision, Section 143A, which amends the Act of 1881. The Section 143A in the Act is a provision that the following:

“Notwithstanding any provision within the Code of Criminal Procedure 1973, the Court investigating section 138 can require the check drawer to compensate the complainant temporarily.

A) in the context of a summary trial or summons, in which he admits guilt or not in the case of a summary trial or subpoena, where he is not in the complaint or warrant; and

B) in all other cases in any other case, on framing of the charge.”

The interim compensation amount must not exceed 20% of the dishonored cheque.

The interim compensation mentioned above must be paid within 60 days from the date of the order, which requires it, or within the time frame not exceeding 30 days as may be ordered by the Court. The amount of compensation paid can be subtracted from the fine that the Magistrate imposes for the drawee’s conviction by Section 138 of the Act or any amount of payment required to be paid by Section 357 under the Code of Criminal Procedure of 1973. Section 138 under the Act is a provision for imprisonment for up to 2 years or a fine of up to double that amount as the dishonored check or both.

Amendments

The two new sections, i.e., the 143A, both 143A and148, have been suggested to be added under the Negotiable Instruments Act of 1881 through Amendment Act: Amendment Act:

Section 143A- It enables the Court to require the holder of the cheque to pay interim compensation to the complainant

In the event of a summary court or in the case of a summons case, in which the defendant pleads not guilty to the charges included in the complaint and

In all other cases in any other case, on framing the charges.

The quantity of Compensation compensation amount must not exceed 20 percent of the total amount in the cheque.

If cleared, the payee could d be ordered to pay back the total sum of the interim payment together with the pre-determined interest rate of the RBI and the drawer.

Time frame The interim compensation should be due within 60 days of the day of the decision by the Court. This period can be extended by another 30 days, subject to justifications that are presented.

Section 148 allows the Appellate Court to order payment for the time it takes to appeal against a conviction under Section 38 of the Negotiable Instruments Act.

An Appellate Court may order the appellant to pay a sum that is a minimum of 20 percent of the amount fined or any compensation that the trial Court has awarded.

This amount will be added to any amount an appellant receives as per Section 143A.

The deposit could be released through an order to pay by the person who is the victim at any time throughout the case.

On Acquittal – Ifis acquitted, the Court will order the complainant to pay the total amount of deposdeposit amount the current RBI percentage of interest back to the applicant.

Time frame – The amount is due within 60 days of the date of the order issued by the Court. This period may be extended an additional 30 days if satisfactory reasons for the delay are provided.

The interim compensation may be obtained using the procedure described by Section 421 in the Criminal Procedure Code, which allows for the sale and attachment of the property that is movable or the issuing of a warrant to the Collector to collect the amount of compensation due to the drawer’s moveable or immovable property as if it were land revenue unpaid.

Suppose the person who wrote the cheque is not found guilty. In that case, the Court will direct the complainant to repay any interim damages to the drawer together with interest at the rate set by the Reserve Bank of India at the start of the applicable fiscal yea within 60 days of the date of this order.

Landmark Judgments

In the case of G.J. Raja vs. Tejraj Surana, SLP (Criminal) No. 3342 of 2019, the Honorable Supreme Court ruled invalid. Section 143A under the Negotiable Instruments Act will not be applied retroactively. “The provisions of said section 143A can be applied or invoked only in cases where the offense under section 138 of NI Act was committed after the introduction of said section 143A.” The Court observed. This provision, therefore, is not applicable if the Court took cognizance of the offense before the amendment became effective. Section 143A applies only if the Court has been notified of the crime after the amendment was made.