Now, you can file cheque bounce cases in your city

Filing a cheque-bouncing complaint has become easier. The government has notified the Negotiable Instruments (Amendment) Act, which allows the complainant to file a complaint in the city, where he is based or where the cheque has been deposited. The Act was passed by Parliament in its winter session that concluded in December 2015. The ordinance to the Act was promulgated in June 2015.

While complainants whose cheques have bounced will be happier, people who are issuing them also have to be more careful because in the absence of sufficient amount or diverse signature, they will have to go through the pain of travelling to another city repeatedly to fight their case.

The Amendment is expected to clear the pending cases of cheque bouncing, as it will be easier for complainants to follow up as they no longer will have to travel. On the other hand, it could also deter those issuing cheques issuing to ensure that the cheques don’t bounce, because they will be forced to travel in case a complaint is filed.

“The Amendment will deter people from issuing cheques without sufficient funds. Until now, they were not bothered because they knew that complainants would not bother travelling far to file their complaint and to follow up the case,” says Amit Maheshwari, managing partner, Ashok Maheshwary & Associates, an accounting firm.

Earlier, cheque bouncing complaints could be filed in places where the cheque was deposited. But in 2104, The Supreme Court had ruled, in the case of Dashrath Roopsingh Rathod versus State of Maharashtra & Another, that for bounced cheques, cases have to be filed only at the place where the branch of the bank on which the cheque was drawn was located.

“This created considerable problems especially in respect of cheques issued from an outstation branch. The payees of such bounced cheques had to travel to a different city to fight their case in the court having territorial jurisdiction over the cheque issuing branch,’’ says Rakesh Nangia, managing partner, Nangia and Company, Chartered Accountants.

For instance, if cheques issued by a Delhi-based firm to vendors in Mumbai and other cities bounced, it meant that vendors had to travel all the way to Delhi for filing their complaints. Now, the issuer of the cheque has to travel to the cities where the cheque has been deposited and the complaint has been filed.

A lot of cases of cheque bouncing were withdrawn due to the confusion over jurisdiction, because it became cumbersome for people to travel to file complaints, says Anshuman Jagtap, an advocate with Hariani and Company. “For institutions like banks, it became very difficult to travel to follow up cases of cheque bouncing. And a lot of security money is collected in the form of post-dated cheques. Recovering the money became very expensive for institutions, especially in case of cheques of small amounts,’’ says Jagtap adds. The punishment for cheque bouncing includes both imprisonment and penalty. Such cases tend to go on for a long time. There are estimated two million cases of cheque bouncing in courts, of varying amounts.