On 2nd August 2018, the Negotiable Instruments (Amendment) Act, 2018 (NI Amendment Act, 2018) has been notified to provide further protection to the recipients and holders of cheques in cheque bounce cases.
In 1881, the Negotiable Instruments Act, 1881 (“NI Act”) was enacted to consolidate the laws pertaining to promissory note, bills of exchanges and cheques and to provide speedy disposal of cases relating to dishonour of cheques. Under the provisions of the NI Act, if a cheque drawn by the drawer (person who writes the cheque) on an account maintained by him with a bank(towards discharge of his debt or liability in whole or in part), is dishonoured by the bank; then the drawee (person in whose favour cheque is issued) of the cheque is entitled to initiate criminal proceedings against the issuer of the cheque before the Metropolitan Magistrate or Judicial Magistrate of First Class. Further, these cases are to be disposed of by the Metropolitan Magistrate or Judicial Magistrate of First Class in accordance with the provisions of summary trial under the Code of Criminal Procedure 1973.
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