Negotiable Instruments (Amendment) Ordinance, 2015

The Supreme Court in the case of Dashrath Rupsingh Rathod v. State of Maharashtra and another ((2014) 9 SCC 129) held that “the territorial jurisdiction is restricted to the Court within whose local jurisdiction the offence was committed, which in the present context is where the cheque is dishonoured by the bank on which it is drawn” as against the then prevalent practice of filing complaints under section 138 of the Negotiable Instruments Act, 1881 (“Act”) before the court in whose jurisdiction the cheque was presented for payment.

Following the abovementioned judgment of the Supreme Court, the Government of India (“GoI”), taking cognizance of the negative impact of the judgement on trade and commerce recently proposed the Negotiable Instruments (Amendment) Bill, 2015 (“Bill”). The Bill, inter alia, provides for the following amendments to the Act:-

  • cases can only be filed before a court within whose jurisdiction the branch of the bank of the payee, where the payee presents the cheque for payment, is situated;
  • all complaints pending before any court not having jurisdiction as per the new scheme of jurisdiction will be transferred to the court having territorial jurisdiction as per the proposed amendment; and
  • if more than one complaint is filed against the same drawer for multiple cheques before different courts, the court shall upon receipt of an application, transfer such cases to the court having jurisdiction as per the new scheme of jurisdiction.

The Bill was passed by the Lok Sabha on 13 May 2015, however, since the Rajya Sabha was adjourned sine die on 13 May 2015, the Bill could not be discussed and passed by the Rajya Sabha. In view of the urgency to create a suitable legal framework for determination of the place of jurisdiction for trying cases of dishonour of cheques, the GoI has passed the Negotiable Instruments (Amendment) Ordinance, 2015 on 15 June 2015. It is to be noted that Ordinance(s) must be approved by the parliament within six (6) weeks of reassembling, failing which they cease to operate. The monsoon session of the Parliament is scheduled to commence from 5 August 2015.