Govt plans harsh law against bounced cheques to promote digital economy

New Delhi: To clear the path for moving towards a cashless economy, the Modi government is examining a proposal that could lead to harsher punishments for defaulters in cheque bouncing cases.

According to reports, if the proposal is accepted, the government could come out with a legislation to amend the law pertaining to cheque bounce cases.

Among the measures the government is examining is that the defaulter will have a month’s time to rectify the error, failing which action would be taken.

The defaulter could then be arrested even before the case is settled, said the report.

At present, dishonour of a cheque, in view of inadequate funds in account, is a criminal offence under Section 138 of the Negotiable Instruments (Amendment) Act, 1881, and can be punishable with imprisonment for a term which may extend to two years or with fine of twice the amount of the cheque or both.

However, there are several instances where the payee is forced to wait to get the money for years after a cheque bounced, said the report. 18 lakh cases of cheque dishonour are pending in Indian courts at the moment.

With an objective to cut down litigation, the proposed amendments to deal with this issue, which are yet to be approved, could be brought in the budget session of Parliament in February, the report said.

Traders’ bodies, which traditionally support the Bharatiya Janata Party (BJP), have expressed concern over cheque bouncing cases, said the report. This is particularly at a time when more and more people were adopting non-cash mode of payments due to demonetisation.

Earlier this year, the government had notified the Negotiable Instruments (Amendment) Bill, 2015, to allow filing of cheque bounce cases in a court at the place where it was presented for clearance and not the place of issue, to prevent litigants from facing the hardship of travelling long distances.