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Negotiable instruments Act Amendment passed by parliament, New rules for cheque bounce and interim compensation

Negotiable instruments Act, amendment

Negotiable instruments Act Amendment

On 27 July 2018, the Rajya Sabha has passed The Negotiable Instruments (Amendment), Bill. It was first introduced in Lok Sabha on January 2, 2018.

The two major area of the amendment are the new rules for bounced cheques, mainly post dates ones.

Further, The new Negotiable Instruments Amendment Bill provides for interim compensation to the complainant to the tune of 20% of cheque amount.

List of amendments

Interim compensation

In the age of net banking, businesses across India use cheques, including post-dated ones, to make and receive payments from vendors, suppliers, and customers. In some cases, such cheques bounce, and the matter ends up in court. It is easy for the drawer of a dishonored cheque to file an appeal and obtain a stay on court proceedings. This reduces the credibility of cheques in the world of business.

In a case under section 138 of negotiable instruments act, a court trying may give interim compensation to the complainant.

The maximum amount of compensation

The interim compensation cannot be more than 20%.


Time period

The compensation shall be paid within 60 days. An extension of 30 days may be given on reasonable ground.


Return of compensation

If the drawer is acquitted, the complainant is bound to repay the money.

The said changes have been made by inserting section 143A


Negotiable instruments Act Amendment also include the provision to insert section 148, empowering the appellate court to direct deposit of a minimum of 20% of the cheque amount in appeal by the drawer against conviction, within sixty days. This amount can be released to the complainant and has to be returned to the accused if the appeal is allowed.


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