The cabinet today considered a proposal to amend the Negotiable Instruments Act, 1881 which will help trade and commerce, particularly in the MSME sector and increase the credibility of the cheque as a financial instrument.
The cabinet on Friday considered a proposal to amend the Negotiable Instruments Act, 1881 which will help trade and commerce, particularly in the MSME sector and increase the credibility of the cheque as a financial instrument, a source confirmed to DNA.
The proposal was to amend the Negotiable Instruments Act, 1881 to provide for interim compensation to the payees of the cheque, both at the Trial stage and Appellate stage.
Dishonour of cheques due to inadequate funds in the account of the drawer of the cheque or for other reasons cases serious distress in the trade, business and MSME sectors, which in turns causes inconvenience to payees and erodes the credibility of cheques.
The Cabinet today considered a proposal to amend the Negotiable Instruments Act, 1881 to address various representations form the public and trading community regarding the injustice caused to payees.
A source told DNA that the amendment would enable the Court order to interim compensation to the payee of a cheque a part of the amount at trial stage.
If the drawer is acquitted, the Court may direct the payee to repay the amount paid as interim compensation with interest, while the Appellate Courts would be enabled to order the appellant to deposit a part of the compensation awarded by the Trial Court at the time of filing an appeal.
The move is believed to be in line with the Centre’s commitment to reduce cash in the economy where cheques will be an integral part of he financial system and form the backbone of trade and commerce.
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