oppn parties Doing Away With Section 138 Of The NI Act Will Be A Retrograde Step

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
oppn parties
Doing Away With Section 138 Of The NI Act Will Be A Retrograde Step

By Sunil Garodia
First publised on 2020-07-23 07:50:56

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

The NDA government is concerned about the ease of doing business in India and has taken several steps to better it. Then why is it thinking of a retrograde step like amending Section 138 of the Negotiable Instruments Act to make bouncing of cheques a civil offence? If the government is worried about the more than 38 lakh cases for cheque bouncing that are pending in courts and are clogging the system, it should recognize that this figure would have been much higher if section 138 was not there. Secondly, by making writing a dud cheque a civil offence, would the litigations go away? Since civil cases in India drag on for years, what will happen is that borrowers will issue cheques with abandon (since there will be no criminal liability) and the judicial system will be choked with civil cases due to bounced cheques and lenders will have no easy solution to get their money back. Willful default would increase manifold. It would also impact transactions like bank loans, trade credit and financing of motor vehicles and appliances as lenders would not have the comfort of lodging a criminal case against a defaulter.

The Covid-19 disruption has brought into sharp focus the fact that at the time of writing a post-dated cheque, to pay current liabilities at a mutually-agreed future date, no one can predict future financial stress and consequent bouncing of cheques. Even otherwise, businesses can see a slump in sales and profits or individuals can lose jobs making it difficult for them to honour future commitments and cheques may be dishonoured due to that. But such cases are few. Most cheque bouncing is due either to willful default or borrowers trying to avoid payment by cooking up disputes. The solution would be for the borrowers to inform the lenders about their problems and for the lenders to verify the genuineness and redraw the schedule of payment with reasonable overdue interest and processing charges. But willful default by borrowers in case of post-dated cheques or default in case of current-dated cheques are financial frauds and cannot be condoned under any circumstance. Dishonouring of cheques must remain a criminal offence. The law should be amended to provide quick redress to lenders or the Supreme Court should issue further guidelines to streamline the process in such cases to do away with lengthy procedural barriers and make way for quick disposal of such cases to ease the load on the judicial system. 

Picture courtesy: cropped from an image at corpbiz.io