Negotiable Instruments (Amendment) Bill

Investopedia says “A negotiable instrument is a written order or unconditional promise to pay a fixed sum of money on demand or at a certain time. A negotiable instrument can be transferred from one person to another. Once the instrument is transferred, the holder obtains full legal title to the instrument.” While the section 13 of the Negotiable Instruments Act 1881 defines negotiable instruments as, “A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.” This act of 1881 defines the cheque, promisory notes and other instruments in various sections of the act. Act defines cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. Act also defines the bill of exchange as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

Negotiable Instruments act was passed in colonial era. In order to make it competent to the time, government has made variouschanges to the act. Like before 1988 there being no provision to restrain the person issuing the Cheque without having sufficient funds in his account. Although for the Dishonoured cheque there was and still is a civil liability present. In order to ensure promptitude and remedy against the defaulters of the Negotiable Instrument a criminal remedy of penalty was inserted in Negotiable Instruments Act, 1881 by amending it. Further changes were bought in 2003 Cheque truncation through digitally were also included and the amendment Act. In order to remove the still persitant problems government has bought the ordinance to the Negotiable Instruments Act, 1881.

The Bill seeks to modify the definition of a cheque in electronic form, and clarify the appropriate area of jurisdiction of courts, where cases of cheque bouncing can be filed. The Bill also amends the definition of ‘cheque in the electronic form’. Under the Act, this was defined as a cheque containing the exact mirror image of a paper cheque and generated in a secure system using a digital signature. The definition has been amended to mean a cheque drawn in electronic medium using any computer resource, which is signed in a secure system with a digital signature and asymmetric crypto system (pair of a public key and private key to create a digital signature), or electronic system.

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