1. With the help of the Negotiable Instruments (Amendment) Act 2018, new provisions related to interim compensation are added in the Negotiable instruments Act 1881.
2. It adds two new sections to the NIA 1881; Section 143A and Section 148 to limit the issues of dishonor of cheque and to stop the injustice that a cheque bearer faces after the dishonor of the cheque.
3. In the cases of dishonor of cheques the drawer drags the case longer to avoid the payment and before this amendment, the cheque holder was not entitled to any kind of compensation until the Court fully resolved the case. The Negotiable Instruments (Amendment) Act 2018 focuses on this unfair issue faced by the cheque holder.
4. The newly added Section 143A gives power to the trial court to allow interim compensation to the complainant of dishonor of cheques when the accused pleads not guilty.
5. Section 143A specifies that the interim compensation provided shall not exceed twenty percent of the amount of the cheque. The decision to pay interim compensation and its amount is decided by the trial court. The trial may or may not allow interim compensation sometimes.
6. The accused must pay the interim compensation to the complainant within 60 days from order. With sufficient cause, the drawer can increase this period by 30 days.
7. If the drawer is acquitted then the complainants have to repay the drawer the complete amount of interim compensation along with interest at the bank rate published by RBI. The complainant must repay the interim compensation within 60 days from order, and the complainant can increase this period by 30 days with sufficient cause.
8. If the accused is found guilty and is charged with any fine or compensation, then the amount got as interim compensation is subtracted from the fined amount.
9. Another provision Section 148 specifies that in case the drawer files an appeal against his/her conviction then the appellate court has the power to direct the applicant to deposit a minimum of twenty percent of the fine or compensation awarded by the trial court. This amount shall besides the interim compensation earlier paid.
10. It is to be noted that this power withheld by the appellate court is not mandatory and depends on the court whether to use it. While the amount must be a minimum of twenty percent, the appellate court decides the exact amount and the appellant should pay it within sixty days from order.
11. If the drawer is acquitted the appellate court may direct the complainant to release the amount paid by the drawer during the pendency of the appeal.
12. The present amendment is a step taken towards improvement in the current scenario. Enhancing the trade industry by reducing the pendency ratio of dishonor of cheque cases. Strengthening the credibility of issued cheques will contribute immensely towards building business relations.
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