Legal experts demand amendment to Negotiable Instruments Act

KATHMANDU, June 8: Legal experts have called on the concerned authority to make necessary amendments to the Negotiable Instruments Act 1977 so that it could widen its scope to cover all cases related to bounced cheques and give victims a respite.

Many legal experts are currently in a fix over how to deal with cases related to bounced cheques, as three different laws are being referred to while settling these cases.

Although the Negotiable Instruments Act 1977 is assumed to be an official legal tool to deal with such cases, many victims refer to the Civil Code while filing cases since it includes provision on detaining the defendant for up to 25 days to proceed with the investigation.

Lately, many victims have also started referring to the Banking Offence and Punishment Act 2008 to deal with cases of bounced cheques as it includes provision on keeping the defendant in the custody for up to 45 days for investigation purpose.

“Since the Negotiable Instruments Act does not have any provision on detaining the offenders — because the law does not define cases of cheque dishonour as criminal cases — victims define the offence in their own ways and file first information reports (FIRs) to better serve their interest,” Advocate Binaya Regmi told a seminar on ‘Dishonour of Cheque: Law and Practices’ organised jointly by Nepal Banking Institute and Appellate Court Bar Association here today.

Presenting a paper, Regmi said he had recently come across an instance in which a single offence had drawn three different FIRs, and the FIRs were filed by making reference to three different Acts.

“This is because the Civil Code includes a provision on compensating the victim or imposing a fine of Rs 5,000 and a jail term of five years on the offender. Likewise, the Banking Offence and Punishment Act includes a provision on slapping a fine of up to Rs 10,000 on the wrongdoer, while the Negotiable Instruments Act allows the victim to claim for interest on the amount that the defendant owes,” Regmi said.

In this regard, Regmi recommended that Nepal Rastra Bank (NRB) take the initiative to make necessary amendments to the Negotiable Instruments Act so that lawyers get the leverage to overlook the other two Acts while dealing with cases of bounced cheques.

“But while making the amendment, NRB should include a provision mentioned in a circular issued to banks and financial institutions on August 21, 2006, which says inability to convert a cheque into cash for whatsoever reason would be considered as dishonour of cheque,” Regmi said.

He made this point as the existing Negotiable Instruments Act only considers inability to convert a cheque into cash due to insufficiency of funds in the account as dishonour of cheque, and overlooks other conditions like closure or freezing of accounts, which may cause a cheque to bounce.

He also argued that it was essential to refer to the Negotiable Instruments Act to settle cases related to bounced cheques, as such cases are not criminal cases and should not draw Civil Code.

“Likewise, the Banking Offence and Punishment Act was introduced to deal with cases of fraud committed by staff of banking institutions in collusion with outsiders, so this Act should not be referred to while dealing with cases of bounced cheques,” Regmi said.

Advocate Bhoj Raj Acharya, however, said victims would continue to refer to the Banking Offence and Punishment Act while dealing with bounced cheque cases unless the Clause 3 (c) of the Act is removed.

Clause 3 (c) of the Act states: “While opening an account with a bank or a financial institution or demanding cash payment, no one shall draw a cheque to obtain or to knowingly make payment from an account where he/she has an apparent knowledge that the account does not have sufficient balance to cover the amount of the cheque drawn.”

Patan Appellate Court Justice Dwarika Man Joshi, on the other hand, did not agree with Regmi’s view on not considering bounced cheque cases as criminal cases. “Cases related to bad cheques should be considered as criminal cases, and not civil cases, as it raises question on the intention of the cheque writer.”

(Source: THT)