Decriminalizing Section 138 of the Negotiable Instruments Act 1881- The Step Forward

Yamini Gurjar
Alliance University, India

Volume II – Issue II, 2020

Cheque Dishonour is dealt under section 138 of the negotiable instruments act 1881. The provision penalizes dishonour due to insufficient funds. India has been using this provision since 1988. But lately, the government believes that the provision has fulfilled its original target which was to prevent people from dishonouring cheque and secure credibility of the cheques. Currently, 20% (approx. 4 million cases) of the total cases presented in the Indian courts are related to cheque dishonour. Hence, we look back at this decision; we can observe that criminalization has not proved to be as successful as it was estimated to be. Therefore, the government proposes to decriminalize it. This proposal has gathered support and opposition from every corner.

This paper discussed the development of the cheque dishonour law in India and how the government has always been inclined towards bringing this amendment. The paper tries to analyse the effect of this decision. The paper finally tries to answer whether this decision is the right course of action.

Keywords: Cheque, Dishonour, Decriminalization, Amendment, Negotiable Instrument


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