Interim Compensation in cases of dishonoured cheques

New Delhi, Dec 15: The Union Cabinet on Friday cleared draft amendments in the Negotiable Instruments Act, 1881, that could award interim compensation in cases relating to dishonoured cheques, both at the trial and appellate stages.

The changes would enable a trial court to order payment of a part of the cheque amount as interim compensation to the receiver. If the drawer is acquitted, the court may direct the receiver to repay the amount paid as interim compensation with interest. Similar provisions would be enabled in case of appeals.

"Dishonour of cheques due to inadequate funds in the account of the drawer of the cheque or for other reasons causes serious distress in the trade, business and MSME sectors. It causes incalculable loss and inconvenience to payees and erodes the credibility of cheques to a large extent," said a government official in the know of the matter, who refused to be named.