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Dishonour of cheques to attract stringent punishment

By Our Special Correspondent

NEW DELHI JULY 5 .The Union Cabinet today gave its green signal for a set of amendments to the Negotiable Instruments Act to make it more people-friendly. The changes include doubling of the punishment for dishonour of cheques from one year to two years, and a provision to legalise transactions through electronic cheque.

Announcing the Cabinet decision, the Union Minister, Sushma Swaraj, said the amendments, which would be brought before Parliament in the form of a Bill for its approval, would also set a time limit of six months for the disposal of such cases from the time of filing of the cases, raise the time ceiling for issue of notice by the victims from 15 days to 30 days, and do away with the existing condition that courts must take cognisance of the cases within one month.

Besides, non-executive directors of defaulting companies would not be any more liable for prosecution if they held the office on behalf of the Central or the State Governments or financial institutions owned or controlled by them.

The Bill would also seek to amend the Information Technology Act to make it applicable to "electronic image of truncated cheque and a cheque in electronic firm''. In other words, transactions through electronic cheques and clearance of paper cheques through electronic means would be made legal.

The Cabinet also cleared a proposal to further amend the Companies (Second Amendment) Bill, which is pending in the Lok Sabha, to allow inter-State cooperative societies which get transformed into producer companies to use their general reserves for investments in any manner and not just in government units, bonds and approved securities as provided for till now. In addition, all directors would be allowed to continue in office for up to one year from the date of their transformation into producer companies. As per present provisions, the number of directors in such companies should be restricted to 15 right from the day they get transformed.

The Cabinet further gave its seal of approval for the agreement on cooperation in the area of tourism, which was signed during the January visit of the Chinese Premier, Zhu Rongji. The accord, among other things, seeks to make India an approved destination for tourists from China. China regulates foreign travel of its citizens through a system of `preferred destinations'. The meeting also decided to provide budgetary support to the Indian Drugs and Pharmaceuticals Limited to meet its expenses on salary and wages for its employees till March next year or till the PSU is privatised, whichever is earlier.

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