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“Section 138, in fact, has been introduced to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in the account maintained by him in bank and induce the payee or holder-in-due-course to act upon it. In other words, these provisions have been introduced to give greater credibility to our trade, business, commerce and industry, which is absolutely imperative in view of the growing international trade and business. The constitutional validity of these provisions has been upheld by the Supreme Court.”

2.15 The Statement of Objects and Reasons appended to the Bill which became the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002, inter alia, states:

“These provisions were incorporated with a view to encourage the culture of use of cheques and enhancing the credibility of the instrument. The existing provisions in the Negotiable Instruments Act, 1881, namely, sections 138 to 142 in Chapter XVII have been found deficient in dealing with dishonour of cheques. Not only the punishment provided in the Act has proved to be inadequate, the procedure prescribed for the Courts to deal with such matters has been found to be cumbersome. The Courts are unable to dispose of such cases expeditiously in a time bound manner in view of the procedure contained in the Act…. A large number of cases are reported to be pending under sections 138 to 142 of the Negotiable Instruments Act in various courts in the country…. The proposed amendments in the Act are aimed at early disposal of cases relating to dishonour of


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