Evaluation and Reform: Complete Notes (Part O)

Part O concludes the series with an evaluation of the Negotiable Instruments Act and the debate on its reform. This consolidated note covers Topic 61.

61. Evaluation and Reform

• Achievements: a durable code of notes, bills and cheques since 1882; coexistence with hundi custom; credible cheques through Section 138; adaptation for truncated and electronic cheques (2002), payee-centred jurisdiction (2015) and interim compensation and appeal deposits (2018).
• Problems: heavy pendency (about 40 lakh cases estimated in 2020; over 6.5 lakh in Delhi alone in 2025); use of criminal law to recover debts; delay despite summary procedure; shifting jurisdiction rules; multiple complaints per transaction; obsolete civil provisions; no framework for UPI and other digital payments.
• Decriminalisation: the June 2020 proposal to decriminalise Section 138 among 39 minor offences was dropped; the Jan Vishwas Acts of 2023 and 2026 left the NI Act untouched. For: the offence is essentially civil and clogs criminal courts. Against: prosecution makes cheques credible, civil remedies are slow, and the section already protects honest drawers.
• Court-led reform: the Law Commission's 213th Report (2008) on fast-track courts; Indian Bank Association (2014); Meters and Instruments (2017); the 2021 Constitution Bench and R.C. Chavan Committee; Sanjabij Tari (2025).
• Proposals: one trial for related cheques; pre-litigation mediation; online dispute resolution; a graded approach for small cheques; a statutory account payee and fictitious payee rule; removal of days of grace; a framework for digital payment dishonour; legislative clarity on IBC moratoria.

62. The Topic of This Part

Topic 61: evaluation and reform of the Negotiable Instruments Act, including the decriminalisation debate.