CAIT Secretary General Praveen Khandelwal said that if the person issuing the cheque knows that there is no criminal liability then it will give rise to the ease of being dishonest rather than promoting ease of doing business
Traders' body CAIT
on Monday urged the government not to decriminalise bouncing of cheques, saying the move will not only nullify the sanctity of cheques but also contradict Prime Minister Narendra Modi's vision of a fair and trustworthy business environment in the country.
In a letter to Finance Minister Nirmala Sitharaman, the Confederation of All India Traders (CAIT) said the country's business community has been perturbed by the proposal to decriminalise Section 138 of the Negotiable Instrument Act, 1881, (NI).
The Section makes bouncing of cheques a criminal offence.
"Decriminalisation of this provision needs a serious thought as this would lead to a great problem in recovering legitimate business dues and private loans. Decriminalisation of Section 138 of this Act will prove as a deterrent to normal business instead of promoting it," CAIT
said in the letter.
It added that not only traders but people in general will also find it difficult to get any goods on equated-monthly instalments (EMI) as it is always supported by post-dated cheques, and no one will accept the cheques if its bouncing is decriminalised.
Secretary General Praveen Khandelwal said that if the person issuing the cheque knows that there is no criminal liability then it will give rise to the ease of being dishonest rather than promoting ease of doing business.
"The entire fundamentals of trade will be destroyed and traders will be left at the mercy of civil litigation that takes several years for justice. Even after the current stringent Section 138, more than 20 per cent of all pendency of cases across the country is only pertaining to cheque bounce. If it is decriminalised, there will be complete disarray and disturbance in trade dynamics," he said.
The finance ministry
has proposed to decriminalise a host of minor offences, including those related to cheque bounce and repayment of loans, in as many as 19 legislations to help businesses tide over the crisis caused by the coronavirus pandemic.
The 19 legislations include the Negotiable Instruments Act (cheque bounce); SARFAESI Act, 2002 (repayment of bank loans); Life Insurance Corporation Act, 1956; PFRDA Act, 2013; RBI Act, 1934; National Housing Bank Act, 1987; Banking Regulation Act, 1949; and Chit Funds Act, 1982.
"Actions taken for decriminalisation of minor offences are expected to go a long way in improving ease of doing business and helping unclog the court system and prisons," the finance ministry
said last month while inviting comments from stakeholders by June 23 on the 19 legislations.
It would also be a significant step in the government's objective of achieving 'Sabka Saath, Sabka Vikas and Sabka Vishwas', it noted.
Based on the feedback, the Department of Financial Services (DFS) will take a call whether a particular Section should remain a criminal offence or be suitably modified to decriminalise.
In May, Finance Minister Nirmala Sitharaman, while announcing the fifth and final tranche of the Rs 20-lakh crore stimulus package for the pandemic-hit economy, said violations involving minor technical and procedural defaults would be decriminalised as an effort to further ease of doing business in the country.
Taking a cue from the decriminalisation of minor offences under Companies Act, the DFS came out with a list of minor offences under various legislation and said decriminalisation of minor offences is one of the thrust areas of the government.