The Union Cabinet approved draft amendments in the Negotiable Instruments Act, 1881, that could award interim compensation in a case relating to bounced 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 discharged, 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.

Dishonor 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.

The proposed changes will be placed before the winter session of Parliament, a government official said. The changes are meant to address various representations from the public and trading community.