Chamber of Small Industry Associations (COSIA), Vidarbha Chapter, Chairman, Shri Mayank Shukla, stated that Government is contemplating to dilute certain Financial Offenses Act, by decriminalizing them. Currently, Cheque Bouncing offense is considered a serious financial fraud. Under section 138 of the penal code, the offender is liable to pay double the amount and also can be imprisoned for a maximum of 2 years.
Many a time during the Business transactions, the supplier offers credit to the buyer against the post-dated cheques, even if the parties are unknown to each other, because the issuance of post-dated cheque forms a firm commitment of payment on a specified date, failing which he is liable to be prosecuted under criminal offense. If this legal provision is diluted the post-dated cheques will be issued by buyers without any sense of commitment Shri Shukla said.
CA Julfesh Shah, Vice Chairman, COSIA elaborating on the issue said that issuance of the post-dated cheque is a link of mutual trust between an unknown supplier and a strange buyer and makes a deal possible between the two unknown parties. If this act is diluted this type of business transaction between the two unknown parties will be difficult to take place and ultimately will affect the business, revenue to the Government, and profit due to business transactions.
The government has sought suggestions from the stakeholders and in response to that COSIA, Vidarbha Chapter has a strong reservation for this proposed move which may prove detrimental to the business ethics and sense of commitment, CA Shah said.It was some sort of safety & security to the suppliers /vendors for the goods/materials supplied to the buyers on credit terms which provided them some comfort level to recover their dues, CA Shah concluded.