Open Access Research Article
LEGAL CHALLENGES AND SYSTEMIC SHIFTS IN DIGITAL INSTRUMENT FRAUD UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT
Abstract
This paper
examines whether the migration of cheque-based payments from paper to
image-based and fully electronic
rails has altered the legal standard of dishonour under Section 138 of the
Negotiable Instruments Act, 1881 (“NIA”), and whether the Act is adequate to
address digital instrument fraud. It
uses doctrinal analysis of the statute, Supreme Court and High Court precedent,
and RBI regulatory instruments, and advances three propositions. First, the
formal ingredients of Section 138 have remained constant, but their evidentiary
foundations, causal attribution and mens rea
implications have shifted materially in Cheque Truncation System (“CTS”)
environments. Second, the presumptions under Sections 118 and 139 were
calibrated for a paper world in which the drawer held the best evidence of
authenticity. They operate inequitably where the decisive evidence lies in
bank-controlled electronic logs. Third, the NIA contains no coherent allocation
of liability among drawers, collecting banks, paying banks and clearing
infrastructures, and it does not reach
e-mandates or tokenised instruments at all. The paper concludes
by proposing targeted amendments: a statutory typology
of returns, an attribution-based safe harbour, electronic-record presumptions,
a bank-cooperation duty, and an extension of the Chapter XVII offence to
electronic payment mandates.
Published Paper
Author Details
Authors: HARIHARAN MRegistration ID: 1013392 | Published Paper ID: IJLRA13392Approved ISSN: 2582-6433 | Country: Delhi, IndiaPage No.: 1526- 1543
Article Information
LEGAL CHALLENGES AND SYSTEMIC SHIFTS IN DIGITAL INSTRUMENT FRAUD UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT
Authors: HARIHARAN M
- Journal IJLRA
- ISSN 2582-6433
- Volume 3
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- AbbreviationIJLRA
- ISSN2582-6433
- AccessOpen Access
- LicenseCC 4.0
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