Published On : Sun, Jun 14th, 2020

Diluting Financial Offences Act may be Deterrent for Businesses

Nagpur: Chamber of Small Industry Associations (COSIA) ,Vidarbha Chapter, Chairman , Shri Mayank Shukla, stated that , Government is contemplating to dilute certain Fianancial Offenses Act ,by decriminalising them.Currently Cheque Bouncing offence is considered a serious financial fraud. Under section 138 of penal code,the offender is liable to pay double the amount and also can be imprisoned for maximum 2 years.

Many a times during the Business transactions, the supplier offers credit to buyer against the post dated cheques, even if the parties are unknown to each other, because issuance of post dated cheque forms a firm commitments of payment on a specified date, failing which he us 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 committment Shri Shukla said.

CA Julfesh Shah,Vice Chairman,COSIA elaborating on the issue said that issuance of post dated cheque is a link of mutual trust between an unknown supplier and strange buyer and makes a deal possible between the two unknown parties.If this act is diluted this type of business transactions 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.

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 committment, 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.