Section 81A IT Act: Application of the Act to electronic cheque and truncated cheque

Information Technology Act, 2000

Section 81A IT Act at a Glance

Section 81A IT Act applies the IT Act to electronic cheques and truncated cheques, subject to modifications notified by the Central Government in consultation with the Reserve Bank of India. Every such notification must be laid before Parliament for 30 days.

Section 81A IT Act Bare Act Text

81A. Application of the Act to electronic cheque and truncated cheque.
(1) The provisions of this Act, for the time being in force, shall apply to, or in relation to, electronic cheques and the truncated cheques subject to such modifications and amendments as may be necessary for carrying out the purposes of the Negotiable Instruments Act, 1881 (26 of 1881) by the Central Government, in consultation with the Reserve Bank of India, by notification in the Official Gazette.
(2) Every notification made by the Central Government under sub-section (1) shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the notification or both Houses agree that the notification should not be made, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that notification.
Explanation.—For the purposes of this Act, the expressions “electronic cheque” and “truncated cheque” shall have the same meaning as assigned to them in section 6 of the Negotiable Instruments Act, 1881 (26 of 1881).

Amendments to this section

Ins. by Act 55 of 2002, s. 13 (w.e.f. 26-2-2003).

Section 81A IT Act in Simple Words

Section 81A IT Act extends the provisions of the IT Act in force to electronic cheques and truncated cheques. Under Section 81A(1) IT Act, this application is subject to any modifications and amendments that the Central Government makes by notification in the Official Gazette (the government's official public journal), after consulting the Reserve Bank of India, as needed to carry out the purposes of the Negotiable Instruments Act, 1881.

Section 81A(2) IT Act sets out Parliamentary oversight over every notification issued under Section 81A(1) IT Act. As soon as possible after the notification is made, it must be laid before each House of Parliament while in session for a total period of 30 days, which may be completed in a single session or spread across two or more successive sessions.

Before the end of the session immediately following that session or those successive sessions, both Houses of Parliament may agree to modify the notification or agree that it should not be made. From that point onward, the notification operates only in the modified form or ceases to have effect. However, any modification or annulment happens without prejudice to (meaning it does not invalidate) anything already done under the notification before that change.

The Explanation to Section 81A IT Act states that for the purposes of the IT Act, the terms "electronic cheque" and "truncated cheque" carry the same meanings given to them in Section 6 of the Negotiable Instruments Act, 1881. Section 81A IT Act was inserted by Act 55 of 2002 with effect from 26 February 2003.

When Section 81A IT Act Applies

The provisions of the IT Act in force apply to, and in relation to, electronic cheques and truncated cheques as defined in Section 6 of the Negotiable Instruments Act, 1881.
The Central Government, in consultation with the Reserve Bank of India, may notify in the Official Gazette modifications and amendments needed to carry out the purposes of the Negotiable Instruments Act, 1881.
Every notification under Section 81A(1) IT Act must be laid before each House of Parliament while in session for a total of 30 days across one session or two or more successive sessions.
If both Houses agree before the end of the immediately following session to modify or annul the notification, it takes effect in modified form or ceases to have effect from then on, without invalidating prior actions under it.

Example of Section 81A IT Act

Anirudh, a business owner in Jaipur, uses an electronic cheque (within the meaning of Section 6 of the Negotiable Instruments Act, 1881) for a ₹2 lakh payment, and a dispute arises over whether the IT Act applies to that electronic cheque. Under Section 81A(1) IT Act, the provisions of the IT Act in force apply to and in relation to electronic cheques and truncated cheques, subject to any modifications and amendments notified in the Official Gazette by the Central Government after consulting the Reserve Bank of India. When the Central Government makes such a notification, Section 81A(2) IT Act requires it to be laid before both Houses of Parliament for a total of 30 days. Even if both Houses later agree to modify or annul that notification within the permitted session window, anything validly done under the notification before that change remains valid.

When Section 81A IT Act Does Not Apply

Where both Houses of Parliament agree within the timeframe in Section 81A(2) IT Act that a notification made under Section 81A(1) IT Act should not be made, that notification ceases to have effect from then on.
Under Section 81A(2) IT Act, any modification or annulment of a notification by both Houses of Parliament does not apply backward to invalidate anything previously done under that notification.

FAQs on Section 81A IT Act

What is Section 81A IT Act?▼

Section 81A IT Act makes the provisions of the IT Act in force applicable to electronic cheques and truncated cheques, subject to modifications notified by the Central Government in consultation with the Reserve Bank of India. It also requires every such notification to be laid before both Houses of Parliament for 30 days and links both cheque terms to Section 6 of the Negotiable Instruments Act, 1881.

Who must the Central Government consult before notifying modifications under Section 81A(1) IT Act?▼

The Reserve Bank of India. Under Section 81A(1) IT Act, the Central Government issues the notification in the Official Gazette after consulting the Reserve Bank of India.

For how long must a notification under Section 81A IT Act be laid before Parliament?▼

30 days in total while each House of Parliament is in session. Under Section 81A(2) IT Act, those 30 days may fall within one session or across two or more successive sessions.

Does Parliamentary annulment of a notification under Section 81A(2) IT Act undo actions already taken under it?▼

No. Section 81A(2) IT Act states that any modification or annulment by both Houses of Parliament does not affect the validity of anything previously done under that notification.

Where does Section 81A IT Act take the meanings of electronic cheque and truncated cheque from?▼

Section 6 of the Negotiable Instruments Act, 1881. The Explanation to Section 81A IT Act assigns both expressions the same meanings they have in that provision.

Have questions about Section 81A IT Act?

Ask NyayGuru about your situation and get an answer based on the Information Technology Act, 2000.

Ask NyayGuru →

Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Information Technology Act, 2000 ·