A private citizen changed a banking law in 90 days!

Early this year, when 69-year-old Mr. J. P. Vaghani, a Mumbai businessman, wanted to file a cheque bouncing case, he learnt that, according to a new rule (as per a Supreme Court order in 2014), a case under Section 138 of the Negotiable Instruments Act must be initiated at the place where the branch of the bank on which the cheque was drawn is located. This meant that Mr. Vaghani could not file the case at Borivali, where he had deposited the cheque. He would have to file a case in Kurla, the location of the bank from where the cheque was dishonoured. This meant he would have to travel from Borivali to Kurla and back, totally over 50 kilometers, for every hearing!

Mr. Vaghani decided to do something about this and, if possible, get the Supreme Court verdict reversed.

On March 15, 2015, he wrote to the Law Minister of India, referring to last year’s judgement, which was “tantamount to harassment of the complainants and benefited the accused who issued the dishonoured cheques.”

“In such circumstances, if business takes place between Mumbai and Delhi and a Mumbai trader delivers material at Delhi and receives a cheque in Delhi which gets dishonoured, then as per recent judgment, the Mumbai trader has to run to Delhi to file a case at the drawee bank’s jurisdiction for recovery and again as per the court, dates arise at his own cost leaving all his business at Mumbai,” Mr. Vaghani’s letter stated.

On April 22, the Union Cabinet, at a meeting chaired by Prime Minister Narendra Modi, cleared the amendment to the Act clarifying the jurisdictional issues for trying dud cheque cases.

On June 10, the Union Cabinet decided to promulgate an Ordinance to the effect that “the offence of rejection/return of cheque under Section 138 of Negotiable Instruments Act will be enquired into and tried only by a Court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated.”

The Ordinance was signed and promulgated by President Pranab Mukherjee on June 15 – proving a huge victory for Mr. Vaghani’s efforts.

Of course, the ordinance would have to be approved by both houses of parliament within six months of being promulgated.

A banking law was amended in 90 days just because a private citizen “decided to do something about this”!!

For complete details, please read this Economic Times report.