Unauthenticated Alteration of Date on a Cheque Constitutes Material Alteration Rendering the Instrument Void Under Section 87

In brief

The question

1. What is the legal effect of correcting the date of a cheque without authentication by the drawer’s signature?

The court held

The Court answered that a correction in the date without the drawer's signature constitutes a material alteration that renders the instrument void.

It also directed

The High Court upheld the Trial Court's verdict, holding that no prosecution under Section 138 of the NI Act is permissible based on a void cheque.

The criminal appeal was dismissed, and the acquittal of the accused was confirmed.

01Facts

The Appellant/Complainant filed a complaint under Section 138 of the Negotiable Instruments Act (NI Act).

p. 3

She alleged that the Accused issued a cheque (Ext. P1) for ₹55,000 on 20.09.2005 to discharge a liability.

p. 2

The cheque was dishonoured upon presentation with the bank memo citing "alteration in date" and "requires full signature".

p. 3

The Accused contended that the cheque was issued in 2004 for a sum of ₹25,000 and was materially altered by the Complainant by changing the year '04' to '05' without his authentication.

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The Trial Court acquitted the accused on 27.11.2006, ruling that the cheque was void due to material alteration.

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02Issues

i.1. What is the legal effect of correcting the date of a cheque without authentication by the drawer’s signature?

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ii.2. What are the legal consequences of a material alteration found in a Negotiable Instrument?

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iii.3. Whether the Trial Court was correct in holding that the accused did not commit an offence under Section 138 of the NI Act because the instrument was void?

p. 5

03Law Applied

The Court primarily applied Section 87 of the Negotiable Instruments Act, 1881, which governs the effect of material alterations.

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Under this provision, any material alteration of a negotiable instrument renders it void against any party who is a party at the time of the alteration and does not consent to it, unless the alteration was made to carry out the common intention of the original parties.

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The court noted that a change in date constitutes a material alteration that requires authentication by the drawer's full signature to remain valid.

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Provisions in the judgment · 3 · Linked ones open on LawLens

Negotiable Instruments Act, 1881 Section 138 Section 139 Section 87

04Reasoning

The Court examined Ext. P1 and the bank memo (Ext. P2), noting that the year '05' had been rewritten after erasing the previous entry.

pp. 5-6

Applying Section 87 of the NI Act, the Court reasoned that for an altered cheque to remain a valid basis for prosecution, the alteration must be authenticated by the drawer's full signature at the place of correction.

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Since the correction from '04' to '05' lacked the drawer’s signature, it was deemed a material alteration made without the proven common intention of the parties.

p. 7

Because a void instrument cannot form the basis of a criminal prosecution under Section 138, the statutory presumptions under Section 139 could not be invoked by the Complainant.

p. 4, 7