How to appreciate evidence in cheque dishonour case if there is allegation that cheque is materially altered?

 If a signed blank cheque is voluntarily presented to a payee,
towards some payment, the payee may fill up the amount and
other particulars. This in itself would not invalidate the cheque.
The onus would still be on the accused to prove that the cheque
was not in discharge of a debt or liability by adducing evidence.
39. It is not the case of the respondent-accused that he either
signed the cheque or parted with it under any threat or coercion.

Nor is it the case of the respondent-accused that the unfilled
signed cheque had been stolen. The existence of a fiduciary
relationship between the payee of a cheque and its drawer, would
not disentitle the payee to the benefit of the presumption under
Section 139 of the Negotiable Instruments Act, in the absence of
evidence of exercise of undue influence or coercion. The second
question is also answered in the negative.
40. Even a blank cheque leaf, voluntarily signed and handed over
by the accused, which is towards some payment, would attract
presumption under Section 139 of the Negotiable Instruments Act,
in the absence of any cogent evidence to show that the cheque
was not issued in discharge of a debt.
41. The fact that the appellant-complainant might have been an
Income Tax practitioner conversant with knowledge of law does not
make any difference to the law relating to the dishonour of a
cheque. The fact that the loan may not have been advanced by a
cheque or demand draft or a receipt might not have been obtained
would make no difference. In this context, it would, perhaps, not
be out of context to note that the fact that the respondent-accused
should have given or signed blank cheque to the appellantcomplainant,
as claimed by the respondent-accused, shows that
initially there was mutual trust and faith between them.
42. In the absence of any finding that the cheque in question was
not signed by the respondent-accused or not voluntarily made over

to the payee and in the absence of any evidence with regard to the
circumstances in which a blank signed cheque had been given to
the appellant-complainant, it may reasonably be presumed that
the cheque was filled in by the appellant-complainant being the
payee in the presence of the respondent-accused being the
drawer, at his request and/or with his acquiescence. The
subsequent filling in of an unfilled signed cheque is not an
alteration. There was no change in the amount of the cheque, its
date or the name of the payee. The High Court ought not to have
acquitted the respondent-accused of the charge under Section 138
of the Negotiable Instruments Act.
REPORTABLE
THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.230-231 OF 2019

Bir Singh  Vs Mukesh Kumar 

Indira Banerjee, J.
Dated:FEBRUARY 06, 2019.

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When overwriting in cheque will not amount to material alteration in cheque dishonour case?

Per contra, the learned counsel for the first respondent has argued that the said correction in one of the digits in the amount entered in figures in Ext. P1 is nothing but material alteration within the meaning of Section 87 of the NI Act. In Ext. P1 the amount has been clearly entered in words as "Rupees one lakh and fifty thousand only". The amount has been entered in figures also. It seems that in digit "0" after the digit "15", there is overwriting. The question to be considered is whether it amounts to material alteration within the meaning of Section 87 of the NI Act? Section 87 of the NI Act clearly says that such an alteration should be a material alteration. Here, an overwriting can also be categorised as an alteration. At the same time, when the amount is clearly discernible and is written in bold letters in words as "one lakh and fifty thousand only", the mere overwriting or correction in the digit "0" in the amount entered in figures in Ext. P1 cannot be treated as a material alteration within the meaning of Section 87 of the NI Act. Had there been any overwriting or corresponding correction in the amount entered in words in Ext. P1, it could have been said that it was an alteration of material nature as contemplated under Section 87 of the NI Act. When there is no corresponding correction or alteration in the amount entered in words in Ext. P1, at any stretch of imagination, it could not have been considered as a material alteration. It seems that the Court below has unnecessarily passed a judgment of acquittal in this case.

Negotiable Instruments Act, 1881 (Central Act 26 of 1881) - Section 87--Material alteration--Mere overwriting on a digit in the amount entered in figures in a cheque does not amount to material alteration, when there is no correction in the amount entered in words in that cheque.

IN THE HIGH COURT OF KERALA

Crl. A. No. 237 of 2009

Decided On: 15.07.2016

 Rajan P.K. Vs. K. Radhakrishnan and Ors.

Hon'ble Judges/Coram:

B. Kemal Pasha, J.

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When filling up of blank Cheque will not amounts to Material Alteration in case of dishonour of cheque?

 With regard to the instruments other than a cheque, an implied
authority is given to the holder at the time of entrusting it to fill up the
same. There may be instances where an implied authority is given to the
person, at the time of entrusting a signed blank cheque containing the
signature of the drawer of the cheque, to fill the columns therein.
 If   a   principal   or   employer   deputes   his   agent   or   employee   to
purchase an article and if the dealer fills up that signed blank cheque
leaf showing the exact amount covered by the bill showing the price of
the article sold then it cannot be said that what was handed over by the
drawer of the cheque is only a signed blank cheque leaf. In such cases an
implied authority to the trader/seller of the article to fill up the cheque
leaf can certainly be inferred. Similarly, there may also be cases where at
the time of settlement of the accounts, a particular amount was found
payable by the drawer of the cheque to the other party and if a signed
blank cheque entrusted to be filled up later is filled up in tune with the
accounts,   showing   the   actual   amount   payable   by   the   drawer   of   the
cheque to the other party, then also it can be said that there was the
implied authority to fill up the signed blank cheque leaf. There may be
such instances where the sum is ascertainable and the signed blank
cheque leaf is given to fill up the same after ascertaining the same. In
such cases there would be no difficulty to infer an implied authority
given by the drawer. Simply because the cheque is seen filled up or
written   in   the   hand   writing   of   another   person   it   cannot   lead   to   a
conclusion that only a signed blank cheque leaf was given. The person
signing the cheque may have difficulty due to many reasons to write the
cheque and it might have been filled up by the payee or by another. In
such cases it cannot be said that what was handed over was only a
signed blank cheque leaf. In all such cases the ultimate conclusion may
depend   upon   the   proof   of   the   transaction   and   execution   of   the
instrument. It must also be held that when it is a case that only a signed
blank   leaf   was   handed   over   by   the   accused,   then   he   must   offer
satisfactory explanation as to the circumstances under which the signed
blank cheque happened to be handed over. Considering the totality of

the evidence and circumstances, it is for the court to draw the inference
as to whether it was given with an implied authority to fill up the same
showing the amount ascertained or ascertainable to discharge the debt
or liability. Therefore, there may be such cases where implied authority
can be inferred. But the contention that when a signed blank cheque leaf
is handed over, it can never be filled up and that if it is filled up it would
amount to a material alteration within the meaning of using Section 87
of   the   N.I.   Act,   does   not   stand   to   rhyme   or   reason.   Similarly,   the
contention that  Section 20 of the N.I. Act is applicable to an unfilled or
blank cheque leaf also cannot be accepted. It would depend upon the
facts of each case. Therefore, it is neither a case which attracts Section
87 of the N.I. Act nor is it a case where the complainant can rely upon
Section 20 of the N.I. Act and contend that as a signed blank cheque leaf
is given it gives an authority to fill up the same according to the whim
and fancy of the payee. [See : P. Purushothaman Nair v. K. Sreekantan
Nair, 2013 (4) ILR (Ker) 115]
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE FIR/ORDER)
NO. 968 of 2014


NIKHIL P GANDHI.
Versus
STATE OF GUJARAT & 2.
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 15/06/2016
Citation:2016 CRLJ4338 Guj

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When cheque shall be deemed to be materially altered in cheque dishonour case?

In the statutory notice, there was no mention about the alteration of dates in the Cheques by the accused after the expiry of the validity of the Cheques. Only in the complaint, it is stated that the Cheques were issued on various dates in the month of March and April, 1998 and in order to suit their convenience by arranging the funds to honour those Cheques, the second accused made endorsement changing the dates and handedover the Cheques for encashment. In the notice as well as in the complaint, no reference was made regarding the endorsement of the Cheques in favour of the financiers and received money from the financiers after discounting the Cheques and later repaid the amounts to financiers and got back the Cheques and presented for collection. It is admitted by PW.1 that the Cheques were endorsed in favour of the financiers and he received the amount due under the Cheques from the financiers and later the financiers gave those Cheques and got the amount from him. In these circumstances, can it be stated that the appellant is a holder in due course and entitled to maintain any action. Section 9 of the N.I.Act defines holder in due course and it means any person who for consideration became the possessor of a promissory note, bill of exchange or cheque, if payable to the bearer or payee or the indorsee thereof, if payable to order before the amount mentioned in it becmae payable and without having sufficient case to believe that any defect existed in the title of the person from whom he derived his title. Therefore, in respect of the cheque payable to the bearer, the first part of Section 9 of the N.I.Act is applicable and therefore, holder in due course, means any person who for consideration became possessor of promissory note, bill of exchange or cheque payable to the bearer. Admittedly, the appellant discounted the Cheques with the financiers and got money from the financiers and according to the appellant, when the Cheques were not honoured when they were presented by the financiers, they gave back the cheques to the appellant and got back the amount paid by them. To substantiate the said allegation, the financiers were not examined regarding the receipt of money from the appellant nor the same was mentioned in the notice as well as in the complaint. It is also seen from the endorsement made in the Cheques, namely, Exs.P.3, P.4, P.6, P.7 and P.8 that those Cheques were endorsed in favour of the financiers and as a matter of fact those Cheques were presented for collection by the financiers and they were returned. Therefore, having regard to the admitted fact that the appellant received money from the financiers by discounting the Cheques and in the absence of any evidence to prove that he repaid the money to the financiers, it cannot be stated that the appellant is the holder in due course and entitled to maintain any action. Though the appellant is a payee as per the cheques, having admitted that the cheques were discounted with the financiers and received money, the appellant cannot claim to be a payee for initiating the prosecution. As per section 9 of the N.I.Act, the payee can become a holder in due course only in the case of cheque payable to the order and when the Cheque is payable to the bearer, unless the person became the possessor of the cheque for consideration, he cannot claim as holder in due course. As stated supra, admittedly, all the Cheques were payable to the bearer and therefore, the appellant cannot claim to be a holder in due course and maintain any action. Hence, Point No.(i) is answered against the appellant.

7. Point No.(ii):- Admittedly, the date of cheques were altered. As stated supra, the appellant did not state any thing about the alteration of the dates in the notice and only in the complaint it was stated that the dates were altered at the instance of the accused and the alteration was also attested by the second accused. The accused disputed the alteration in the dates and signature found along with the alteration of date. The appellant is relying upon the alteration of dates and contended that the dates were altered by the second accused and he also attested the alteration by affixing the signature. Therefore, when the specific case was put forward by the appellant regarding the alteration and the same was denied, the burden is on the appellant to prove to that effect by sending the Cheques for examination of experts and the appellant did not take any steps to examine those documents. Admittedly, the Cheques were presented for collection on 19.3.1999 and but for the alteration of the dates, the cheques would have become stale and invalid when they were presented for collection on 19.3.1999. As stated supra, there are endorsements in Exs.P.3, P.4, P.6, P.7, P.8 and P.9 that the Cheques were presented for collection through bank by the financiers even in the year March 1998. Therefore, in order to make the Cheques valid, the dates of the Cheques were altered and but for the alteration, the Cheques could not have been presented for collection on 19.3.1999. Therefore, it is more important on the part of the complainant to prove that the alteration of dates was made by the accused. Having regard to the fact that the appellant did not mention about the discounting of Cheques with the financiers and did not mention the alteration of dates in the notice and failed to take steps to compare the signature found in the Cheques with the endorsement made along the alteration of date would lead to the conclusion that the appellant failed to prove that the alteration of dates in the Cheques were done by the second accused. It is further to be noted that in the chief examination, PW.1 did not state any thing about the alteration of dates and the endorsements made by the second accused. Once that conclusion is arrived at, it has to be held that the Cheques were materially altered as alteration of dates in the Cheques amounts to material alteration and when the Cheuqes were materially altered, the present action on those Cheques is not maintainable. Point No.(ii) is also answered against the appellant.

Madras High Court

Pattabiram Yarn Co vs Sangeetha Exports on 10 March, 2015

Citation; 2015 ALLMR(CRI)Journal 456

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