Material Alteration By Cheque Drawer To Defeat Payment Attracts S. 138 NI Act; 'Who Altered' Is A Triable Issue: J&K&L High Court

Emphasising that a material alteration in a cheque does not, by itself, absolve the accused of criminal liability, the Jammu and Kashmir and Ladakh High Court has held that the decisive factor under the Negotiable Instruments Act is not the mere presence of an alteration, but the identity of the person who made it.A bench of Justice Sanjay Dhar ruled that where an alteration is made by the drawer himself to defeat payment and frustrate proceedings under Section 138, prosecution cannot be scuttled at the threshold, as the question of responsibility for such alteration is one of fact to be determined during trial.The ruling came while dismissing a petition seeking the quashing of a cheque dishonour complaint and the cognizance order passed by the trial Magistrate, arising out of alleged alterations in the cheque amount.Background:The respondent-complainant had instituted a complaint under Sections 138 and 142 of the Negotiable Instruments Act alleging that the petitioner owed him ₹14 lakhs and had issued a cheque dated May 11, 2022, towards liquidation of the said liability. On presentation, the cheque was returned unpaid, with the bank's endorsement: “alterations require drawer's authentication”.After issuance of a statutory demand notice and the drawer's failure to make payment within the prescribed period, the complainant approached the Additional Mobile Magistrate, Shopian. The Magistrate, finding a prima facie case, took cognizance and issued process against the accused. These proceedings were challenged before the High Court.Counsel for the petitioner, Advocate Mudasir Bin Hassan, contended that the cheque had been forged by the complainant. It was argued that the petitioner owed only ₹14,000 and that the complainant had fraudulently converted the figure "14,000" into "14.00 lacs" by altering the figures and words on the cheque. The petitioner asserted that he had sufficient balance in his account and that the dishonour was not attributable to insufficiency of funds but to forgery committed by the complainant.Court's observations on Section 138 NI Act:Justice Dhar examined the scope of Section 138 of the Negotiable Instruments Act and reiterated that dishonour of a cheque is not confined to cases of insufficiency of funds alone. Relying on the Supreme Court decision in M/s Lakshmi Dyechem v. State of Gujarat, the Court observed that Section 138 covers a broad range of situations where dishonour results from deliberate acts or omissions of the drawer intended to prevent the cheque from being honoured.The Court noted that acts such as appending a signature which does not match the specimen signature available with the bank, or making unauthenticated overwriting or alterations in the cheque, if done with the intent to defeat payment, would squarely attract Section 138.“So long as an act or omission on the part of the drawer is intended to prevent the cheque being honoured, the dishonour would become an offence under Section 138 of the Negotiable Instruments Act,” the Court observed.Turning specifically to Section 87 of the Negotiable Instruments Act, the Court held that any alteration in the amount mentioned in a cheque undoubtedly constitutes a material alteration. Such an alteration, under ordinary circumstances, renders the negotiable instrument void against a party who did not consent to it, unless it was made in order to carry out the common intention of the original parties.However, Justice Dhar made it clear that the legal inquiry cannot stop at identifying a material alteration. What is determinative is who made the alteration and for what purpose.If the alteration is attributable to the accused-drawer and is intended to frustrate payment or defeat proceedings under Section 138, the drawer cannot be permitted to take advantage of his own wrong to avoid prosecution. On the other hand, if the alteration has been made by the payee to gain undue benefit, the legal consequences may be entirely different.“The issue as to which of the parties has made alteration in the cheque is a question of fact which can be determined only during trial,” the Court categorically held.Placing reliance on the Supreme Court judgment in Veera Exports v. T. Kalavathy, the High Court reiterated that disputes regarding consent to alteration and responsibility for such alteration necessarily require evidence. Such factual controversies, the Court held, cannot be adjudicated in proceedings seeking quashing of a complaint.The Court also noted that the petitioner had not responded to the statutory demand notice, explaining his version. The Court reasoned that had the petitioner responded to the demand notice, the "situation may have been different", but his failure to do so reinforced that the determination of authorship of the alteration was a matter for trial.Thus, holding that the petition raised disputed questions of fact regarding material alteration and the parties' conduct, Justice Sanjay Dhar declined to interfere with the ...

Material Alteration By Cheque Drawer To Defeat Payment Attracts S. 138 NI Act; 'Who Altered' Is A Triable Issue: J&K&L High Court

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