Section 87 NI Act | Cheque Not Invalid If Altered With Consent Of Drawer: Karnataka High Court

The Karnataka High Court has reiterated that if the payee or holder of the cheque had made alteration with the consent of drawer on cheque, such alteration cannot be a ground to resist right of payee or holder thereof.

A single judge bench of Justice Rajendra Badamikar dismissed a revision petition filed by accused D B Jatti who had challenged the conviction order passed by the trial court for the offence under Section 138 of Negotiable Instruments Act, and upheld by the Appellate court.

The petitioner had contended that there is material alteration in the date of the cheque, which is evident from the evidence of handwriting expert and notarized xerox copy of the cheque.

It was said that the handwriting expert was not cross-examined and his report was not challenged regarding material alteration in the date on the cheque and as such, the cheque becomes invalid under Section 87 of the Act.

The complainant Lalchand K Chhabria, proprietor of M/s Jamnadas Devidas opposed the plea saying that the accused had knowledge of material alterations in the cheque and hence, the accused cannot take advantage of Section 87 of the NI Act.

Findings:

The court observed that since the signature on the cheque is admitted, the presumption under Sections 139 and 118 of the NI Act is in favour of the complainant and the accused would be required to rebut the said presumptions.

On perusing the original cheque and the xerox copy, the court said “There is absolutely no dispute of the fact that there is material alteration in the date on Ex.P1 as well as in Ex.D1. But, interestingly, Ex.D1 is the copy of Ex.P1 and there additional alternation is made by inserting the figure as ‘9’, which is not in Ex.P1. Hence, prima facie it is evident that subsequently Ex.D1 was also manipulated after a xerox copy of the same was obtained.”

It added “It is for the accused to explain as to how he came in possession of Ex.D1. That itself discloses that after bouncing of the cheque it was xeroxed and in that event, it is evident that the accused had knowledge of bouncing of the cheque and he obtained a xerox copy of the cheque. It is for him to explain how he had obtained a xerox copy of the cheque.”

Placing reliance on the judgment of the Supreme Court in the case of Appeal (Crl.) 1110-1111 of 2001 [Veena Exports Vs. Kalavathy], the bench said “In the instant case, by producing Ex.D1 and getting it marked, the accused himself has established that the alternation was within his knowledge and surprisingly he gets xerox copy of the same, wherein the same alteration is seen as found in Ex.P1, which establish that it was accused who has altered the cheque prior to its issuance.”

The bench also rejected the contentions of the petitioner that the complaint was signed and filed through his Power of Attorney, who had no knowledge and there is no assertion in this regard.

It said “During the entire cross-examination of PW.1, who is power of attorney holder, his knowledge itself is not at all denied or disputed. Further, admittedly PW.1 is the Accountant of the complainant working under him. Under such circumstances, his knowledge itself is presumed and that has not been challenged.”

The court also rejected the contention of the accused that he had certain transactions with one Manoj Gera, who is a financial consultant. He had issued the disputed cheque to him. Since, Gera had advanced loan to him and towards security, he had obtained a cheque (Ex.P1), which was used by the complainant unlawfully, accused had claimed.

The Court took into account that Gera had denied the fact that he had any transactions with the accused.

Finally, it held “In view of these facts and circumstances, it is evident that the complainant has discharged his burden of proving the fact that the cheque under Ex.P1 is issued towards legally enforceable debt. The accused has failed to rebut the said presumption available in favour of the complainant. Both the Courts below have appreciated all these aspects in detail and analysed the oral as well as documentary evidence in accordance with law. No illegality or infirmity is found with the judgment of conviction and order of sentence passed by the trial Court and confirmed by the Appellate Court.”

Accordingly it dismissed the petition.

Case Title: D B Jatti And M/s Jamnadas Devidas

Case No: CRL.R.P No. 964 OF 2019

Citation: 2023 LiveLaw (Kar) 167

Date of Order: 12-04-2023

Appearance: A.C. Chethan, Advocate for Petitioner.

M S Narayan, Advocate for Respondent.

Click Here To Read/Download Order