Drawer's Consent Not Required For Alterations To Body Of Blank Signed Cheque But Shouldn't Exceed Amount Covered By It: Karnataka High Court

The Karnataka High Court has held that when the drawer of the cheque signs and issues a blank cheque to the complainant, if any alteration appears on the body of the cheque, such alterations need not require the consent of the drawer of the cheque.

A single judge bench of Justice S Rachaiah made the observation while allowing the appeal filed by a school teacher H B Bhagyalakshmi and setting aside the acquittal of Cheluvamma from offence punishable under Section 138 of the Negotiable Instruments Act.

The trial court had acquitted the accused on the ground that the cheque was altered. However, the appellant argued that the endorsement of the bank on dishonour of cheque there is no such averment and thus the order of acquittal passed by the Trial Court is perverse and erroneous.

Further it was said the evidence of PW.2 (in presence of whom the complainant paid the amount to the accused) though inspired the confidence of the Court, the Trial Court failed to take note of the same and recorded the acquittal which is opposed to the evidence on record.

The amicus curiae appointed by the court for the respondent/accused justified the concurrent findings and submitted that the accused had borrowed a sum of Rs.1,50,000. However, the complainant has materially altered the number '1' as '2' and presented it for encashment. Moreover, the evidence of PW.2 is not sufficient to prove the case of the complainant as she is not an eyewitness to the transaction.

The bench referred to Section 87 of the Act and said any material alteration of a negotiable instrument renders the same void as against any person who is a party thereto at the time of making such alteration and does not consent thereto.

However, in the present case it noted that when the accused herself has admitted that she has issued a signed blank cheque to the complainant, it cannot be said that the body of the cheque is materially altered.

Further referring to Section 20 of the Act, the bench observed,

“On reading of the above said provision, it makes it clear that where one person signs and delivers to another a paper stamped in accordance with law relating to negotiable instruments either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. Once the authority is given to the complainant, it cannot be said that it is materially altered.”

Court said every negotiable instrument- On Demand Promissory Note or Bills of Exchange or Cheque- issued by the endorsee and signed blank, gives authority to the holder of the bills of exchange or cheque to fill up the same not exceeding the amount covered by the stamp.

Following which it held, “In the present case, the complainant has stated that she has paid Rs.2,50,000 to the accused and also further stated that to clear the loan, the accused has issued a cheque. On the other hand, the accused has admitted that she has issued a blank cheque and also further stated that the amount of Rs.1,50,000, was filled by the complainant in her presence and subsequently, number '1' has been changed to number '2' and made it as Rs.2,50,000. However, on careful perusal of Ex.P1– cheque, it appears that the amount mentioned in the number might be seen as altered, however, the amount mentioned in the word is not altered. Therefore, it cannot be said that the cheque is materially altered in respect of the amount.”

Allowing the appeal, the Court convicted respondent/accused under Section 138 of N.I. Act and sentenced her to pay a fine of Rs.3,00,000. Of this, Rs.2,90,000 would be payable to the complainant/appellant as compensation under Section 357-A CrPC and balance of Rs.10,000 will be adjusted to the exchequer of the State.

Appearance: Advocates H B Rudresh and P B Ajith For Petitioner.

Amicus Curiae Amruthesh C

Citation No: 2024 LiveLaw (Kar) 2

Case Title: H B Bhagyalakshmi AND Cheluvamma

Case No: Criminal Appeal No 2104 OF 2018

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