2001 (11) TMI 934 - SC - Companies Law

Alteration in cheque - criminal proceedings launched by the appellant under section 138 of the Negotiable Instruments Act, 1881 Held that - Appeal dismissed. It is held by the High Court that a change of date is a material alteration which affected the interests of the respondent. It is held that the respondent, not being a willing party to the said alteration, the cheques were void as contemplated by section 87. At this stage, there is no basis for arriving at such a conclusion. In the earlier part of the impugned judgment, it has been correctly held that this is a question of fact. This is a fact which will have to be established on evidence during trial. At this stage, the High Court could not have quashed the complaint merely on the basis of an assertion in the reply.

Summary

Issues:
Appeal against quashing of criminal proceedings under section 138 of the Negotiable Instruments Act, 1881 based on alteration of cheque dates and validity period.

Analysis:
The case involved the appellant filing a complaint under section 138 of the Negotiable Instruments Act, 1881, after the respondent's cheques, originally dated in 1995, were dishonored when presented in 1996. The respondent alleged that the alteration of dates was not voluntary and filed a petition to quash the complaint. The High Court quashed the complaint based on the reasoning that once the validity period of the cheques had expired, they could not be revalidated by altering the dates. However, the Supreme Court found this reasoning fallacious as there is no legal provision prohibiting the revalidation of a negotiable instrument, including a cheque, by the drawer voluntarily.

The High Court also relied on section 87 of the Negotiable Instruments Act, which deals with the effect of material alteration on a negotiable instrument. The section states that any material alteration renders the instrument void against parties who did not consent to the alteration. The Supreme Court clarified that whether an alteration was made with or without the consent of the drawer is a question of fact that requires evidence to establish during trial. Therefore, the High Court could not have quashed the complaint based solely on the respondent's assertion in the reply.

Consequently, the Supreme Court set aside the impugned order, dismissed the respondent's petition, and directed the Judicial Magistrate II, Karur to proceed with the complaint according to the law. The appeal was disposed of with no order as to costs.