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Issues Involved:
1. Whether the insertion of a date on an undated cheque amounts to material alteration under Section 87 of the Negotiable Instruments Act, 1881. 2. Whether the cheque was issued without consideration and merely as security for a loan transaction. 3. Whether the presumption under Section 118 of the Negotiable Instruments Act applies and if it was rebutted by the defendant. Issue-wise Detailed Analysis: 1. Insertion of Date on an Undated Cheque: The primary issue was whether adding a date to an undated cheque constitutes a material alteration under Section 87 of the Negotiable Instruments Act, 1881. The court noted that the defendant admitted to issuing the cheque but claimed that the plaintiff inserted the date without his consent, which he argued amounted to material alteration. The court examined the definition of "material alteration" and concluded that while alteration of the date might generally affect the instrument, the holder of an undated cheque has implied authority to insert the date. Therefore, inserting the date does not constitute material alteration rendering the cheque void, especially when the cheque is otherwise complete and valid in all respects. 2. Issuance of Cheque Without Consideration: The defendant contended that the cheque was issued without consideration, merely as security for a loan transaction related to toddy shops business. The court emphasized that under Section 118 of the Negotiable Instruments Act, there is a presumption that every negotiable instrument was made or drawn for consideration. The burden of proof lies on the defendant to show that the cheque was not supported by consideration. The defendant's evidence, including his own testimony and documents (Exhibits B-1 to B-6), was deemed insufficient to rebut this presumption. The court held that mere existence of transactions between the parties did not prove the cheque lacked consideration. 3. Presumption Under Section 118 of the Negotiable Instruments Act: The court reiterated that once the execution of the cheque is admitted, the presumptions under Section 118 of the Act apply until the contrary is proved. The initial burden is on the plaintiff to prove the issuance of the cheque, which shifts to the defendant to show it was not supported by valid consideration. The court found that the defendant failed to discharge this burden. The court also highlighted that the cheque was complete in all respects except for the date, and the insertion of the date by the payee, who is the holder in due course, did not amount to material alteration. The court referred to the implied authority of the payee to insert the date, and the presumption under Section 118(b) that a negotiable instrument bearing a date was made or drawn on such date. Conclusion: The court concluded that inserting a date on an undated cheque does not amount to material alteration under Section 87 of the Negotiable Instruments Act, 1881, as the holder in due course has implied authority to do so. The defendant failed to rebut the presumption under Section 118 of the Act that the cheque was supported by consideration. Consequently, the appeal was dismissed, and the judgment of the learned single judge was upheld.
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