2019 (8) TMI 62 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - acquittal of the accused - offence punishable under Section 138 of the Negotiable Instruments Act 1881 - HELD THAT - On a perusal of Ext.P1 cheque it is seen that the name Kousthubhan (the name of the accused) was initially written as the name of the payee. It is seen that the name of the payee written as Kousthubhan is struck off and the name of the complainant is written in the cheque as the payee - Therefore it is evident that there was alteration made in the cheque with regard to the name of the payee. The question is whether it is a material alteration or not. Alteration of the payee s name in a cheque is material which affects the character of the instrument and so also the relationship of the parties and their legal position as originally expressed. Therefore it has to be concluded that material alteration of Ext.P1 cheque was effected with regard to the name of the payee. The party who consents to the alteration as well as the party who made the alteration are not entitled to complain against such alteration. If the drawer of the cheque himself altered the cheque he cannot take advantage of it later by saying that the cheque became void as there is material alteration thereto. Even if the payee or the holder of the cheque made the alteration with the consent of the drawer thereof such alteration also cannot be used as a ground to resist the right of the payee or the holder thereof. It is always a question of fact whether the alteration was made by the drawer himself or whether it was made with the consent of the drawer. It requires evidence to prove the aforesaid question whenever it is disputed. Whether material alteration of the cheque was made by the accused himself or with his consent? - HELD THAT - Ext.P1 is a cheque which was subjected to material alteration and that the complainant failed to prove that material alteration of the cheque was done or made by the accused himself or with his consent. The plea of the accused is also not probable. He did not even give any intimation to the bank regarding the loss of the cheque. According to him the cheque was lost from the possession of his friend Babu. The accused did not examine his friend Babu. Therefore the plea raised by the accused regarding the circumstances under which the cheque left his possession cannot be accepted as probable or convincing - in view of the material alteration of the cheque non-acceptance of the plea of the accused does not inure to the advantage of the complainant. The weakness of the plea of the accused does not come to the rescue of the complainant. Material alteration of the cheque without the consent of the drawer makes the instrument void and no criminal action would lie on the basis of such an instrument. There are no compelling grounds to reverse the order of acquittal passed by the trial court - appeal dismissed.

Summary

Issues Involved:
1. Competency of the power of attorney holder to institute the complaint.
2. Material alteration of the cheque.
3. Validity of the evidence presented by the accused.

Detailed Analysis:

1. Competency of the Power of Attorney Holder to Institute the Complaint:
The appellant, represented by a power of attorney holder (PW1), challenged the trial court's judgment acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881. The trial court initially found that PW1 had the authority to institute the complaint based on Ext.P6, the power of attorney document. The court noted that the complainant had authorized PW1 to prosecute and conduct cases in her name, which was substantiated by the complainant’s testimony (PW2). The court reiterated that a power of attorney holder can initiate legal proceedings on behalf of the principal, as established in A.C Narayanan v. State of Maharashtra (AIR 2014 SC 630). Thus, the trial court correctly found PW1 competent to file the complaint.

2. Material Alteration of the Cheque:
The primary issue was whether Ext.P1 cheque was void due to material alteration. The cheque initially had the name "Kousthubhan" as the payee, which was struck off and replaced with the complainant's name. The court defined material alteration as one that changes the rights, liabilities, or legal position of the parties (Loonkaran Sethia v. Ivan E. John: AIR 1977 SC 336). The alteration of the payee’s name was deemed material, affecting the instrument’s character and the parties' legal relationship. Under Section 87 of the Act, such alteration renders the cheque void unless consented to by the parties involved. The court found no evidence that the alteration was made by the accused or with his consent. The complainant’s and PW1’s testimonies did not clarify the circumstances of the alteration. The court concluded that the complainant failed to prove the alteration was made by or with the consent of the accused, making the cheque void and invalid for prosecution.

3. Validity of the Evidence Presented by the Accused:
The accused claimed the cheque was drawn in his own name for withdrawing money and was lost while in the possession of his friend Babu. However, he only filed an affidavit and did not orally depose before the court. The court emphasized that an accused cannot give evidence on affidavit under Section 145(1) of the Act (Mandvi Co-operative Bank Limited v. Nimesh: AIR 2010 SC 1402). Without valid examination-in-chief, the accused’s cross-examination was also invalid. Additionally, the accused’s plea lacked credibility as he did not inform the bank about the lost cheque or present his friend Babu as a witness. Despite the weakness of the accused’s plea, the material alteration of the cheque was sufficient to render it void, precluding criminal action.

Conclusion:
The court found no compelling grounds to reverse the trial court’s order of acquittal. The appeal was dismissed, upholding the trial court’s judgment that the cheque was void due to material alteration and that the complainant failed to prove the alteration was made by or with the consent of the accused.