2022 (6) TMI 1030 - HC - Indian Laws

Validity of suit promissory notes - material alteration with reference to the year material alteration with reference to the year mentioned in Exs. A1 to A4 - HELD THAT - 'Material alteration' literally means an alteration made to an instrument that adds or deletes any provision or changes the rights and obligations of any party under it. 'Material alteration' in negotiable instrument means, any change in written instrument which makes it to speak different legal language from that of the original, that includes altering the date of instrument. The trial Court observed that nothing incriminating evidence was extracted from CW. 1 by the plaintiff to discredit her assertions on material alteration to year of execution of promissory notes marked as Exs. A1 to A4. Having regard to the evidence brought on record, the trial Court rightly observed that there is material alteration to the numerical '7' in the year mentioned in Exs. A1 to A4 showing the execution of promissory notes as if in the year 2007, whereas they were actually executed in the year 2001. The evidence on record clearly points out alteration of numerical '1' as '7', changing the year of execution from 2001 to 2007. Once it is established that there is material alteration to the year in the negotiable instrument, which is crucial to seek enforcement of the liability, Section 87 comes into operation. Therefore, the plaintiff cannot seek enforcement of alleged liability from the defendant. Appeal dismissed.

Summary

Issues Involved:
1. Validity and enforceability of the promissory notes.
2. Alleged material alteration of the promissory notes.
3. Applicability of Section 87 of the Negotiable Instruments Act, 1881.

Issue-wise Detailed Analysis:

1. Validity and Enforceability of the Promissory Notes:
The plaintiff instituted a suit for recovery of Rs. 57,01,479/- with future interest at 18% per annum, based on four promissory notes executed by the defendant. The defendant admitted to borrowing money and executing the promissory notes but claimed that the amounts mentioned were incorrect and that the debts had been repaid. The trial court formulated issues to determine whether the promissory notes were true, valid, and supported by consideration, and whether the plaintiff was entitled to the suit amount. The trial court decided against the plaintiff, dismissing the suit.

2. Alleged Material Alteration of the Promissory Notes:
The defendant argued that the promissory notes were executed in 2001, but the plaintiff altered the year to 2007. The expert from the Telangana State Forensic Science Laboratories confirmed alterations in the promissory notes, stating that the numerical '1' was altered to '7' with a different tint of ink. The expert's deposition supported the claim of material alteration, which was not effectively rebutted by the plaintiff.

3. Applicability of Section 87 of the Negotiable Instruments Act, 1881:
Section 87 stipulates that any material alteration of a negotiable instrument renders it void against any party who did not consent to the alteration. The court noted that material alteration includes changes to the date, which is crucial for determining the enforceability and validity of the instrument. The court referenced previous judgments, including Allampati Subba Reddy and Jayantilal Goal, to affirm that any alteration in the date of a promissory note is material and voids the instrument unless consented to by the affected party.

Conclusion:
The court concluded that the promissory notes had been materially altered, changing the year from 2001 to 2007. This alteration was crucial for the enforcement of the liability and fell within the purview of Section 87 of the Negotiable Instruments Act, rendering the promissory notes void. Consequently, the plaintiff could not seek enforcement of the alleged liability, and the appeal was dismissed. Pending miscellaneous petitions were also closed.