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TMI Blog2023 (8) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... t in figures as well. Therefore, in terms of the RBI Guidelines dated 22.02.2010 (Annexure P-4/A) which have statutory force, read with Section 87 of the Negotiable Instruments Act, the cheque was not valid tender and could never have been presented for encashment even assuming that the material alterations were signed by Sudha Mittal and assuming that she was competent to sign the same despite the fact that she was not an executant of the cheque. Though, the cheque has been dishonoured due to closure of the bank account, since the very cheque in question is materially altered and had been returned back first time on the grounds of material alteration, the provisions of Section 87 of the Negotiable Instruments Act and the RBI guidelines would apply rendering the cheque void, moreso, when the complaint does not explain as to how the materially altered cheque came into the possession of the complainant. The continuation of the proceedings in the present cases would be nothing but an abuse of the process of the Court - the complaint is quashed. - HON BLE MR. JUSTICE JASJIT SINGH BEDI Mr. Avnish Mittal , Advocate with Ms. Ishika Jain , Advocate for the petitioner ( s ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dha Mittal purportedly signed the material alterations on the said cheque. However, the complaint does not mention the factum of alterations. The said cheque was dishonoured on account of the fact that there was material alteration in the cheque and it required the full signatures of the drawer. Thereafter, it was presented once again and the reason for the subsequent dishonour was that the account had been closed. It may be mentioned here that only the subsequent dishonour is spoken off in the complaint. Thereafter, a legal notice was served upon the accused and pursuant thereto, the complaint under Section 138 of Negotiable Instruments Act came to be filed on 24.04.2013. The copy of the complaint is annexed as Annexure P-1 to the petition. Pursuant to the filing of the complaint, the accused/petitioners came to be summoned for having committed the offence under Section 138 of Negotiable Instruments Act. The copy of the summoning order dated 24.10.2013 is annexed as Annexure P-3 to the petition. Thereafter, notice of accusation was served upon the accused on 06.08.2014. The copy of the said accusation is annexed as Annexure P-2 to the petition. 4. The aforementioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure R2/1. The cheque in question along with the alterations had been handed over to the answering respondent by the accused and there was no reason for the complainant to make alterations/changes on the said cheque to his own detriment. The report of the handwriting expert produced by the accused/petitioner could not be relied upon at this stage in summary proceedings under Section 482 Cr.P.C. and the petitions raised disputed questions of fact. Deliberate cancellations and alterations were made on the cheque and each of those cancellations/alterations bore the signature of Sudha Mittal (petitioner in CRM-M-36782-2014). It was thus, pleaded that the present petitions being devoid of merit ought to be dismissed. 7. The learned counsel for the petitioners states that the present complaint has not been filed disclosing the true facts. The cheque in question was materially altered, forged and fabricated as is borne from the report of the handwriting expert (Annexure P-5). Taking the allegations to be true, the alterations bore the signatures of Sudha Mittal and not Sachin Mittal who is the signatory to the cheque. Merely being a signatory to the bank account would not sanctify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bill or in any indorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need such person is called a drawee in case of need . Acceptor . After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the acceptor . Acceptor for honour . [When a bill of exchange has been noted or protested for non-acceptance or for better security], and any person accepts it supra protest for honour of the drawer or of any one of the indorsers, such person is called an acceptor for honour . Payee . The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the payee . Section 27 of the Negotiable Instruments, reads as under:- 27. Agency. Every person capable of binding himself or of being bound, as mentioned in section 26, may so bind himself or be bound by a duly authorized agent acting in his name. A general authority to transact business and to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation. For the purposes of this section, debt or other liability means a legally enforceable debt or other liability. 11. The various judgments of the High Court and the Hon ble Supreme Court as have been cited by the counsel for the parties are discussed hereinbelow:- In Smt. Veena Singhal Versus State of U.P. another, 2020(1) NIJ 72, where the Thous was changed to lacs without the counter-signs of the executant of the cheque, the Court quashed proceedings holding that the cutting amounted to material alteration and was violative of RBI Guidelines. (an SLP No.10549/2019 is pending before the Hon ble Supreme Court titled as Sanjay Kumar Gupta Versus The State of Uttar Pradesh another). The relevant paragraphs of the said judgment are as under:- 7. At the time of argument, learned counsel for the applicant has mainly emphasised three points that the cheque in question is not a legally enforceable instrument in the light of guidelines issued by the R.B.I. dated 6.10.2010, cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a cutting found in the impugned cheque, which cutting was also not found signatured by the person, who had issued the same. 12. The reply of the argument of learned counsel for the applicant that the said guideline no. 9, on which, applicant is relying upon to state that the said cheque has become invalid only on account of said cutting is that the said kind of cutting is impermissible only in respect of cheques cleared under the Cheque Truncation System (CTS) and not for those cheques which are cleared under other clearing arrangement such as MICR clearing, Non-MICR clearing, over the counter collection (for cash payment) or direct collection of cheques outside the Clearing House Arrangement , but, I find no force in the argument of learned counsel for the opposite party no. 2 because the established practise of Bank is that any alteration in original state of a cheque such as date, amount, payee's name, changing word order to bearer appearing after payee's name or in endorsement is called material alteration. All material alteration must have drawer's approval with his full signature (not initials) where the alteration are made. One of the mandatory featu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the judgment that it is a settled law that a person, who is in custody of document subsequent to its execution, has to discharge the burden of establishing that it was not altered, should there be any alteration. 16. Facts of the present case may be taken to be identical to the citation relied upon by the learned counsel for the accused applicant because in the present case also cheque is stated to have been returned for insufficient amount and not for any alteration or cutting in the cheque but no explanation has come on record that why the impugned cheque was received by the opposite party no. 2 despite the said cheque having alteration in the amount in words without any signature of the executant of the cheque and why it was not insisted by him at that very moment that the said cheque was void under the provisions of Section 87 of the Act due to the said cutting particularly when the amount was so big. He would be treated to be in possession of the said cheque soon after the same was issued to him and when he came in possession of the same, if any alteration in the said cheque happened, the burden would lie only on him to explain as to under what circumstances the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 138 of the Negotiable Instruments Act on the basis of the said void cheques. In view of this finding, the other arguments made by the learned counsel for the appellant now remain only of academic importance, which need no further discussion in the present case. 13. In view of the aforementioned discussions, I find and hold that the respondent accused could not have been found guilty of the offence under section 138 of the Negotiable Instruments Act on the basis of the said void cheques which have been produced in the Court below and marked Exhibits 1/1 and 1/2, there being material alteration in the dates of the cheques. (emphasis supplied) In Allampati Subba Reddy Versus Neelapareddi Ramanareddi, 1996 AIR (Andhra Pradesh) 267, there was material alteration in the date of the promissory note. The Court observed that where an instrument appears to have been altered, it was a general rule that a party offering it in evidence was to explain its appearance because every alteration of a negotiable instrument rendered it suspicious. The relevant para 5 of the judgment held as under:- 5. The law on the point seems to me to be clear. The English rule that a mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such an alteration is made with the consent of the other party, or is made to effectuate the common intention of the original parties. It is wrong to assume that the date of the promissory note is merely a description. It indicates the time when the promissory note was executed. In most cases the date is very material in calculating the date of the performance of the contract and more often fixing the period of limitation within which the plaintiff will have to institute the suit on the foot of such promissory note. It is immaterial whether the alteration is made in the date or month or year. Any such alteration being material must necessarily result in the avoidance of the promissory note. 7. It is true that in two cases alterations, though material, do not vitiate the instruments firstly, when the alteration is made before the promissory note is executed, and secondly, if the alteration made was merely to correct a mistake, or to make it what it was originally intended to be. As stated earlier, the Section (S. 87) itself states that the alteration can be made with the consent of the parties, or to carry out the common intention of the original parties. Any mistake occurrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... war v. Baboo Moodnarain Singh, (1861-63) 9 Moo Ind App 1 at p. 17 (PC). It is true that this wholesome rule is not without its exceptions. If there be, for example, independently of the instrument corroborative proof strong enough to rebut the presumption which arises against an apparent and presumable falsifier of evidence, there must however, be an explanation and such a strong proof to rebut the initial presumption. It is relevant to note that the presumption under the English Law is that in the case of deeds signed and sealed, alterations were made before execution, but no such presumption exists in the case of negotiable instruments. The law on the subject has been thus stated in the Halsbury's Laws of England. III Edition, Vol. 11. Para. 622, p. 379 :- A writing which is intended to be under hand only can be altered by erasure, or interlineation, or otherwise, before it is signed, but it lies upon the party who puts the instrument in suit to explain an alteration and show when it was made. That being the position of law as I understand it, let me see whether any explanation was offered by the plaintiff about the suspicious nature of the suit promissory note. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and no employee could be prosecuted, since a proprietary concern was not a juristic person and the principles of vicarious liability would not apply to it as to a company. In Veera Exports Versus T. Kalavathy, (2002) 1 SCC 97, the complaint was quashed on the assertion of the accused that she had changed the date on the cheque against her will. The Hon ble Supreme Court set aside the order of the High Court whereby the complaint was quashed holding that whether the accused had re-validated the cheque by will or not was a matter of trial. In Arpan Jain another Versus State another, 2021 SCC OnLine Del 4222, the contention of the petitioners/accused was that the cheque had been given as a security. The same was altered materially by the complainant by changing the date for re-validation without the consent and knowledge of the petitioners/accused. The Court held that it was a triable issue as to whether the complainant had altered the cheque or the same had been done by the accused/petitioners. A similar view was expressed in R. Arjunraj Versus V. Krishnasamy, 2017 SCC OnLine Mad 3462. In M.M.T.C. Ltd. Another Versus Medchl Chemicals and Pharma (P) Ltd. another, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal i.e. Sachin Mittal. Though, the cheque has been dishonoured due to closure of the bank account, since the very cheque in question is materially altered and had been returned back first time on the grounds of material alteration, the provisions of Section 87 of the Negotiable Instruments Act and the RBI guidelines would apply rendering the cheque void, moreso, when the complaint does not explain as to how the materially altered cheque came into the possession of the complainant. Further, in reply to this petition for quashing, the stand of the complainant is that the materially altered cheque had been handed over to him which he presented for encashment. Once again, he chooses to sidestep the issue of the earlier dishonour on account of material alterations which had been admitted by CW1-Baljinder Singh, Clerk, Union Bank of India in his cross-examination. There is absolutely no explanation as to why he would accept such a materially altered cheque and not ask for a new one to be issued. It may also be relevant to mention here that the judgments quoted by the learned counsel for the respondent/complainant do not discuss the RBI Circular dated 22.02.2010 (Annexure P-4/A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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