Complainant putting date on cheque without drawer’s consent renders instrument void

In the matter of M/s. Pinak Bharat and Company v. Anil Ramrao Naik (Criminal Appeal Nos. 1630 and 1631 of 2011) decided on 22.12.2022 by the Hon’ble Bombay High Court.

FACTS: The appellant is a partnership firm, and the complainant is one of its partners. The appellant gave a loan of Rs. 1 crore to the accused/respondent in 2003. The parties entered into a Memorandum of Understanding for repayment. At the time of execution of the MoU, the accused issued two cheques to the complainant. The cheques did not mention any date or the name of the payee. The accused had taken the loan to pay for a property however, filed a civil suit for extension of time for recovery of the amount by the complainant. The complainant, in 2007 deposited the two cheques which were returned unpaid. Therefore, the complainant filed two complaints in the trial court. The trial court acquitted the accused holding that when the civil suit was pending, the complainant was not justified in completing the cheques without authority of the accused. Hence the present appeals.

OBSERVATIONS: The Hon’ble High Court referred to Section 87 of the Negotiable Instruments Act, 1881 which provides that material alterations are void if the person does not consent to them. It was observed in the present case, the complainant did not state anywhere that the date was put as instructed by the accused in fact, the accused sought extension of time for repayment. Thus, the court observed that there was neither consent nor did the alteration arise out of common intention of the parties.

It was further observed that cheque no doubt is a negotiable instrument which is transferable and negotiable, and presumption under Section 139 of the Negotiable Instrument Act,1881 could only be drawn when the pre-conditions were satisfied. As the complainant unilaterally put in dates on the cheques without the authority of the accused and even by not informing him, the same amounted to material alterations.

Hence, the Hon’ble High court agreed with the trial court’s findings on this regard and held that prosecution under section 138 of the NI Act could not have been initiated in the present case.