2019 (8) TMI 1872 - HC - Indian Laws

Court quashes summoning order for altered cheque, citing RBI guidelines.

Veena Singhal Versus State of U.P. and Ors.

The court quashed the summoning order, ruling the cheque void due to material alteration, making it unenforceable. The accused-applicant was not held ... Dishonour of Cheque - insufficient funds - discharge of legally enforceable debt or not - present complaint has been filed against the signatory of the cheque and not against the Company and its Directors - signatory had not denied her signatures on the impugned cheque and lastly it is stated that the pleas taken by the applicant could be seen only at the time of trial when defence is taken by the accused-applicant. HELD THAT:- In the present case, 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 cutting took place but in counter affidavit, no such disclosure has been made, which renders the impugned cheque to be a void instrument in the light of Section 87 of the Act. The view is fully agreed upon that whether or not cheque was issued for discharging a debt or liability can be seen at the time of trial and not in proceeding before this Court under Section 482 Cr.P.C. but the question remains in the present case that the impugned cheque itself appears to be void on account of there being cutting, which renders the said cheque to be void under the provisions of Section 87 of the N.I. Act, and hence, the subsequent proceedings in opinion of this Court would not serve any purpose, hence in view of this peculiar situation in this case, it is considered appropriate to quash the impugned order. The impugned order dated is quashed. Issues Involved:1. Validity of the cheque due to alterations.2. Legal enforceability of the cheque.3. Liability of the accused-applicant.4. Procedural correctness of the trial court's summoning order.Issue-wise Detailed Analysis:1. Validity of the Cheque Due to Alterations:The accused-applicant argued that the cheque was invalid due to material alterations. The cheque had a cutting over the word 'Thous' which was changed to 'Lacs' without the drawer's full signature, violating RBI guidelines. Clause 9 of the RBI Circular dated 6.10.2010 prohibits changes/corrections on cheques, except for date validation. The court found that this alteration rendered the cheque void under Section 87 of the Negotiable Instruments Act (N.I. Act), which states that any material alteration without consent renders the instrument void.2. Legal Enforceability of the Cheque:The applicant contended that the cheque was not legally enforceable as it was a void document due to the alteration. The court noted that the RBI guidelines, which have statutory force, were violated. The cheque was not enforceable as it did not comply with the RBI's stipulations for valid instruments, particularly under the Cheque Truncation System (CTS).3. Liability of the Accused-Applicant:The accused-applicant claimed she had no legally enforceable liability to pay the amount as the cheque was issued in the context of a business transaction involving her husband’s company, Gangotri Granite Private Ltd., where she had no official role. The court observed that the cheque was issued by the applicant herself and not by the company. The applicant's argument that the cheque was given as a blank cheque to Alok Kankane (a business associate) and later misused was not substantiated with adequate evidence.4. Procedural Correctness of the Trial Court's Summoning Order:The trial court's summoning order was challenged on the grounds that it did not consider the cheque's invalidity and the lack of enforceable liability. The court found that the trial court failed to appreciate the material alteration in the cheque, making it void. Consequently, the summoning order was deemed erroneous.Conclusion:The court quashed the summoning order dated 20.2.2012, stating that the cheque was void due to material alteration under Section 87 of the N.I. Act. The applicant was not found liable as the cheque was not a legally enforceable instrument. The opposite party was advised to seek alternative remedies through civil court for claiming the due amount.