2023 (8) TMI 649 - HC - Indian Laws

Altered cheque leads to quashing of criminal complaint

M/s ANIL AGRO INDUSTRIES & ANOTHER Versus M/s BHODAY STEEL ROLLING MILLS And SUDHA MITTAL Versus M/s BHODAY STEEL ROLLING MILLS

The court quashed the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881, along with all subsequent proceedings. It was found ... Dishonour of Cheque - main contention raised by the learned counsel for the petitioner is that there is material alteration and interpolation in the cheque which was in contravention of the RBI Guidelines - HELD THAT:- In M/s Goyal Enterprises Versus State of Jharkhand, [2011 (12) TMI 786 - JHARKHAND HIGH COURT], the Court held that change of date on the cheque amounted to material alteration in the absence of the signature of the drawer. In the present case, the complaint does not disclose that the cheque was materially altered or that it was dishonoured first time due to a material alteration or as to how and at what stage did Sudha Mittal purportedly sign/counter-sign the material alterations - A perusal of the CTS Cheque (Annexure P-4) would reveal cutting on the name of the beneficiary and the amount in words. There appears to be an overwriting on the amount 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. Issues Involved:1. Quashing of criminal complaint under Section 138 of the Negotiable Instruments Act, 1881.2. Material alteration and forgery of the cheque.3. Liability of an authorized signatory who is not a partner or proprietor of the firm.Issue-wise Detailed Analysis:1. Quashing of Criminal Complaint under Section 138 of the Negotiable Instruments Act, 1881:The petitions were filed under Section 482 Cr.P.C. to quash the criminal complaint No.105-A dated 24.04.2013, summoning order dated 24.10.2013, and the notice of accusation dated 06.08.2014, along with all subsequent proceedings. The accused/petitioners argued that the cheque in question was materially altered and forged, as per the report of the handwriting expert. The complaint did not disclose the fact of the material alterations or the initial dishonour due to such alterations, which was a significant omission. The court observed that the complaint only mentioned the subsequent dishonour due to the account being closed, ignoring the initial dishonour due to material alterations.2. Material Alteration and Forgery of the Cheque:The accused contended that the cheque was materially altered, violating RBI Guidelines. The cheque had multiple alterations, including changes in the beneficiary's name and the amount, which were purportedly signed by Sudha Mittal. According to Section 87 of the Negotiable Instruments Act, any material alteration renders the instrument void unless made with the consent of all parties involved. The court noted that the RBI Guidelines dated 22.02.2010, which have statutory force, prohibit any material alterations except for the date, which must be signed by the drawer. The court found that the cheque was materially altered, and the complaint did not explain how such a cheque came into the complainant's possession, making the cheque invalid for presentation.3. Liability of an Authorized Signatory Who is Not a Partner or Proprietor of the Firm:Sudha Mittal, one of the petitioners, argued that she was merely an authorized signatory and not a partner or proprietor of the firm M/s Anil Agro Industries. The court examined the Special Power of Attorney which authorized her to sign cheques on behalf of the proprietor, Sachin Mittal. However, the court held that merely being an authorized signatory does not affix liability under Section 138 of the Negotiable Instruments Act, especially when the cheque was materially altered and not signed by the drawer. The court also referred to Section 27 of the Negotiable Instruments Act, which states that an agent must be duly authorized to bind the principal, and such authority does not extend to accepting or endorsing bills of exchange.Conclusion:The court concluded that the continuation of the proceedings would be an abuse of the process of the court. Therefore, the complaint, summoning order, notice of accusation, and all subsequent proceedings were quashed against all the accused. The court emphasized that the materially altered cheque, not being a valid tender under the RBI Guidelines and Section 87 of the Negotiable Instruments Act, could not form the basis of a valid complaint under Section 138. Additionally, Sudha Mittal, not being a partner or proprietor, could not be held liable merely as an authorized signatory.