Material alteration and missing arraignment of the principal debtor defeated cheque dishonour liability and led to acquittal.

A cheque dishonour prosecution failed where the cheque contained an unexplained material alteration in the payee's name, because such alteration affected the instrument's enforceability unless authorised or consented to. The conviction also could not stand on vicarious liability because the Society, treated as the real debtor and a juristic entity, was not arraigned as an accused; liability under cheque dishonour law cannot be fastened on an office-bearer without prosecuting the principal offender. The revision was allowed, the conviction was set aside, and the accused was acquitted, with consequential directions on refund and bond compliance.

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Issues: (i) Whether the cheque was vitiated by a material alteration in the name of the payee and, if so, whether such alteration affected enforceability of the instrument. (ii) Whether the accused could be convicted under Section 138 of the Negotiable Instruments Act on a theory of vicarious liability when the Society, whose liability was said to have been discharged, was not arraigned as an accused.

Issue (i): Whether the cheque was vitiated by a material alteration in the name of the payee and, if so, whether such alteration affected enforceability of the instrument.

Analysis: The cheque bore the name of the Society as the payee, while the words referring to the bank in the loan account were inserted in a different ink and handwriting. The alteration was not explained by the complainant witness. The governing principle applied was that a material alteration in a negotiable instrument, particularly one affecting the payee's name and legal effect, renders the instrument void unless the alteration is duly explained and shown to be authorised or made with consent.

Conclusion: The alteration was material and the cheque could not be treated as enforceable on the basis of the altered endorsement.

Issue (ii): Whether the accused could be convicted under Section 138 of the Negotiable Instruments Act on a theory of vicarious liability when the Society, whose liability was said to have been discharged, was not arraigned as an accused.

Analysis: The complaint pleaded an individual loan, but the evidence was advanced on the footing that the Society had borrowed the amount and that the accused, as its office-bearer, issued the cheque. The Society, though treated as the real debtor and a juristic person, was not made an accused. The controlling rule applied was that vicarious liability under the cheque dishonour law cannot be fastened on directors or office-bearers unless the principal offender, namely the company or equivalent juristic entity, is prosecuted as required by law.

Conclusion: The conviction could not be sustained because the Society was not impleaded, and the accused could not be held vicariously liable.

Final Conclusion: The concurrent findings of the courts below were set aside, and the accused was acquitted in revision, with consequential directions regarding refund of any deposited amount and compliance with the bond requirement.

Ratio Decidendi: In prosecutions for cheque dishonour based on a juristic entity's liability, vicarious liability of an office-bearer cannot be sustained unless the principal juristic person is arraigned as an accused, and a cheque bearing an unexplained material alteration in the payee's name is not enforceable.

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