2026 (1) TMI 844 - HC - Indian Laws

Cheque alteration causing dishonour u/s 138: responsibility for material alteration left to trial; petition dismissed

Dominant issue: whether dishonour caused by alteration of a cheque attracts liability under Section 138 NI Act and who bears responsibility for the ... Dishonour of a cheque on account of alteration made in the cheque amount - allegation is that the cheque in question is forged and that the act of forgery has been committed by the respondent - HELD THAT:- The issue as to in what contingencies the offence under Section 138 of the Negotiable Instruments Act would be constituted upon dishonour of a cheque has been deliberated upon by the Supreme Court in the case of M/s Lakshmi Dyechem v. State of Gujarat & Ors. [2012 (12) TMI 106 - SUPREME COURT]. It has been held that 'Dishonour on account of such changes that may occur in the course of ordinary business of a company, partnership or an individual may not constitute an offence by itself because such a dishonour in order to qualify for prosecution under Section 138 shall have to be preceded by a statutory notice where the drawer is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence, hence punishable.' Thus, it is clear that so long as an act or omission on the part of the drawer of the cheque is intended to prevent the cheque being honoured, the dishonour would become an offence under Section 138 of the Negotiable Instruments Act. Therefore, in a situation where the drawer of a cheque intentionally appends a different signature on the cheque, which does not match with his specimen signature available in the bank, the offence under Section 138 of the Negotiable Instruments Act would be constituted against the drawer. Similarly, in a case where a drawer intentionally, with a view to prevent the honour of the cheque, makes overwriting/alterations in the cheque, either in the amount mentioned in the cheque or in the date mentioned therein, without authenticating these overwritings or alterations, the offence under Section 138 of the Negotiable Instruments Act would get attracted - Section 87 of the Negotiable Instruments Act provides that any material alteration of a negotiable instrument renders the same void as against one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. An alteration in the amount mentioned in the cheque qualifies to be a material alteration within the meaning of Section 87 of the Negotiable Instruments Act. In the present case, the alteration which has been made in the cheque pertains to the amount mentioned therein and, as such, it is a material alteration. However, the question remains as to who was responsible for making this alteration. If the said alteration has been made by the accused-drawer of the cheque with a view to defeat the proposed proceedings under Section 138 of the Negotiable Instruments Act against him, he cannot be absolved of his liability for prosecution but if such alteration has been made by payee of the cheque with a view to take undue benefit, the situation may be different. The issue as to which of the parties has made alteration in the cheque, is a question of fact which can be determined only during trial of the case. Thus, it is clear that the issue as to whether the alterations made in the cheque, which is subject matter of the impugned complaint, have been made at the instance of the petitioner or at the instance of the respondent, can be determined only after trial as the same is a question of fact which cannot be gone into in the present proceedings - It is also pertinent to note here that in the present case, as per the allegations made in the complaint, the petitioner, despite having received the demand notice informing him that the cheque had been dishonoured on account of the reason that the alterations have not been authenticated did not choose to respond to the said notice. The petition is dismissed leaving it open to the petitioner to project the contentions raised by him in the present petition before the learned trial Magistrate at the appropriate stage during trial of the case. Issues: Whether dishonour of a cheque on account of unauthenticated alteration in the amount constitutes an offence under Section 138 of the Negotiable Instruments Act, and whether the question as to which party made the material alteration can be determined at the interlocutory stage.Analysis: The legal framework includes Section 138 (dishonour of cheque) and Section 87 (effect of material alteration) of the Negotiable Instruments Act, 1881, and the principles laid down by the Supreme Court in decisions such as Lakshmi Dyechem and Veera Exports. If an act or omission by the drawer is intended to prevent the cheque from being honoured (for example, by unauthenticated overwriting or by appending a mismatching signature), the resulting dishonour may fall within Section 138 subject to satisfaction of other statutory conditions including service of notice. An alteration in the amount is a material alteration under Section 87; whether the alteration was made by the drawer or by the payee (with or without the drawer's consent) is a question of fact requiring evidence at trial. Where the drawer fails to respond to the statutory demand notice, the determination of who effected the alteration becomes a matter for trial.Conclusion: Dishonour of a cheque due to an unauthenticated material alteration can constitute an offence under Section 138 if the alteration was made by the drawer with the intention to prevent the cheque being honoured; the issue of which party made the alteration is a factual question to be decided at trial and cannot be finally determined at the interlocutory stage.