[NI Act] Complainant Putting Date On Cheque Without Drawer's Consent Renders Instrument Void: Bombay High Court
Subsequently adding dates for payment without the payer's consent renders the negotiable instrument void, the Bombay High Court said refusing relief in a cheque bouncing case. "No doubt cheque is negotiable instrument which is transferable and negotiable, presumption under Section 138 of the Negotiable Instrument Act can be drawn only when the pre-conditions are satisfied....
Subsequently adding dates for payment without the payer's consent renders the negotiable instrument void, the Bombay High Court said refusing relief in a cheque bouncing case.
"No doubt cheque is negotiable instrument which is transferable and negotiable, presumption under Section 138 of the Negotiable Instrument Act can be drawn only when the pre-conditions are satisfied. The complainant unilaterally has put in dates on the cheques without the authority of the accused and even by not informing him. So, it amounts to material alterations. If it is so such negotiable instrument becomes void", Justice S. M. Modak held in his judgment.
The court dismissed two appeals against acquittal of the accused in a cheque bounce case under section 138 of the Negotiable Instruments Act, 1881.
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, he could not complete the construction of the building on the plot. The accused filed a civil suit for extension of time for recovery of the amount by the complainant.
After filing of the suit, the complainant, in 2007 deposited the two cheques which were returned unpaid. Therefore, the complainant filed two complaints in the trial court. She admitted that she filled in the name of the payee i.e., the firm's name and date as April 27, 2007.
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.
The question before the court was whether the complainant was justified in putting name of the payee and date on the cheques.
The court did not find putting the name of the payee objectionable as the cheques were given to the complainant for this reason in the first place.
The court referred to section 87 of the NI Act which provides that material alterations are void if the person does not consent to them, unless the alterations are towards the common intention of the parties.
The court noted that 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 of the loan, the court observed. Thus, the court said that there was neither consent nor did the alteration arise out of common intention of the parties.
The court agreed with the trial court's findings on this regard and held that prosecution under section 138 of the NI Act cannot be initiated in the present case.
Case no. – Criminal Appeal Nos. 1630 and 1631 of 2011.
Case Title – M/s. Pinak Bharat and Company v. Anil Ramrao Naik
Citation: 2022 LiveLaw (Bom) 505