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2023 (12) TMI 1432 - HC - Indian LawsDishonour of cheque - acquittal of the accused for the offence under Section 138 of the Negotiable Instruments Act - sufficient grounds to warrant interference with the Trial Court s findings - HELD THAT - Any material alteration of a negotiable instrument renders the same void as against any person who is a party thereto at the time of making such alteration and does not consent thereto. DW.1 in her evidence has stated that she has borrowed Rs.1, 50, 000/- from the complainant and Smt.Kashibai was standing as surety for the said amount. The said Smt.Kashibai insisted the accused/DW.1 to repay the loan to the complainant. As per her instruction the accused said to have paid Rs.1, 25, 000/-. The accused had to pay the balance and intimated the complainant to return the cheque and also informed the complainant that the balance would be paid at the time of returning the documents. On conjoint reading of Sections 20 and 87 of the N.I Act it makes it clear that the provision of Section 87 are subject to those of Sections 20 49 86 and 125 of the Act. When the accused / drawer of the cheque signed the cheque and issued blank cheque to the complainant if any alteration appears on the body of the cheque such alterations need not require the consent of the accused / drawer of the cheque. In this way the Trial Court has committed error in recording the acquittal on the ground that the cheque is materially altered. Therefore the judgment and order of acquittal passed by the Trial Court is liable to be set aside. Conclusion - i) The judgment and order dated 26.10.2018 passed in C.C.No.25323/2017 by the XII and XXXVII Additional Chief Metropolitan Magistrate (S.C.C.H-8) at Bengaluru is set aside. ii) The respondent / accused is convicted for the offence under Section 138 of N.I. Act and she is sentenced to pay a fine of Rs.3, 00, 000/- in default of payment of fine she shall undergo simple imprisonment for one year. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment were:
ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents The case revolves around Section 138 of the Negotiable Instruments Act, which deals with the dishonor of cheques for insufficiency of funds or if it exceeds the amount arranged to be paid. The presumption under Section 139 of the Act mandates that once the execution of a cheque is admitted, it is presumed to be for the discharge of a debt or liability. However, this presumption is rebuttable, and the accused can raise a probable defense. The legal precedent referenced was the Supreme Court's decision in Basalingappa v. Mudibasappa, which outlines the principles regarding the presumption and its rebuttal under Sections 118(a) and 139. Court's interpretation and reasoning The Court noted that the presumption under Section 139 is rebuttable and the onus is on the accused to raise a probable defense. The accused's defense was that the cheque was materially altered from Rs.1,50,000 to Rs.2,50,000. The Court also examined Section 87 of the N.I. Act, which renders a negotiable instrument void if materially altered without consent, unless it was made to carry out the common intention of the original parties. Key evidence and findings The complainant alleged that the accused issued a cheque for Rs.2,50,000, which was dishonored due to an alteration. The accused admitted to issuing a blank signed cheque, which the complainant filled. The Trial Court had found the alteration without consent and acquitted the accused. However, the Appellate Court found that the accused's admission of issuing a signed blank cheque gave the complainant authority under Section 20 of the N.I. Act to fill in the cheque, negating the claim of material alteration. Application of law to facts The Court applied Sections 20 and 87 of the N.I. Act, determining that the accused, by issuing a signed blank cheque, provided the complainant with prima facie authority to complete the cheque. The Court found that any alteration did not require the accused's consent due to the nature of the blank cheque issuance. Treatment of competing arguments The appellant argued that the Trial Court's decision was perverse and failed to consider the evidence properly, particularly the bank's endorsement and the testimony of witnesses. The respondent contended that the cheque was altered without consent. The Appellate Court found the appellant's arguments more persuasive, particularly in light of the legal provisions allowing the filling of blank signed cheques. Conclusions The Court concluded that the Trial Court erred in its judgment by not properly applying the legal provisions regarding blank signed cheques and material alteration. The acquittal was found unjustified, and the appellant's appeal was allowed. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning The Court highlighted: "Once the authority is given to the complainant, it cannot be said that it is materially altered. The endorsement issued by the bank in this regard appears to be erroneous and not acceptable." Core principles established
Final determinations on each issue
ORDER
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