Putting Date On Cheque Without Drawer's Consent Renders it Void : Bombay High Court

Putting Date On Cheque Without Drawer's Consent Renders it Void : Bombay High Court

Rules it is imperative to have a mutual agreement before taking any such action

The Bombay High Court has dismissed the appeals against the acquittal of a person in a cheque-bouncing case under the Negotiable Instruments Act, 1881. It added that the dates for the payment without the payer's consent render the negotiable instrument void.

In his judgment, Justice SM Modak stated, "No doubt, a cheque is an instrument transferable and negotiable under Section 138 of the Negotiable Instruments Act. It can be drawn only when the pre-conditions are satisfied. The complainant unilaterally put dates on the cheques without the authority of the accused/respondent and without informing him. So, it amounts to material alterations and the negotiable instrument becomes void."

The appellant is a partnership firm, and the complainant is one of its partners.

In 2003, the appellant gave a loan of Rs.1 crore to the accused/respondent. The parties entered a Memorandum of Understanding (MoU) for repayment. At the time of the execution of the MoU, the respondent issued two cheques to the complainant. The cheques did not mention any date or the name of the payee.

The respondent had taken the loan to pay for a property. However, he could not complete the construction of the building on the plot in time. He then filed a civil suit for a time extension for recovery of the amount by the complainant.

Meanwhile, in 2007, the complainant, a woman, deposited the two cheques which were returned unpaid. She filed two complaints in the trial court admitting that she filled in the date 27 April 2007 and the firm's name as a payee in the cheques.

However, the trial court acquitted the respondent holding that when the civil suit was pending, the complainant was not justified in completing the cheques without the authority of the respondent. The court, though, did not find putting the name of the payee objectionable, as the cheques were given to the complainant for this reason.

Justice Modak referred to the NI Act, which provides that material alterations are void if the person does not consent unless the alterations are towards the common intention of the parties.

The bench noted that the complainant had not stated that the date was put as instructed by the respondent. In fact, the latter had sought a time extension to repay the loan. This meant, his consent was not taken, and it was not a mutual decision.

While agreeing with the trial court's findings, the high court held that prosecution under the NI Act could not be initiated.