Material alteration of a negotiable instrument renders it void against any one who is party thereto at the time of making such alteration and who did not consent to it.

JUDGMENT

1. This is an appeal from the judgement and decree of the Principal Subordinate Judge, Narasaraopet, given in A.S. 75 of 1967 on 12th Jan. 1968 whereby the learned Judge allowed the appeal and granted decree in favour of the plaintiff for the amount due under Ex. A-1 deducting two payments of Rs. 1700/- each covered by Ex. A-2 and Ex. A-3 together with counter interest on the sums from the respective dates. Finally a decree for Rs. 1564-95 p. was granted.

2. The material facts, in order to appreciate the contentions raised before me are that the respondent-plaintiff filed the suit for recovery of Rs. 2721-70 ps. being the balance of the principal and interest due on a promissory note dt. 1-9-1962 executed by the defendant in favour of Kudithipudy Raghavaih, the plaintiff's transferor for Rs. 4,500/-. The defendant paid Rs. 1700/- on 19.7.63 and Rs. 700/- on 28.1.1964 as part payments. The promissory note was transferred to the plaintiff for collection on 20-5-1966. The plaintiff, therefore asked for a decree.

3. The defendant admitted the execution of the promissory note and the borrowing of Rs. 4,500/- from the plaintiff's ???. He further contended that he paid in all Rs. 3,400/-, Rs. 1,700/- on 19.7.1963 and another sum of Rs. 1700/- on 28-1-1964. He contended that the figure of 1,700/- in the endorsement dt. 28-1-1964 on the promissory note was altered to Rs. 700/-.

4. The trial court, after framing appropriate issues and recording evidence Adduced by the parties, reached the conclusion that Rs. 1700/- were paid by the defendant on 28.1.1964 under Ex. A-3 and that the endorsement is materially altered inasmuch the figure of Rs. 1700/- was converted into Rs. 700/-. He therefore dismissed the suit in view of the provisions of Sec. 87 of the Negotiable Instruments Act (hereinafter referred to as the Act).

5. Dissatisfied with that judgment, the plaintiff carried the matter in appeal. The appellate court came to the conclusion that Ex. A-3 has been materially altered subsequent to its execution. He however, held that since it is a receipt and not a negotiable instrument Sec. 87 of the Act is not applicable to the case. Consequently he gave deduction of Rs. 1,000/- in addition to what the plaintiff had already deducted and decreed the suit for the balance. It is this view that is now challenged in this Second Appeal.

6. The first contention of the learned Advocate appearing for the appellant was that the lower appellate court was not correct in holding that Sec. 87 of the Act is not applicable to an endorsement made in the promissory note. He therefore submitted that in view of the concurrent finding of the fact that Ex. A-3 which is an endorsement on the promissory note is material alteration, the suit on the basis of that promissory note on which such endorsement appears must be dismissed.

7. I find it difficult to agree with this submission. Sec. 87 of the Act at the very outset says that material alteration of a negotiable instrument renders the same void. In order, therefore, to attract the provisions of Sec. 87 of the Act the alteration must not only be material alteration but such material alteration must be in a negotiable instrument and it is only then that such negotiable instrument materially altered would be void against any one who is party thereto at the time of making such alteration and who did not consent to it. Therefore the short question is whether the endorsement Ex. A-3 appearing on the back of the promissory note is a negotiable instrument. Ex A-3 read as follows:—

8. A reading of this document would leave no one in doubt that it is a receipt acknowledging payment of Rs. 700/-. Merely because the receipt appears on the back of the promissory note I fail to see how such a receipt can be called a negotiable instrument. Nor does it become part of the promissory note because of the endorsement on it. It has a separate entity.

9. Now a negotiable instrument is defined under Sec. 13 of the Act. Accordin