IMPORTANT POINT
When a cheque is issued for a valid consideration, with .no dispute regarding signature, amount and name, it cannot be said that putting a gate on the cheque by the payee who is the holder of the cheque in due course would amount to material alleration rendering the instrument void.

Headnote:(i) Negotiable Instruments Act, 1881 - Section 118 - Presumptions as to negotiable instruments - Once there is admission of issuance of a cheque or the same is proved to have been issued presumption u/s 118 is raised that it is supported by consideration - When statutory presumption is discharged by plaintiff burden shifts to defendants to show that the cheque, though issued, is not supported by valid consideration - In order to discharge the burden, defendant has to adduce acceptable evidence - In the instant case, self serving evidence of defendant - Burden of proof not discharged.
       Held: When once the execution of the cheque is admitted, presumptions under S. 118 of the Act arise, until the contrary is proved. Initial presumption rests on the plaintiff to prove that the cheque was issued by the defendant. As soon as the execution of the cheque is proved, the rule of presumption laid down under S. 118 of the Act applies. So also once there is admission of issuance of a cheque or the same is proved to have been issued, the presumption under S. 118 is raised that it is supported by consideration. When statutory presumption is discharged by the plaintiff the burden shifts to the defendants to show that the cheque, though issued, is not supported by valid consideration. In other words, once the issuance of the cheque is admitted or proved, and the presumption is drawn under S. 118 of the Negotiable Instruments Act that presumption can be rebutted by circumstantial evidence or by presumption of fact drawn under S. 114 of the Evidence Act. (Para 10)
       In order to discharge the burden, defendant has to adduce acceptable evidence. In the instant case, there is only the self-serving evidence of defendant who got himself examined as DW 1. Defendant has relied on documents Exts. B 1 to B6. Ext. B 1 is an agreement between the plaintiff and the defendant with regard to right to conduct arrack shop No. 10, in Group IV of Kottarakkara Range, which was given to defendant under certain terms and conditions. Defendant also relied on Ext. B4 dated 31-3-1984 with regard to an agreement in respect of toddy shop No. 10. We are of the view that merely because there were some transactions between the plaintiff and defendant, the same would not lead to the conclusion that the cheque was not supported by consideration. Oral evidence of DW 1 and Exts. B 1 to B6 as such would not lead to the conclusion that the cheque was not supported by consideration. Those documents would show that there were some transactions between the plaintiff and defendant. But defendant has to adduce reliable evidence to rebut the presumption under S. 118 of the Act. which according to us, he has not discharged. (Para 12)
       (ii) Negotiable Instruments Act, 1881 - Section 87 - Effect of material alteration - Undated cheque Not void - Putting a date on the cheque by payee who is holder of cheque in due-course - Whether amounts to material alteration (No).
       Held: When a cheque is issued, for valid consideration, with no dispute regarding signature amount and name, it cannot be said that putting a date on the cheque by the payee who is the holder of the cheque in due course would amount to material alteration rendering the instrument void. In fact there is no material alteration. When a cheque is admittedly issued with blank date and when the payee has no objection with regard to the name, amount and signature, it can be presumed that there is an implied consent for putting the date as and when required by the beneficiary and get it en-cashed. In other words, when the date is put by the payee, or the drawer on the cheque the presumptions under S. 188 of the Act would arise. (Para 16)
       The burden is, therefore, entirely on the drawer of the cheque to establish that the payee had no authority to put the date and en-cash the cheque. In other words, payee has got the implied authority to put the date. When the date appears on the cheque, presumption under S. 118 (b) operates. Therefore, the burden shifts to the drawer to establish that he has not authorised the drawee to put the date on the cheque. (Para 17)
       In the instant case, admittedly the cheque was complete in all respects, except the date. It is the contention of the defendant that hand-writing of the date on the cheque is different and that the ink used for putting the date is also different. Assuming that if there is difference in the hand-writing with regard to the date as well as the ink used, that is not enough to rebut the presumption under S. 118 (b) of the Act, since the payee has put the date on the basis of implied authority. We are therefore, of the view that defendant has not discharged the burden or rebutted the presumption under S. 118 (b) of the Act. (Para 19)
       Result: Appeal dismissed.

JUDGMENT

K.S. Radhakrishnan, J. - The question that has come up for consideration in this case is as to whether insertion of a date on an undated cheque would amount to material alteration within the meaning of S. 87 of the Negotiable Instruments Act.

2. Appellant was the defendant in O.S. No. 16 of 1986 of the Sub Court, Kottarakkara. Suit was instituted by the respondent-plaintiff for realization of Rs. 30,000/- with interest. According to him, defendant had borrowed an amount of Rs. 30,000/- and issued a cheque dated 11-6-1985 for the said amount. Cheque was sent for collection through the Catholic Syrian Bank, Kottarakkara. But the cheque was dishonoured stating 'refer to drawer'. Advocate notice dated 8-7-1985 was issued to the defendant. Defendant did not respond to the notice. Hence the plaintiff instituted the suit. Defendant in his written statement stated that he had not borrowed Rs. 30,000/- from the plaintiff. However, he admitted the issuance of the cheque. According to him, it was issued without consideration for adjustment of certain transactions in connection with toddy shops of Kottarakkara Range.

3. In order to establish his case, plaintiff got himself examined as PW 1. Defendant got himself examined as DW 1. On the side of the plaintiff Exts. Al to A3 were produced and defendant produced Exts. B 1 to B6.

4. The dispute between the parties centres round Ext. A1 cheuqe dated 11-6-1985. Issuance of the cheque is admitted by both the parties. Defendant's case is that the plaintiff cannot claim relief on the basis of the said cheque since he had made material alteration in the cheque. According to him, plaintiff inserted the date on the cheque without obtaining his consent. Insertion of a date on the cheque, according to the defendant, would amount to material alteration within the meaning of S. 87 of the Negotiable Instruments Act.

5. Trial Court accepted the contention of the defendant and held the date was subsequently inserted. Trial Court took the view that since the plaintiff was a holder in due course, it is for the plaintiff to establish that the alteration was made with the consent of the defendant. On facts, the court took the view that cheque was issued only for adjustment of certain transactions between the plaintiff and defendant entered into on 31-3-1985, and the cheque was not supported by any consideration. Trial court therefore. dismissed. On appeal, this Court reversed the decision of the trial court, and decreed the suit. Aggrieved by the same, defendant has come up with this appeal.

6. Counsel for the defendant contended that the cheque was issued for the purpose of certain adjustments, and settlement of accounts, between the plaintiff and defendant in connection with certain toddy shop's business. According to him on settlement of accounts, an amount of Rs.16,346,95 was due to the defendant. For realizing the same he was intending to Initiate appropriate proceedings. It was stated that he issued an undated cheque as security for a loan transaction, in connection with certain abkari business, which was not supported by any consideration. Plaintiff, however, without the consent of the defendant, inserted a date on the cheque. Counsel contended that the insertion of a date on a cheque without consent would amount to material alteration within the meaning of S. 87 of the Negotiable Instruments Act. Counsel relied on the decision of the Andhra Pradesh High Court in Jayantilal v. Zubeda Khanum1, and contended that material alteration takes in not only a case where certain thing which is already written has been altered or erased, but also a new insertion.

7. Learned counsel appearing for the plaintiff, on the other hand, contended that cheque was issued to him on 11-6-1985 for encashment and that he had not put any date on the cheque. Counsel contended that even if plaintiff had put any date on the cheque there is a presumption under S. 118 (b) of the Act, which stated that every negotiable instrument bea

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Judicial Analysis

SupremeToday

IMPORTANT POINTWhen a cheque is issued for a valid consideration, with .no dispute regarding signature, amount and name, it cannot be said that putting a gate on the cheque by the payee who is the holder of the cheque in due course would amount to material alleration rendering the instrument void.

Judicial Analysis

IMPORTANT POINT
When a cheque is issued for a valid consideration, with .no dispute regarding signature, amount and name, it cannot be said that putting a gate on the cheque by the payee who is the holder of the cheque in due course would amount to material alleration rendering the instrument void.