Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2016 Supreme(Del) 4199

IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SAHAI ENDLAW, J.
YOGESH MEHRA – Appellant
Versus
AMIT AGGARWAL – Respondent
R.F.A. No. 510 of 2015
Decided On : 23-05-2016

Advocates Appeared:
For the Appellant : Mr. Ramit Malhotra.
For the Respondents: Mr. Kamlesh Kumar, Mr. Narsh Kumar Bansal and Mr. Anurag Saxena.

The main legal point established in the judgment is that a cheque with material alterations becomes void under Section 87 of the Negotiable Instruments Act, 1881, and a suit under Order XXXVII of CPC cannot be maintained on such a cheque.

Headnote:
Cheque Alteration - Civil Procedure - Negotiable Instruments Act, 1881 - Section 138, Section 5, Section 87 - The court discussed the alteration of a cheque and its implications under the Negotiable Instruments Act, 1881. It highlighted the requirement for consent for material alterations and the consequences of alterations on the validity of the cheque. The court also considered the maintainability of a suit under Order XXXVII of the CPC based on a cheque with material alterations and the relevance of SMS as a written contract.
Fact of the Case:

The respondent/plaintiff filed a suit under Order XXXVII of CPC against the appellant/defendant for dishonor of a cheque. The appellant/defendant sought leave to defend, alleging tampering and misuse of the cheque. The Trial Court decreed the suit, but the High Court set aside the judgment and remanded the suit for adjudication as an ordinary suit.
Finding of the Court:

The High Court found that the Trial Court erred in not considering the dishonor of the cheque due to material alterations. It held that the suit under Order XXXVII of CPC could not be maintained on a cheque with material alterations and set aside the judgment, remanding the suit for adjudication as an ordinary suit.
Issues: The issues revolved around the dishonor of a cheque, allegations of tampering, and the maintainability of a suit under Order XXXVII of CPC based on a cheque with material alterations.
Ratio Decidendi: The court's decision was based on the finding that the cheque had been dishonored due to material alterations, rendering it void under Section 87 of the Negotiable Instruments Act, 1881. It also emphasized the requirement for consent for material alterations and the relevance of SMS as a written contract.
Final Decision: The High Court set aside the judgment and remanded the suit for adjudication as an ordinary suit.

Judgement Key Points

Case Summary: Yogesh Mehra v. Amit Aggarwal (R.F.A. No. 510 of 2015)

Main Legal Principle

A cheque with material alterations is void under Section 87 of the Negotiable Instruments Act, 1881, as against parties who did not consent to the alteration, rendering it ineligible for a suit under Order XXXVII of the CPC. [11000525270014][11000525270016]

Facts of the Case

Plaintiff and defendant engaged in financing used cars with prior transactions; defendant issued Cheque No. 099331 dated 25th July, 2013 for Rs.11,80,000/- from Axis Bank, Lok Vihar branch. (!) [11000525270004]
Cheque returned unpaid in August 2013. (!)
Defendant allegedly promised payment but avoided calls; plaintiff claimed SMS admission by defendant of altering the cheque date and requesting time. (!) (!) [11000525270004]
Plaintiff filed suit under Order XXXVII CPC after legal notice; defendant denied liability. (!) [11000525270005]
Defendant alleged cheque issued in February 2012 for Rs.1,80,000/- as security, paid in cash by April 2012, plaintiff claimed destruction but later misused it by altering amount/date; bank returned it for "alter/correct" in August 2013. (!) (!) (!) (!) (!) (!) (!) (!) (!) [11000525270005][11000525270007][11000525270022]
No Section 138 NI Act proceedings filed by plaintiff. (!)

Trial Court Proceedings

Defendant sought leave to defend alleging tampering; trial court decreed suit for plaintiff, finding no visible tampering, amount consistent in figures/words, SMS admission by defendant, and defense unbelievable. [11000525270006]
No cheque return memo filed by plaintiff. [11000525270010]

Appellate Court Findings

Appeal admitted; execution stayed conditionally on deposit, later vacated. [11000525270001][11000525270002]
Bank letter confirmed return for "alter/correct on instruments are prohibited in CTS"; plaintiff's counsel could not confirm/deny. [11000525270007][11000525270009][11000525270011]
Trial court erred in not addressing dishonor due to alterations; such cheque ceases to be bill of exchange under Section 5 NI Act unless alteration carries common intention; suit under Order XXXVII not maintainable. [11000525270012][11000525270013][11000525270014]
Alteration discharges parties without consent. [11000525270014]
SMS does not form basis for Order XXXVII suit as not a written contract; defendant denied SMS authenticity, alleging misuse of his phone; no reply filed by plaintiff to leave application. [11000525270019][11000525270020][11000525270021][11000525270024][11000525270025] (!) (!)

Ratio Decidendi

Materially altered cheque void under Section 87 NI Act without consent; bank dishonor on alteration ground raises triable issue barring Order XXXVII suit. [11000525270013][11000525270014][11000525270016]
SMS screenshot not qualifying written contract for summary suit. [11000525270025]

Final Decision

Impugned judgment/decree set aside; suit remanded as ordinary suit for written statement and adjudication. [11000525270026][11000525270027]
Parties to appear 14th July 2016 before trial court; no costs. [11000525270028] (!) (!)

Acts/Provisions Referred

CPC: Section 96, Order XXXVII. [11000525270001][11000525270014]
NI Act: Sections 5, 87, 138. [11000525270014] (!)

Advocates

Appellant: Mr. Ramit Malhotra. [p_49? – inferred from context]
Respondent: Mr. Kamlesh Kumar, Mr. Narsh Kumar Bansal, Mr. Anurag Saxena. [p_49? – inferred from context]

JUDGMENT :

RAJIV SAHAI ENDLAW, J.

1. This first appeal under Section 96 of Code of Civil Procedure, 1908 (CPC) impugns the judgment and money decree dated 15th April, 2015 of the Court of the District & Sessions Judge (North), Rohini Courts, Delhi in CS No. 43/2014 filed by the respondent/plaintiff under Order XXXVII of CPC, consequent to the dismissal of the application of the appellant/defendant for leave to defend.

2. Notice of the appeal was issued and subject to the appellant/defendant depositing a sum of Rs.5.90 lakhs in this Court, execution was stayed.

3. Upon the appellant/defendant not depositing the amount, vide order dated 6th April, 2016, the order of stay of execution was vacated, the appeal admitted for hearing and posted for today for hearing. On enquiry, it is informed that the execution of the decree is underway.

4. The counsels have been heard and the Trial Court record requisitioned in this Court perused.

5. The respondent/plaintiff instituted the suit from which this appeal arises, pleading:

(i) that both, the respondent/plaintiff and the appellant/defendant are engaged in the same business, of financing of used cars and there have been several transactions between them and the appellant/defendant in discharge of his liability towards the respondent/plaintiff issued Cheque No. 099331 dated 25th July, 2013 on the account maintained by him with Lok Vihar, New Delhi branch of Axis Bank in favour of the respondent/plaintiff for an amount of Rs.11,80,000/-;

(ii) that the said cheque was however, in the month of August, 2013, returned unpaid;

(iii) that the appellant/defendant upon being apprised thereof, again promised to pay but thereafter started avoiding the telephone calls of the respondent/plaintiff;

(iv) that however the appellant/defendant through SMS from his mobile phone admitted the fact that he had altered the date on the cheque and asked for some time to make the payment; the images taken from the mobile phone of the respondent/plaintiff were annexed to the plaint;

(v) that ultimately the respondent/plaintiff got issued a legal notice and in reply whereto the appellant/defendant denied his liability against the cheque.

6. The appellant/defendant sought leave to defend pleading:

(a) that the respondent/defendant had tampered and misused the cheque;

(b) that the appellant/defendant had given to the respondent/plaintiff the cheque in question on 20th February, 2012 for a sum of Rs.1,80,000/-;

(c) that the said cheque was given as security with an understanding that the respondent/plaintiff would return the said cheque, after the payment of the said amount of Rs.1,80,000/-;

(d) that however the respondent/plaintiff failed to return the cheque inspite of payment of the entire amount of Rs.1,80,000/- in cash in April, 2012 stating that the same had been mutilated and destroyed;

(e) that the appellant/defendant believed and trusted the respondent/plaintiff;

(f) that after about one and a half years i.e. from January, 2014, the respondent/plaintiff started harassing the appellant/defendant demanding money, even though the appellant/defendant had no liability;

(g) that the respondent/plaintiff in February, 2014 disclosed that the cheque aforesaid had not been mutilated and threatened the appellant/defendant on the basis thereof;

(h) that complaints dated 28th February, 2014 and 13th March, 2014 were made by the appellant/defendant in this respect;

(i) that the appellant/defendant also made enquiries from his Bank and the Bank vide letter dated 8th March, 2014 informed the appellant/defendant that the cheque for Rs.11,80,000/- had been returned on 26th August, 2013 for the reason of alteration/correction;

(j) that it is for this reason only that no proceedings under Section 138 of the Negotiable Instruments Act, 1881 had been filed by the respondent/plaintiff.

7. The learned District Judge, vide impugned judgment/order dated 15th April, 2015 has decreed the suit holding (i) that a bare perusal of the cheque did not show any sign of

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