The main legal point established in the judgment is that the insertion of a date on an undated cheque does not amount to material alteration under Section 87 of the Negotiable Instruments Act, as the holder in due course has implied authority to do so, unless proven otherwise by the drawer of the cheque.

RADHAKRISHNAN, J.

The question that has come up for consideration in this case is as to whether insertion of a date or an undated cheque would amount to material alteration within the meaning of Section 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 realisation 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 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 date of the plaintiff Exts. A1 to A3 were produced and defendant produced Exts. B1 to B6.

4. The dispute between the parties centres round Ext. A1 cheque 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 without the meaning of Section 87 of the Negotiable Instruments Act.

5. Trial Court accepted the contention of the defendant and held that 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 shops' business. According to him, on settlement of accounts, an amount of Rs. 16,346.95 was due to the defendant. For realising 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 Section 87 of the Negotiable Instruments Act. Counsel relied on the decision of the Andhra Pradesh High Court in Jayantilal v. Zubeda Khanum, AIR 1986 AP 120 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 Section 118(b) of the Act, which s