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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Jasjit Singh Bedi , J.
M/s Anil Agro Industries & Anr. – Appellants
Versus
M/s Bhoday Steel Rolling Mills & Ors. – Respondents
CRM-M-23251-2015
Decided On : 16-01-2023
Forgery - Negotiable Instruments Act - Section 138 - 7, 27, 87 - The court discussed the relevant provisions of the Negotiable Instruments Act, including Section 7, 27, and 87, and cited various judgments to establish the legal principles regarding material alteration of cheques, liability of parties, and the effect of alterations on the validity of the instrument. The court emphasized that material alteration of a negotiable instrument renders it void unless made to carry out the common intention of the original parties, and that only the date on the cheque could be altered. The court also highlighted the requirement for the drawer's approval with full signature for any material alteration.
Fact of the Case:
The accused/petitioners were summoned for having committed the offence under Section 138 of Negotiable Instruments Act based on a complaint filed for dishonour of a cheque. The accused argued that the cheque was materially altered, forged, and fabricated, and that one of the accused was not liable as she was neither a partner nor a proprietor of the firm. The respondent/complainant contended that the alterations were made with consent and that the accused were actively involved in the business and daily functioning of the concern.
Finding of the Court:
The court found that the cheque was materially altered and had been returned for the first time on account of material alterations, rendering it void as per the RBI Guidelines and Section 87 of the Negotiable Instruments Act. The court also held that one of the accused was not liable as she was not a partner or proprietor of the firm. The court concluded that the continuation of the proceedings would be an abuse of the process of the Court and quashed the complaint, summoning order, notice of accusation, and all subsequent proceedings against all the accused.
Issues: The issues involved in the case included the validity of the cheque, the liability of the accused, and the maintainability of the complaint against one of the accused who was not a partner or proprietor of the firm.
Ratio Decidendi: The court's decision was based on the finding that the cheque was materially altered and void as per the RBI Guidelines and Section 87 of the Negotiable Instruments Act. The court also considered the lack of liability of one of the accused as she was not a partner or proprietor of the firm.
Final Decision: The court quashed the complaint, summoning order, notice of accusation, and all subsequent proceedings against all the accused, as the continuation of the proceedings would be an abuse of the process of the Court.
Factual Aspects: The case involves a dispute over a cheque issued by the accused, which was allegedly materially altered, forged, and fabricated. The accused contend that the cheque was tampered with, specifically through alterations in the amount and signatures, which were not authorized by the drawer. The cheque was dishonoured initially due to these material alterations, and subsequent dishonours occurred because the bank account was closed. The accused also argue that one of the respondents is not liable since she was neither a partner nor a proprietor of the firm and was not the drawer of the cheque. The respondent claims that the alterations were made with consent and that the signatures on the alterations were valid, thus making the cheque a valid instrument.
Legal Aspects: The legal discussion centers around the validity of the cheque in light of the material alterations, guided by the provisions of the Negotiable Instruments Act and RBI guidelines. The key legal principles include: - Material alteration of a negotiable instrument generally renders it void unless made to reflect the common intention of the original parties. - Only the date on a cheque may be altered, and such alteration must be signed by the drawer to be valid. - Alterations without the drawer’s consent, especially in the amount or payee’s name, can invalidate the cheque. - The burden of proof lies on the holder to establish that any alleged alteration was authorized or made in accordance with the original parties' common intention. - The liability of parties depends on their status—only the proprietor or drawer is liable, and non-parties or authorized signatories not acting as drawers are not liable. - RBI guidelines have statutory force, emphasizing that cheques should not be materially altered and should be signed by the drawer.
Legal Issues: The primary legal issues include: - Whether the cheque was materially altered in violation of legal and RBI guidelines. - Whether the alterations were made with the drawer’s consent or in accordance with the original parties’ common intention. - The liability of the accused, particularly whether a non-drawer signatory or authorized signatory can be held liable under the Negotiable Instruments Act. - The validity of proceedings initiated under Section 138 of the Negotiable Instruments Act against the accused, in light of the alleged material alterations and the status of the accused.
Discussion and Holding: The court examined the provisions of the Negotiable Instruments Act, especially Sections 87 and 138, and relevant RBI guidelines, concluding that material alterations in a cheque without the drawer’s consent render the instrument void. The evidence, including handwriting expert reports, supported the contention that the cheque was forged and fabricated, further invalidating the instrument. The court emphasized that only the date on a cheque can be legally altered, and any other alterations, especially in the amount or payee's name, are impermissible unless made with the drawer’s full signature and consent.
Furthermore, the court held that the accused who were not the drawers of the cheque could not be held liable under Section 138, especially when the cheque was materially altered and dishonoured on that basis. The fact that the accused were neither partners nor proprietors of the firm, and that the alterations lacked proper authorization, led the court to conclude that continuing proceedings would amount to abuse of process.
Ultimately, the court quashed the criminal proceedings against all accused, ruling that the cheque’s material alterations and the absence of proper authorization rendered the instrument invalid and the prosecution unsustainable. The proceedings were deemed to be an abuse of the court’s process, and the complaint and subsequent actions were dismissed accordingly.
JUDGMENT
Jasjit Singh Bedi, J. - This order shall dispose of two petitions bearing No.CRM-M-23251-2015 titled as M/s Anil Agro Industries & Another Versus M/s Bhoday Steel Rolling Mills and CRM-M-36782-2014 titled as Sudha Mittal Versus M/s Bhoday Steel Rolling Mills. For the sake of convenience, the facts are being taken from CRM-M-23251-2015 as both these petitions are arising out of the same complaint and summoning order.
2. The present petitions have been filed under Section 482 Cr.P.C. for quashing of the criminal complaint No.105-A dated 24.04.2013 (Annexure P-1) under Section 138 of Negotiable Instruments Act, 1881, summoning order dated 24.10.2013 (Annexure P-3) passed by the Court of Judicial Magistrate, 1st Class, Amloh, District Fatehgarh Sahib, the accusation order dated 06.08.2014 (Annexure P-2) along with all subsequent proceedings arising therefrom.
3. The brief facts as emanating from the pleadings are that the accused/petitioners purportedly availed a loan from the complainant/ respondent for the purposes of business of their firm accused No.1. The accused agreed and assured to repay the said loan amount along with interest @ 12 % per annum to the complainant/respondent. As per the assurance given by the accused, the complainant advanced a loan to the accused @ 12 % per annum. The total loan availed by the accused was Rs.15,00,000/- vide Cheque no.3162767 dated 03.08.2011 for an amount of Rs.7,00,000/- and Cheque no.592801 dated 08.08.2011 for an amount of Rs.8,00,000/-.
Over a period of time, the accused are stated to have paid back some part of the loan advanced along with interest to the complainant/respondent after deducting TDS and the records of the same were entered into the account books of the accused and the complainant. After adjusting the account between themselves, as on 31.03.2012, an amount of Rs.10,74,250/- remained to be paid by the accused to the complainant. As on 31.12.2012, the amount increased to Rs.11,70,933/-. With a view to discharge their legal liabilities, a cheque No.043464 dated 08.01.2013 for a sum of Rs.11,50,000/- drawn on Union Bank of India, Branch Mandi Gobindgarh was issued in favour of the complainant/respondent. The accused Sachin Mittal purportedly signed the cheque, whereas the accused Sudha Mittal purportedly signed the material alterations on the said cheque. However, the complaint does not mention the factum of alterations.
The said cheque was dishonoured on account of the fact that there was material alteration in the cheque and it required the full signatures of the drawer. Thereafter, it was presented once again and the reason for the subsequent dishonour was that the account had been closed. It may be mentioned here that only the subsequent dishonour is spoken off in the complaint.
Thereafter, a legal notice was served upon the accused and pursuant thereto, the complaint under Section 138 of Negotiable Instruments Act came to be filed on 24.04.2013. The copy of the complaint is annexed as Annexure P-1 to the petition.
Pursuant to the filing of the complaint, the accused/petitioners came to be summoned for having committed the offence under Section 138 of Negotiable Instruments Act. The copy of the summoning order dated 24.10.2013 is annexed as Annexure P-3 to the petition.
Thereafter, notice of accusation was served upon the accused on 06.08.2014. The copy of the said accusation is annexed as Annexure P-2 to the petition.
4. The aforementioned complaint, summoning order and notice of accusation along with subsequent proceedings are under challenge in these petitions.
5. The main contention raised by the learned counsel for the petitioner is that there is material alteration and interpolation in the cheque which was in contravention of the RBI Guidelines. A copy of the said guidelines/instructions are annexed as Annexure P-4/A to the petition.
The signatures of Sudha Mittal (petitioner in CRM-M-367822014) at four places are different. The name of the beneficiary has been cha
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