Section 138 NI Act Cheque Alteration Is A Triable Issue: J&K High Court

The High Court of Jammu & Kashmir and Ladakh at Srinagar has reaffirmed the boundaries of judicial intervention in proceedings under the Negotiable Instruments (NI) Act, ruling that whether an unauthenticated alteration on a cheque constitutes an offence is a "question of fact" to be settled through a full trial.

The Backdrop: A Disputed cheque

The legal battle originated from a complaint filed by Abdul Hamid Lone against Abdul Hamid Wani. Mr. Lone alleged that Mr. Wani owed him Rs. 14 lakh and had issued a cheque to settle the debt. When the cheque was presented at the J&K Bank Branch in Harmain, Shopian, it was dishonoured with the remark: “alterations require drawer’s authentication.”

Mr. Wani, in his petition to the High Court, argued that the primary document was a forgery. He contended that his original debt was merely Rs. 14,000, and the cheque had been illicitly altered by the payee to reflect a significantly higher amount. Consequently, he sought to quash the proceedings pending before the Additional Mobile Magistrate, Shopian.

Legal Questions and Arguments

The central legal question before Justice Sanjay Dhar was whether a cheque dishonoured due to unauthenticated material alterations falls under the ambit of Section 138 of the NI Act.

• The Petitioner’s Stance: Mr. Wani argued that the cheque was void under Section 87 of the NI Act, which stipulates that any material alteration of a negotiable instrument renders it void against a party who has not consented to such change. He claimed that the respondent’s act of increasing the amount constituted a fabrication of evidence.
• The Court’s View: The Court pointed out that the respondent had—prior to filing the complaint—served a notice of demand under the law. The petitioner failed to respond to this notice, which, in the eyes of the Court, narrowed the scope for summary dismissal of the complaint.

Key Observations

Justice Sanjay Dhar relied heavily on Supreme Court precedents to guide the decision, noting that determining the originator of the alteration is a factual dispute rather than a legal one appropriate for quashing.

The Court held: > “The issue as to which of the parties has made alteration in the cheque, is a question of fact which can be determined only during trial of the case.”

Referring to the Supreme Court ruling in M/s Lakshmi Dyechem v. State of Gujarat , the Court emphasized: > “So long as an act or omission on the part of the drawer of the cheque is intended to prevent the cheque being honoured, the dishonour would become an offence under Section 138 of the Negotiable Instruments Act.”

Furthermore, referencing Veera Exports vs. T. Kalavathy , the judgment noted: > “It is always a question of fact whether the alteration was made by the drawer himself or whether it was made with the consent of the drawer. It requires evidence to prove the aforesaid question whenever it is disputed.”

The Decision: A Lesson for Litigants

The High Court dismissed the petition to quash, allowing the trial before the Additional Mobile Magistrate, Shopian, to proceed. By doing so, the Court underscored that evidence—such as original banking records or forensic verification of handwriting—must be presented during the trial phase to determine whether the cheque was a lawful instrument or a product of forgery.

The decision serves as a significant reminder that summary proceedings under Section 482 of the CrPC are not the appropriate venue for litigating disputed facts. For litigants involved in NI Act cases, the message is clear: the validity of a cheque, when challenged, must undergo the rigour of a trial rather than a cursory review at the threshold.