Holding

A drawer may voluntarily re‑validate a negotiable instrument, and an alteration made with the drawer's consent does not render the instrument void under Section 87 of the Negotiable Instruments Act.

Summary

The respondent issued eight cheques to the appellant in April 1995, which were dishonoured when presented in May 1995. After being asked for more time, the respondent altered the dates of the cheques to 1996 and presented them again in July 1996, where they were again dishonoured. The appellant filed a complaint under Section 138 of the Negotiable Instruments Act, but the Madras High Court quashed the complaint, holding that the cheques had become invalid after six months and that the alteration could not re‑validate them. On appeal, the Supreme Court held that a drawer may voluntarily re‑validate a negotiable instrument and that an alteration made with the drawer's consent does not render the instrument void under Section 87. The court emphasized that whether the alteration was made by the drawer or with his consent is a question of fact to be decided on evidence. Consequently, the High Court's order was set aside and the petition dismissed, allowing the criminal complaint to proceed. The decision clarifies that the six‑month expiry rule does not preclude re‑validation through consensual alteration.

Issues considered

Whether a material alteration, such as changing the date of a cheque after the six‑month validity period, can re‑validate the instrument under the Negotiable Instruments Act.
Whether a drawer is permitted to voluntarily re‑validate a negotiable instrument, including a cheque, and the effect of Section 87 on such alterations.
Whether the High Court erred in quashing the Section 138 complaint on the ground of expiry and alleged non‑voluntary alteration.

Legislation cited

Negotiable Instruments Act, 1881s. 125, s. 138, s. 20, s. 49, s. 86, s. 87

Subjects

Negotiable Instruments ActSection 138Section 87cheque alterationrevalidationmaterial alterationexpiry of chequecriminal complaintdrawer consentfact of alteration

Judgment

A VEERA EXPORTS
v.
T. KALAVATHY

NOVEMBER 2, 2001

B [K.T. THOMAS AND S.N. VARIAVA, JJ.]

Negotiable Instruments Act, 1881 :

Section 87-Materic.l alteration-Effect of-Negotiable instrument-
Revalidation ~f-Held: It is always open to a drawer to voluntarily revalidate
c a negotiable instrument, including a cheque-After such alteration drawer
cannot contend that the cheque has become void as there is material alteration
thereto-Even payee of a cheque can make alteration with the consent of the
drawer thereof-Whether the alteration is made by the drawer himself or made
with his consent is a question of fact.
D
The respondent had issued to the appellant several cheques bearing
various dates but these cheques, when presented for payment, were dis·
honoured. The fact of dishonour was brought to the notice of the respond·
ent and she changed the date of the cheques. But the cheques were once
again dishonoured. The appellant then filed a complaint under Section 138
E of the Negotiable Instruments Act, 1881. The respondent contended that
she had been forced to change the dates against her will.

High Court quashed the complaint on the ground that the validity
period of a cheque was only 6 months and that a cheque, which had
become invalid because of the expiry of the stipulated period could not be
F •
made valid by alteration of dates. Hence this appeal.

Disposing the appeal, the Court

HELD : 1.1. There is no provision in the Negotiable Instruments Act,
1881 or in any other law, which stipulates that a drawer of a negotiable
G
instrument cannot revalidate it. It is always open to a drawer to voluntar-
ily revalidate a negotiable instrument, including a cheque. (10-F]

2. The first paragraph of Section 87 of the Act makes it clear that the
party who consents to the alteration as well as the party who made the
.H alteration are disentitled to complain against such alteration, e.g. if the
8
VEERA EXPORTSv.T. KALAVATHY [VARlAVA, J.] 9
drawer of the cheque himself altered the cheque for validating or A
revalidating the same instrument he cannot take advantage of it later by
saying that the cheque became void as there is material alteration. Further,
.. even if the payee or the holder of the cheque made the alteration with the
consent of the drawer thereof, such alteration also cannot be used as a
ground to resist the right of the payee or the holder thereof. It is always a B
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. This is a fact which
will have to be established by evidence at the trial. Thus at this stage the
High Court could not have quashed the complaint. (11-B-C-D; F]
c
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos.
1110-1111 of2001.
•
From the Judgment and Order dated 24.11.2000 of the Madras High
Court in Crl. O.P. No. 21681 of 1998.
D
R. Sudhinder and Rajesh Kumar for the Appellant.

K. Shivraj Choudhary and Dr. R. Prakash for the Respondent.

The Judgment of the Court was delivered by E
S.N. VARIAVA, J. Leave granted.

Heard parties.

These appeals are against the Judgement of a single Judge of the Madras F
High Court by which the criminal proceedings launched by the appellant under
Section 138 of the Negotiable Instruments Act have been quashed.

Briefly stated the facts are as follows:

The Respondent had issued to the Appellant 8 cheques, bearing various dates G
'
from 9th April, 1995 to 30th April, 1995, for a sum totalling Rs. 4 lacs. The
cheques were presented for payment on 15th May, 1995 but were dishonoured.
It is the case of the Appellant that the fact of dishonour was brought to the
notice of the Respondent and that the Respondent then requested for more time
to pay. The Appellants claim that they granted her more time to pay. The H
10 SUPREME COURT REPORTS [2001] SUPP. 5 S.C.R.
A Appellants claim that as the Respondent still could not pay the amounts, in
January 1996, she changed the date of the cheques from 1995 to 1996. The
Appellants claim that the Respondent also made the necessary endorsement on
the cheques at that time. The Appellant's claim that the Respondent then
requested the Appellant to present the cheques after a period of three months. "
B The cheques were again P.resented on 18th July, 1996 and were dishon-
oured. A legal notice dated 8th August, 1996 was served upon the ·Respondent.
The Respondent, by her reply dated 23rd August; 1996, alleged that she had
been forced to change the dates against her will. She also took up some other
contentions. The Appellant then filed a complaint under Section 138 of the
c Negotiable Instruments Act.

The Respondent thereafter filed a petition in the High Court of Madras
to quash the complaint. By the impugned order dated 24th November, 2000,
the High Court has quashed the complaint. Hence this Appeal.

D In the impugned judgment it has been held that the defence that the
alteration in the date was not made voluntarily was a question of fact which.
would not constitute a ground for quashing the complaint. However, after so
holding correctly, the Court goes on to state that the validity period of a cheques
is only 6 months. It was held that the validity period of all the 8 cheques had
already expired by October, 1995, and then held that once the validity period
E
was over, the cheques could not be re-validated by altering the dates so as
to give fresh life to the cheques for another 6 months. It is held that in law,
a cheque which has become invalid because of the expiry of the stipulated
period could not .be made valid by alteration of dates.

F In our view this reasoning is entirely fallacious. There is no provision
in the Ne.gotiable Instruments Act or in any other law which stipulates that a
drawer of a negotiable instrument cannot re-validate it. It is always open to
a drawer to voluntarily revalidate a negotiable instrument, including a cheque.

The High Court has also placed reliance on Section 87 of the Negotiable
G Instruments Act, which reads as follows :

"87. Effect of material alteration - Any material alteration of a nego-
tiable instrument renders the same void as against any one who is a
party thereto at·the. time of making such alteration and does not consent·
thereto, unless it was made in order to carry out the common intention
H
VEERAEXPORTS v. T. KALAVATHY [VARIAVA, J.] 11
of the original parties; A
Alteration by indorsee - Any such alteration, if made by an indor~ee,
discharges his indorser from all liability to him in respect of the
consideration thereof.

The provisions of this section are subject to those of Sections 20, 49, B
86 and 125."

The first paragraph of Section 87 makes it clear that ·the party who
consents to the alteration as well as the party who made the alteration are
disentitled to complain against such alteration, e.g. if the drawer of the cheque
himself altered the cheque for validating or revalidating the same instrument C
he cannot take advantage of it later by saying that the cheque became void as
there is material alteration thereto. Further, even if the payee or the holder
• of the cheque made the alteration with the consent of the drawer thereof, such
alteration also cannot be used as a ground to resist the right 'of the payee or
the holder thereof. It is always a question of fact whether the alteration was D
made by the drawer himself or whether it was made with the consent of th7
drawer. It requires evidence to prove the aforesaid question whenever it is
disputed.

It is held by the High Court that a change of date is a material alteration
.which affected the interests of the Respondent. It is held that the Respondent E
not being a willing party to the said alteration, the cheques were void as
contemplated by Section 87 of the Negotiable Instruments Act. At this stage
there is no basis for arriving at such a conclusion. In the earlier part of the
impugned Judgment it has been correctly held that this is a question of fact.
This is a fact which will have to be established on evidence during trial. At this
F
stage the High Court could not have quashed the complaint merely on the basis
of an assertion in the reply.

Under the circumstances the impugned order is set aside. The Petition
filed by the Respondent stands dismissed. The Judicial Magistrate II, Karur
shall now proceed with the complaint in accordance with law. G
The Appeals stand disposed of accordingly. There shall be no order as
to costs.

v.s.s. Appeals disposed of.