Recently, the Jammu & Kashmir and Ladakh High Court declined to quash criminal proceedings over a dishonoured cheque, holding that allegations of forgery or material alteration cannot bypass prosecution under the Negotiable Instruments Act. The Court observed that questions about cheque alterations are factual matters for trial and cannot justify pre-emptive judicial intervention.
Brief Facts:
The dispute traces back to a complaint filed before the Court of the Additional Mobile Magistrate, Shopian, alleging dishonour of a cheque for Rs.14 lakh issued by the petitioner in discharge of an alleged liability. The cheque drawn on J&K Bank, Unit Harmain, was returned unpaid with the endorsement “alterations require drawer’s authentication.” Following the dishonour, a statutory demand notice dated 23.05.2022 was served, calling upon the drawer to make payment within the prescribed fifteen-day period.
Upon non-payment, the complainant initiated proceedings under Sections 138 and 142 of the Negotiable Instruments Act, culminating in an order dated 10.06.2022, whereby the trial Magistrate took cognizance and issued process against the accused. Aggrieved, the petitioner approached the High Court seeking quashment of both the complaint and the summoning order.
Contentions of the Petitioner:
Counsel for the petitioner contended that the cheque in question was not dishonoured due to insufficiency of funds but on account of alleged forgery and unauthorised alteration committed by the complainant. It was argued that the petitioner owed only Rs.14,000, which was fraudulently converted into Rs.14 lakh by tampering with the cheque. Emphasis was placed on the fact that sufficient balance existed in the petitioner’s account and that the dishonour was a direct consequence of material alterations, rendering the cheque void under Section 87 of the Negotiable Instruments Act, thereby negating any offence under Section 138.
Contentions of the Respondent:
Despite service of notice, the respondent did not enter appearance before the High Court. However, the Court considered the pleadings and record emanating from the complaint, including the statutory notice and the bank’s return memo, which attributed dishonour to unauthenticated alterations in the cheque.
Observations of the Court:
The High Court framed the central issue as whether dishonour of a cheque due to alterations in the amount, without drawer’s authentication, could still attract Section 138 liability. Relying heavily on the Supreme Court’s ruling in M/s Lakshmi Dyechem v. State of Gujarat, the Court reiterated that Section 138 is not confined to cases of insufficient funds alone, but extends to situations where the drawer’s conduct is intended to defeat encashment of the cheque.
The Court observed that “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.” While acknowledging that alteration in the cheque amount constitutes a material alteration under Section 87, the Court emphasised that the critical question, who made the alteration and with what intent, is a pure question of fact, incapable of determination in quashing proceedings. Drawing support from Veera Exports v. T. Kalavathy, the Court underscored that such disputed factual issues “require evidence and can only be adjudicated during trial.”
The Court also noted the petitioner’s failure to respond to the statutory demand notice, holding that this silence further reinforced the need for a full-fledged trial.
The decision of the Court:
The Court dismissed the petition, refusing to quash the complaint or the summoning order, while granting liberty to the petitioner to raise all defences before the trial court. The ratio emerging from the decision is clear, where cheque dishonour is linked to alleged alterations, the determination of culpability depends on evidence and cannot be pre-judged at the pre-trial stage under Section 482 jurisdiction.
Case Title: Abdul Hamid Wani Vs. Abdul Hamid Lone & ors.
Case No.: CRM(M) No.264/2022
Coram: Hon’ble Mr. Justice Sanjay Dhar
Advocate for the Petitioner: Adv. Mudasir Bin Hassan
Advocate for the Respondent: Nil
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