Case: – Smt H B Bhagyalakshmi v/s Smt Cheluvamma; Criminal Appeal No. 2104 of 2018
In a significant legal development, the High Court of Karnataka, in, the above-mentioned case reversed the acquittal of the respondent in a cheque bounce case under Section 138 of the Negotiable Instruments Act. The judgment, delivered on December 15, 2023, highlights crucial legal principles regarding material alteration of negotiable instruments.
The case involved a dispute between the parties, where the former accused the latter of failing to repay a loan of Rs. 2,50,000. The complainant presented a cheque issued by the respondent for encashment, but it was dishonoured due to an alleged alteration.

  1. The complainant contended that she lent the amount for Respondents’ granddaughter’s education and family necessities.
  2. The accused claimed she borrowed only Rs. 1,50,000 and accused the complainant of altering the cheque amount.
  3. The Trial Court acquitted the accused, citing the complainant’s failure to prove the accused’s consent to alter the cheque.
    The Hon’ble High Court, analysed Sections 20 and 87 of the Negotiable Instruments Act, emphasizing that once a person signs and delivers a blank or incomplete cheque, it gives prima facie authority to the holder to complete it for any amount specified. The judgment criticized the Trial Court’s error in concluding that the cheque was materially altered.
    The High Court set aside the acquittal, convicting the present Respondent under Section 138 of the N.I. Act. A fine of Rs. 3,00,000 was imposed, with compensation of Rs. 2,90,000 payable to the complainant. The decision underscores the importance of understanding legal principles in negotiable instrument cases and sets a precedent for similar disputes.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

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