Sc Quashes Madras Hc Order On Cheque Revalidation

The Supreme Court has quashed the judgment of the Madras High Court which had held that once the validity period of a cheque was over, it could not be revalidated by altering the dates so as to give fresh life to it for another six months.

The Bench consisting of Justice KT Thomas and Justice SN Variava stated that this view of the high court was "entirely fallacious". There is no provision in the Negotiable Instruments Act or in any other law which stipulates that a drawer of negotiable instrument could not revalidate it.

It is always open to a drawer to voluntarily revalidate a negotiable instrument, including a cheque.

In this case, eight cheques were issued to Veera Exports by a person which were dishonoured when they were submitted to the bank. She, then, sought more time to pay. After more than six months, she changed the date of the cheques and asked the exporter to submit them to the bank. Again they bounced. The exporter then filed a criminal complaint under Section 138 of the Negotiable Instruments Act. She moved the high court complaining that she was forced to change the dates against her will. The high court then quashed the complaint. Against this, the firm appealed to the Supreme Court.

In the judgment, the Supreme Court cited Section 87 of the Act dealing with the effect of material alteration in cheques. It clarified that if the drawer of the cheque himself altered the cheque for validating or revalidating it, he could not take advantage of it later by saying that the cheque became void as there was material alteration.

Even if the payee or holder of the cheque made the alteration with the consent of the drawer, such alteration could not be used as a ground to resist the right of the payee or the holder. It is always a question of fact whether the alteration was made by the drawer himself or whether it was made with his consent. It requires evidence. The court asked the magistrate to proceed with the complaint in this case.