The Jammu Kashmir High Court ruled that a material alteration on a cheque does not automatically absolve an accused of criminal liability under Section 138 of the Negotiable Instruments Act, 1881.
Justice Sanjay Dhar, presiding over the bench, underscored that the critical factor is not merely the presence of an alteration, but the specific identity of the individual who made it.
Establishing criminal intent in altered instruments
This judgment, delivered on January 19, 2026, stems from a petition filed by Abdul Hamid Wani, who sought to quash a cheque dishonour complaint lodged by Abdul Hamid Lone, alleging forgery.
The court’s decision means that if the cheque’s drawer intentionally alters the instrument to defeat payment and frustrate legal proceedings, they cannot simply evade prosecution. Such a scenario demands a full trial to ascertain the responsibility for the alteration, effectively preventing accused individuals from capitalizing on their own wrongful acts at the initial stages of a complaint.
This pivotal ruling came during the dismissal of a petition that aimed to quash a complaint related to cheque dishonour, along with a cognizance order issued by the Additional Mobile Magistrate, Shopian.
The heart of the petitioner’s argument, presented by his counsel Advocate Mudasir Bin Hassan, was that the cheque had been forged by the complainant. Wani contended that he owed only ₹14,000, and Lone had fraudulently inflated this amount to ₹14 lakhs by altering figures and words on the cheque dated May 11, 2022.
Wani asserted that his account held sufficient funds and the cheque’s dishonour wasn’t due to an insufficiency of balance, but rather the alleged forgery. The bank’s endorsement on the returned cheque, “alterations require drawer’s authentication,” highlighted the central dispute over the instrument’s integrity.
The broad scope of Section 138 prosecutions
Justice Dhar meticulously examined the parameters of Section 138 of the Negotiable Instruments Act, reinforcing that cheque dishonour isn’t exclusively tied to insufficient funds. He referenced the Supreme Court’s precedent in M/s Lakshmi Dyechem v. State of Gujarat, which broadened the interpretation of Section 138.
That landmark decision, from November 27, 2012, clarified that a wide array of deliberate acts or omissions by the drawer, intended to prevent a cheque from being honoured, would trigger the provisions of Section 138.
These acts include appending a signature that doesn’t match the bank’s specimen, or making unauthenticated overwriting or alterations. If these actions are carried out with the express intent to circumvent payment, they fall squarely within the ambit of Section 138.
“So long as an act or omission on the part of the drawer is intended to prevent the cheque being honoured, the dishonour would become an offence under Section 138 of the Negotiable Instruments Act,” the Court stated unequivocally.
Dissecting material alteration under Section 87
The Court also delved into Section 87 of the Negotiable Instruments Act, which specifically addresses the effect of material alteration. An alteration in the amount of a cheque undeniably constitutes a material alteration. Typically, such an alteration would render a negotiable instrument void against any party who didn’t consent to it, unless it was made to align with the original parties’ common intention.
However, Justice Dhar was clear: the legal inquiry must extend beyond merely identifying a material alteration. What truly matters for criminal liability is who made the alteration and their purpose.
If the drawer is responsible for the alteration, and their intention was to frustrate payment or derail Section 138 proceedings, they cannot use their own wrongdoing to sidestep prosecution. Conversely, if the payee made the alteration to gain an undue benefit, the legal ramifications would be significantly different.
The Court stressed that “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.” This highlights the complexity of such cases and the necessity of a thorough judicial process to uncover the truth.
Precedent and the necessity of factual determination
The High Court relied on another crucial Supreme Court judgment, Veera Exports v. T. Kalavathy, which affirmed that disputes over consent to alteration and responsibility for such changes inherently require evidence. These types of factual controversies cannot be resolved during proceedings aimed at quashing a complaint. They demand a full evidentiary hearing and cross-examination.
Furthermore, the Court noted that Abdul Hamid Wani had failed to respond to the statutory demand notice, neglecting to offer his version of events. Justice Dhar indicated that “the situation may have been different” had Wani responded, but his silence only reinforced the need for a trial to establish the alteration’s authorship.
Ultimately, because the petition raised disputed questions of fact regarding the material alteration and the conduct of both parties, Justice Sanjay Dhar declined to intervene with either the complaint or the summoning order. This leaves Wani free to present all permissible defenses before the trial court, ensuring due process is followed.
Broader implications for cheque fraud prevention
This ruling from the Jammu and Kashmir and Ladakh High Court carries substantial weight for how cheque fraud and related disputes are handled across India. It reinforces the principle that while an altered cheque might seem void under Section 87, the underlying criminal intent of the person making the alteration is paramount.
This creates a stronger deterrent against drawers attempting to escape liability by deliberately tampering with instruments.
The decision offers a layer of protection for payees, ensuring that a simple claim of alteration by the drawer cannot instantly derail a legitimate prosecution under Section 138.
It places the burden of proof on the accused to demonstrate that the alteration was not their doing or was not intended to defraud, rather than allowing them to escape on a technicality.
For individuals or businesses dealing with bounced cheques, understanding the nuances of these legal provisions is crucial, and legal counsel can be invaluable in clearing a bounced cheque case effectively.
The Indian legal system continues to evolve in its approach to financial instruments, particularly cheques, which remain a common mode of payment. Cases of cheque fraud, including forgery and material alterations, are unfortunately prevalent. This judgment helps to streamline the process, ensuring that genuine complaints are not summarily dismissed and that those responsible for deliberate acts to defeat payment are held accountable.
Previous interpretations and evolving jurisprudence
The Supreme Court’s decision in M/s Lakshmi Dyechem v. State of Gujarat in 2012 marked a significant shift, expanding the scope of Section 138 beyond mere insufficiency of funds. This included issues like signature mismatches or account closure. This broader interpretation aimed to prevent drawers from exploiting technicalities to avoid payment. However, more recent rulings have introduced further refinements.
For instance, in July 2026, a Supreme Court bench comprising Justices Sanjay Kumar and Sanjeev Sachdeva, in Rajasab v. Hulagappa, set aside a conviction under Section 138 where a cheque was visibly altered from ₹10,000 to ₹1.10 lakhs.
This ruling emphasized that if a cheque clearly shows signs of material alteration, courts may not need additional evidence to prove tampering, rendering the instrument invalid. This decision appears to offer some protection to drawers against inflated or tampered cheques, setting up an interesting dynamic with the Jammu and Kashmir High Court’s recent pronouncement.
| Aspect | Section 138 (Dishonour of Cheque) | Section 87 (Effect of Material Alteration) |
|---|---|---|
| Primary Focus | Criminal liability for cheque dishonour | Validity of an instrument after alteration |
| Conditions for Offence | Cheque for debt, dishonoured, demand notice, non-payment | Alteration affecting rights/liabilities without consent |
| Consequence | Imprisonment (up to 2 years) and/or fine (up to twice cheque amount) | Instrument becomes void against non-consenting parties |
| Key Element for Liability | Drawer’s intent to prevent payment | Identity of the alterer and their intent |
| Burden of Proof | Presumption against drawer (rebuttable) | On the party alleging alteration |
The role of a criminal defense attorney in cheque cases
Navigating the intricacies of the Negotiable Instruments Act, especially when allegations of material alteration or forgery arise, requires specialized legal expertise. Both complainants seeking justice for dishonoured cheques and accused individuals facing charges need to understand their rights and obligations. A seasoned criminal defense attorney for bounced cheque cases can be instrumental in presenting a robust defense or pursuing a strong prosecution.
Such legal professionals are equipped to analyze the evidence, challenge claims of alteration, or prove the intent behind such changes. Their role extends to advising on the appropriate response to statutory demand notices, preparing for trial, and understanding the nuances of various high court and Supreme Court judgments that continuously shape this area of law.
This is particularly relevant given the continuous evolution of jurisprudence around Sections 87 and 138.
Future outlook for cheque-related disputes
This latest ruling from Justice Sanjay Dhar ensures that individuals who attempt to manipulate financial instruments to evade lawful obligations will find it harder to escape justice at an early stage. The emphasis on the trial court’s role in determining the true authorship and intent behind alterations adds an important layer of scrutiny.
This makes it difficult for defendants to use material alteration as an automatic shield against prosecution.
However, the existence of conflicting interpretations, as seen in the recent Supreme Court judgment in Rajasab v. Hulagappa, highlights the ongoing need for clarity. The legal landscape surrounding cheque dishonour and material alterations remains dynamic, with courts striving to balance the protection of creditors with safeguards against malicious prosecution. This continuous judicial discourse shapes how cheque dishonour liability is ultimately applied in practice.
For both financial institutions and the general public, vigilance remains key. Authenticating changes on cheques, maintaining clear records of transactions, and understanding the precise implications of statutory notices are more critical than ever. The courts are making it clear that intent and responsibility will be thoroughly investigated.
What is material alteration in a cheque?
A material alteration in a cheque refers to any change made to its essential terms, such as the date, amount, or payee’s name, without the consent of all parties involved. Such changes significantly alter the nature or legal effect of the instrument.
Does a materially altered cheque automatically invalidate a criminal case under Section 138?
No, not automatically. The Jammu and Kashmir and Ladakh High Court has clarified that while a material alteration typically renders a negotiable instrument void, it does not by itself absolve the accused of criminal liability. The critical factor is who made the alteration and their intent.
Why is the identity of the person who altered the cheque so important?
The identity is crucial because if the drawer themselves altered the cheque to defeat payment, they cannot escape criminal prosecution under Section 138. If the payee made the alteration to gain an undue benefit, the legal consequences would differ significantly. This distinction determines liability and requires a full trial to ascertain.