The defendant who has suffered a money decree in O.S.No.124 of 2003 on the file of the District Court Nagapattinam is the appellant. The respondent which is a Benefit Fund incorporated under the Indian Companies Act, 1956, instituted the above suit for recovery of a sum of Rs.5,45,333/- allegedly due on a promissory note said to have been executed by the defendant on 21.05.2000 for a sum of Rs.4,00,000/-.
2. According to the plaintiff, the defendant had borrowed a sum of Rs.4,00,000/- on 21.05.2000 promising to repay the same with interest at 24% per annum. The defendant did not come forward to pay the amount, inspite of legal notice dated 20.12.2002, on the other hand she has chosen to issue a reply on 02.01.2003 denying the very borrowing. Hence, the plaintiff filed the above suit. In the plaint, the plaintiff had stated the facts relating to certain other borrowings made by the defendant from the plaintiff and the initiation proceedings under Section 138 of Negotiable Instruments Act, which came to be settled by the defendant by making payments.
3. The defendant resisted the suit contending that she never borrowed a sum of Rs.4,00,000/- from the plaintiff and did not execute the promissory note on 21.05.2000. She would claim that she borrowed a sum of Rs.20,000/- from the plaintiff. As a security for the said borrowings, the plaintiff had obtained four blank cheques bearing numbers 543027 to 543030 payable at Indian Bank Mayiladuthurai Branch and the two blank promissory notes for the said sum of Rs.20,000/-. The plaintiff had presented one of the cheques bearing No.503028 and upon it being dishonoured, it had launched proceedings under Section 138 of Negotiable Instruments Act.
4. It is admitted case of the parties that proceedings under Section 138 of Negotiable Instruments Act ended in a compromise. The defendant would contend that the claim made by her in the reply notice are the true and correct facts. Apart from the above in the additional written statement filed by her on 01.3.2007, the defendant took a plea of material alteration of suit promissory note. According to the defendant, the suit promissory note has been tampered with and corrections have been made in the date as well as in the consideration of the promissory note, which makes it a void document under
Section 87 of the Negotiable Instruments Act. On the above contentions, the defendant claimed that the plaintiff is not entitled to the suit claim.
5. The Mr.P.C.Kailash Chand Jain, the Managing Director of the plaintiff was examined as PW.1 and Exs.A1 to A7 were marked. Defendant examined herself as DW1 and Exs.B1 to B3 were marked. The Trial Court framed following issues:-
(1) Whether the plaintiff is entitled to recover the suit amount with subsequent interest as claimed in the plaint?
(2) To what relief the plaintiff is entitled to?
An additional issue was also framed:
(1) Whether the suit is barred by limitation? (3)
6. On a consideration of the evidence on record, the learned District Judge, Nagapattinam disbelieved the case of the defendant. The learned District Judge rejected contention of material alteration on the ground that the same was not raised at the time of filing the written statement and the same was raised only in the additional written statement. On the aforesaid findings, learned District Judge, Nagapattinam decreed the suit as prayed for with costs.
7. Aggrieved by he said judgement and decree the defendant has filed this appeal.
8. I have heard Mr.Sivakumar learned counsel appearing for the appellant and Mr.Arvindkumar, learned counsel appearing for the respondent.
9. The following points emerge for consideration in this appeal.
1)Whether the suit promissory note has been materially altered?
2)Whether alteration renders the promissory note void against the defendant under
Section 87 of the Negotiable Instruments Act?
3)Whether the plaintiff's failure to produce the account book, would dis-entitle it from getting a decree in the suit?
4) To what other relief is appellant is entitled to?
10. Mr.R.Sivakumar, learned counsel appearing for the appellant would draw my attention to the promissory note Ex.A1 and point out that the document has been materially altered. According to the learned counsel the following alterations are made in the promissory note:
1) The date of the document has been corrected as 21.05.2000 instead of 21.05.1998.
2)Similar corrections have been made in the fist line of the document, wherein in the year 1998, number-8 has been scratched and 2000 has been inserted.
3) The amount of the promissory note has also been altered.
4) the numeral-1 has been converted as 4. and
5)While writing the amount in words in Tamil, it is seen that the amount has been written as xU yl;rk; the letters xU has been scratched and added letter ehd;F has been inserted.
The defendant has singed over the revenue stamp and has also put the date as 21.05.1998. The said writing has also been scratched and the year has been altered as 2000. Apparently, while scratching the year 1998, beneath the signature of the defendant in the revenue stamp, the promissory note has got damaged, which had prompted the plaintiff to affix a transparent adhesive tape behind the document. The defendant has also signed beneath the revenue stamp. Though the date 21.05.2000 has been written beneath the said signature of the defendant, it is visible even to the naked eye that the date has been written with a different pen.
11. I have heard the counsel and perused the document Ex.A1 with due care and I am inclined to agree with the learned counsel for the appellant. On the right side of the promissory note the amount of Rs.1,00,000/- has been converted into Rs.4,00,000/- by putting V in horizontal shape. The fact that the letters have been scratched and substituted is very clearly visible. The above observations are also strengthened by a very vital document produced by the defendant, in cross-examination of PW1 i.e. Ex.B1. It is seen that Ex.B1 is a notice dated 21.05.2000 issued by the plaintiff to the defendant claiming that she had borrowed a sum of Rs.1,00,000/- on 21.05.1998 by executing a promissory note. It is the case of the plaintiff that the said sum of Rs.1,00,000/- was repaid by the defendant. The plaintiff as PW1, in his chief examination claimed that the defendant had executed the suit promissory note after borrowing the sum of Rs.4,00,000/-. It should be remembered that the plaintiff is a Registered Company and a Mutual Fund. In his cross-examination, the plaintiff would admit as follows:
thjp epWtdk; kj;jpa muR epWtdj;jpd; epjp epWtd rl;lj;jpd; fPH; fl;Lg;ghl;oy; tUk; v';fs; epWtdk; U:/10.000-? f;F nky; tut[ bryt[ fzf;Ffs; fhnrhiy K:ykhf bra;ag;gl;L tUfpwJ vd;why; rhpay;y/ gpujpthjpf;F bfhLj;j jhth fld; thjp epWtdj;jpd; tUkhd thp fzf;fpy; fhl;lg;gl;Ls;sJ/ me;e tUkhd thp fzf;F M$h;gLj;j ehd; Kaw;rp bra;fpnwd;/ v';fs; epWtdj;jpy; ,Ue;J gpujpthfpf;F ;mDg;gpa mwptpg;g[ gp/rhM/1 MFk; mjpy; gpujpthjp 21/5/98?y; U:gha; xU yl;rk; v';fspk;; fld;bgw;wjhf fhl;lg;gl;Ls;sJ jhth flDWjp rPl;L 21/05/2000k;; njjpaplg;gl;lJ/@ He would further depose that:
@jhth flDWjp rPl;oy; jkpHurd; g{h;j;jp bra;J ifbaGj;J nghl;l ,';fpw;Fk;. nkny fz;l thrf';fs; vGjg;gl;l ,';fpw;Fk; tpj;jpahrk; cs;sJ/ jhth flDWjp rPl;oy; 199 f;F gpwF Ruz;lg;gl;L 2000 vd;W jdpahf vGjg;gl;lJ vd;why; rhpay;y/ kWgoa[k; 199 vd;w ,lj;ij Rud;lg;gl;L jpUj;jp vGjg;gl;Ls;sJ vd;why; rhpay;y/ flDWjp rPl;oy; xd;W vd;w vGj;J vy;yhk; 4 vd jpUj;jg;gl;Ls;sJ vd;W brhd;dhy; rhpay;y/@ @gpujpthjpapd; ifbaGj;Jf;F fPnH Ruz;lg;gl;L jpUj;jg;gl;lJ bjhpaTlhJ vd;gjw;fhf flDWjp rPl;L gpd;g[wk; nlg; xl;o ,Uf;fpnwd; vd;why; rhpay;[email protected] It could be seen from the evidence extracted above that PW-1 has admitted that he has got accounts and he would produce the same. PW1 has also admitted that the signature of Tamilarasan who is said to have filled up the document is in a different ink than the other portions of the document. Therefore, it could be seen that the defendant apart from taking a plea of material alteration has also extensively cross examined the plaintiff on the issue of material alteration. The plaintiff had in fact issued a notice under Ex.B1 demanding repayment of Rs.1,00,000 said to have been borrowed by the defendant on 21.05.1998. The said Ex.B1 is dated 04.02.2000. The alleged borrowing under the suit promissory note is said to have taken place on 21.05.2000.
12. It is also the admitted case of the parties that defendant has borrowed money from the plaintiff on the strength of a few cheques. Upon dishonour of the said cheques proceedings under Section 138 of the Negotiable Instrument Act has been taken and they have ended in compromise. The attendant circumstances would create a considerable suspicion about the case of the plaintiff that it advanced a sum of Rs.4,00,000/- to the defendant, who is already a defaulter. As already stated that the suit promissory note has been altered by correcting the date and the amount. The suit has been filed on 02.06.2003. If the original date found in the promissory note is taken as 21.05.1998 the suit will be barred by limitation. The alteration of the date of the promissory note so as to bring it within a period of limitation is necessarily a material alteration. It would render the document void under
Section 87 of the Negotiable Instrument Act.
13. Unfortunately the learned District Judge had rejected the claim of the defendant regarding the material alteration on a technical ground that she has not chosen to raise the plea in her written statement, though she had admitted that she had seen the promissory note before filing her first written statement. I am unable to persuade myself to agree with the conclusion of the learned District Judge. It should be pointed out that the procedure is only a hand-maid of justice and justice cannot be defeated by invoking a flaw in the procedure. Useful reference in this regard can be made to the decision of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst.Katiji & Ors. reported in LW 1987 Vol.100 676. Though it was a case under Section 5 of the Limitation Act, the following observation of the Supreme Court in paragraphs 4 and 6 can be made applicable to the case on hand:
4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot clim to have vested right in injustice being done because of a non-deliberate delay.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. With the above observations of the Hon'ble Supreme Court in mind, we have to go into the question of material alteration and the effect of such alteration. 13.
Section 87 of the Negotiable Instruments Act reads follows:
87. Effect of material alteration.Any material alteration of a negotiable 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 of the original parties; Alteration by indorsee.And any such alteration, if made by an indorsee, 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 20,49,86 and
125.14. As already stated the alteration of Ex.A1 has been made in the date as well the amount of consideration. In A.Thirumoorthy & another vs. S.Bastin reported in 2014-5- L.W. 887, it has been observed as follows in paragraphs 18 and 20:
18. Plea of material alteration in the suits instituted based on negotiable instruments is very important because it goes to the root of the matter. 'Alteration' means a 'change' The phrase 'material' means 'very important'. So far as
Section 87 of the Negotiable Instruments Act, which deals with material alteration, it is those alteration which would change the legal character of the instrument, which would extend or extinguish a right or liability under the instrument. An alteration to the date in the instrument is a material alteration because it extents enforceability of an instrument on the point of limitation otherwise currency of its enforceability would have been lost. 20. The devastating role of material alteration in a suit based on a negotiable instrument has been highlighted by the Andhra Pradesh High Court in ALLAMPATTI SUBBA REDDY VS. NEELAPAREDDI (AIR 1966 A.P. 267), which runs as under:
(5)The law on the point seems to me to be clear. The English rule that a material alteration of a date makes it altogether void is summarised thus in Halsbury's Law's of England, III Edition, Vol.11, p.367, Paras.598 and 599:- ?598.A writing proposed to be executed as a deed may be altered by erasure or interlineation or in any other way before it is so executed, and any alteration so made before execution does not affect the validity of the deed. Any alteration, erasure or interlineation appearing upon the face of a deed is presumed, in the absence of evidence to the contrary, to have been made before the execution of the deed.
599.If an alteration (by erasure, interlineation, or otherwise) is made in a material part of a deed, after its execution, by or with the consent of any party thereto or person entitled thereunder, but without the consent of the party or parties liable thereunder, the deed is thereby made void. The avoidance, however, is not ab initio, or so as to nullify any conveyancing effect which the deed has already had; but only operates as from the time of such alteration, and so as to prevent the person, who has made or authorised the alteration, and those claiming under him, from putting the deed in suit to enforce against any party bound thereby, who did not consent to the alteration, any obligation, covenant, or promise thereby undertaken or made.? (6)The law is not otherwise in India. The above said rule is quoted with approval in several Indian decisions.
Section 87 of the Negotiable Instrument Acts statutorily adopts the said rule.
Section 87 is so far as it is relevant is in the following terms:-
Any material alteration of a negotiable 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 of the original parties;
It must be remembered that it is not any and every alteration that avoids the instrument. To have that effect the alteration must be in a material particular. A material alteration can be brought about by change of date or time of drawing or of the place of payment or by change in the sum payable, etc., etc. It is thus evident that the date of a promissory note is a material portion of it, and any alteration of such date will naturally void the promissory note, unless, of course, as stated in the Section such an alteration is made with the consent of the other party, or is made to effectuate the common intention of the original parties. It is wrong to assume that the date of the promissory note is merely a description. It indicates the time when the promissory note was executed. In most cases the date is very material in calculating the date of the performance of the contract and more often fixing the period of limitation within which the plaintiff will have to institute the suit on the foot of such promissory note. It is immaterial whether the alteration is made in the date or month or year. Any such alteration being material must necessarily result in the avoidance of the promissory note.
(7)It is true that in two cases alterations, though material, do not vitiate the instrument; firstly, when the alteration is made before the promissory note is executed, and secondly, if the alteration made was merely to correct a mistake, or to make it what it was originally intended to be. As stated earlier, the Section (S.87) itself states that the alteration can be made with the consent of the parties, or to carry out the common intention of the original parties. Any mistake occurring before the execution of the promissory note can, however, always be corrected before the document is actually executed.
(8)The general rule in English law followed in India is that a party having custody or control of a document produced in evidence must explain the alteration. When the instrument on its production appears to have been altered, it is a general rule that the party offering it in evidence must explain its appearance, because every alteration in the case of a negotiable instrument renders it suspicious. It is only reasonable that the party claiming under it should remove the suspicion. It is true that it is not on every occasion that a party tendering an instrument in evidence is bound to explain any material alteration that appears upon its face. He must, however, explain when he is seeking to enforce it. It is plain that when the alteration appears to have been made contemporaneously with the document, or if it is made at some subsequent period with the privity of the parties charged and there is no fraud, it does not affect the validity of the instrument.
15. Again in C.R.Shankar v. N.Alagappan reported in 2015-3-L.W. 34 this Court after referring to the judgement of the Hon'ble Supreme Court in Kundan Lal Ralaram vs. The Custodian, Evacue property Bombay reported in AIR 1961 SC 1316 and the judgement in Jayantilal v. Zubeda Khanum reported in AJR 1986 Andra Pradesh 120 held that the alteration pleaded in the said case namely, use of two different inks and different hand writings in the promissory note would amount to material alteration. It is also pointed out in paragraph 9 of the said judgement that the plaintiff who has admitted that he has been maintaining accounts and filing income tax returns and they would reflect the alleged loan advanced to the appellant on 27.11.1997, failed to produce the same before the Court to prove the passing of consideration the court will be justified in drawing an adverse inference against the plaintiff. I am in respectful agreement with both the above judgements. A material alteration would change the legal character of the instrument, and extinguish the liability under the instrument. In the case on hand, the date of the promissory note has been so altered so as to prove that it was within three years i.e. within the period prescribed under the Limitation Act. If this is not a material alteration, nothing else could be termed as a material alteration. In my opinion, as already pointed out, the Managing Director of the plaintiff as PW1 in his evidence has specifically admitted that the plaintiff has got accounts and the borrowing by the defendant on 21.05.2000 was reflected in the accounts as well as in the income tax returns of the plaintiff. Though he would say that he would produce the documents, he has not chosen to do so. The learned counsel for the appellant would reply upon the judgment of the Hon'ble Supreme Court in Kundan Lal Ralaram vs. The Custodiazn, Evacue property Bombay reported in AIR 1961 SC 1316 and contend that adverse inference should be drawn against the plaintiff for not having produced the accounts. The said view of the Hon'ble Supreme Curt has also been followed by this Court in C.R.Shankar v. N.Alagappan reported in 2015-3-L.W. 34 referred to supra.
16. In the light of the above, I am constrained to hold that the suit promissory note namely, Ex.A1, has been materially altered so as to render it void under
Section 87 of the Negotiable Instruments Act and as such the plaintiff is not entitled to a decree on the basis of the said document. In view of the foregoing discussion point Nos.1 and 2 are answered against respondent and in favour of the appellant.
17. In fine, the appeal is allowed with cost throughout setting aside the judgement and decree of the Trial Court in O.S.No.68 of 2004 dated 08.02.2008. The suit in O.S.No.68 of 2004 is dismissed with costs. The respondent will pay the costs in this appeal also.
01.03.2017 Index : Yes Internet: Yes vk To The District Court, Nagapattinam.
R.SUBRAMANIAN,J vk PREDELIVERY JUDGEMENT IN A.S.No.549 of 2008 01.03.2017 http://www.judis.nic.in