Legal Reference Library

Gujarat High Court has recently held that the contention that when a signed blank cheque leaf  is handed over, it can never be filled up and that if it is filled up it would  amount to a material alteration within the meaning of using Section 87 of the   N.I.  Act, does not stand to rhyme or reason. The Court said that it would depend upon the facts of each case. Justice J.B.Pardiwala has allowed a batch of Petitions seeking quashment of Criminal Proceedings under Section 138 of NI Act. He has framed the following questions relating to blank cheques (i) Whether Section 20 of the Negotiable Instruments Act applies to a cheque as well? (ii) Whether filling up of a signed blank cheque leaf would amount to a material alteration within the meaning of Section 87 of the N.I. Act? (iii) Is there an implied authority to a person who receives a signed blank cheque leaf to fill up the same showing any amount  as he likes? Answering the questions, the Court held as follows;...

HIGH COURT OF MADHYA PRADESH BENCH AT GWALIOR Present HON. SHRI JUSTICE B.D.RATHI 1 Day of December, 2014 (Cri. Rev. No.56/2014) Smt. Sunita Dubey Vs. Hukum Singh Ahirwar Connected with (Cri. Rev. No.59/2014) Smt. Sunita Dubey Vs. Dev Kishan Ahirwar Negotiable Instruments Act, 1881 - Section 138 - Evidence Act, 1872 - Section 45 - Examine insertion of the entries in the cheque through Handwriting Expert - Held, the instrument may be wholly blank or incomplete in any particular; in either case, the holder has the authority to make or complete the instrument as a negotiable one. The authority implied by a signature to a blank instrument is so wide that the party so signing is bound to a holder in due course even though the holder was authorised to fill for a certain amount. Section 20 of the Act declares that inchoate instruments are also valid and legally enforceable. In the case of a signed blank cheque, the drawer gives authority to the drawee to fill up the agreed liability....