Background
The appellant was convicted under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of a cheque. The trial court held that the cheque was for ₹1,10,000. The Sessions Court and Karnataka High Court (Dharwad Bench) upheld the conviction, though the High Court slightly reduced the fine amount.
The appellant contended that the original cheque amount was only ₹10,000 and that it had been materially altered by inserting the words “One Lak” and the figure “1” to inflate it to ₹1,10,000.
Supreme Court’s Ruling
Appeal allowed. Conviction set aside.
The Court examined the original cheque (placed on record) and observed that the alteration was patently clear on the face of the instrument:
- The words “One Lak” were interjected before “Ten Thousand only”.
- The numerical “1” was inserted before “10,000/-”.
Key Holding:
“When the alteration of the cheque is patently clear on the face of it, the Courts below ought not to have insisted on any further evidence in that regard. The material alteration of the cheque was manifest.”
Because of the clear material alteration, the conviction under Section 138 NI Act could not be sustained. All lower court judgments were set aside.
Directions
- Amount paid by the appellant as compensation to be reimbursed within four weeks.
- Appellant free to seek release of any deposited amount along with accrued interest.
Significance
- Material alteration vitiates the instrument: A visibly altered cheque loses its enforceability under Section 138.
- Courts must examine the document carefully: When alteration is apparent, no additional evidence is required to reject the claim.
- Protects drawers against inflated or tampered cheques.
This is a clear reaffirmation that Section 138 liability arises only on a valid, unaltered negotiable instrument.
Case Title: Rajasab v. Hulagappa
Criminal Appeal arising out of SLP (Crl.) No. 17025/2025
Bench: Justices Sanjay Kumar & Sanjeev Sachdeva
Date: 17 July 2026
Click HERE for full JUDGMENT.
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