Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Alterations Corrections Prohibition under CTS - Generally, alterations or corrections on cheques are prohibited under CTS standards to prevent fraud and ensure authenticity. However, certain minor or non-material corrections, such as those made before the cheque is signed or to correct mistakes, may not vitiate the instrument ["2023 0 Supreme(P&H) 469"], ["INSDCDRC00000005864"], ["2023 0 Supreme(HP) 426"].
Material vs. Non-Material Alterations - Material alterations, especially those that change the terms or amount, are prohibited and can lead to dishonor or legal consequences under Section 138 of the Negotiable Instruments Act. Non-material corrections, if voluntary and properly authenticated, may not attract penal provisions ["2023 0 Supreme(P&H) 469"], ["INSDCDRC00000005864"].
CTS Applicability and Circulars - The Reserve Bank of India issued circulars making CTS mandatory from October 2021, with non-CTS cheques being phased out or restricted. Acceptance of non-CTS cheques has been discouraged, but not entirely prohibited before the specified deadlines. The structure and compliance of cheques as per CTS standards are crucial for legal validity ["2023 0 Supreme(HP) 426"], ["2024 Supreme(Online)(Tel) 33505"].
Legal Implications of Alterations - Alterations that are material or not properly authenticated can lead to the cheque being considered invalid or dishonored, and may attract proceedings under Section 138. Minor corrections, especially those aligned with CTS standards, are generally acceptable unless proven to be fraudulent ["INSDCDRC00000005864"], ["2023 0 Supreme(UK) 507"].
Court Interpretations - Courts have emphasized that alterations should be minimal, non-material, and properly authenticated. In cases where alterations are voluntary and non-material, the cheque may still be valid. Conversely, material or fraudulent alterations can lead to conviction under Section 138 ["INSDCDRC00000005864"], ["2025 0 Supreme(HP) 90"].
Analysis and Conclusion:Alterations or corrections on cheques are generally prohibited under CTS standards to prevent fraud and ensure instrument integrity. However, minor, non-material corrections made before signing or properly authenticated may not invalidate the cheque or attract penal provisions under Section 138. The applicability of CTS standards and the nature of alterations are key factors; material alterations or those made fraudulently can lead to dishonor and criminal liability. Courts tend to scrutinize whether corrections are minor and properly authenticated, and whether they comply with CTS regulations. Therefore, alterations corrections are prohibited in principle but may be permissible if they meet the criteria of non-materiality and proper authentication under the applicable legal and regulatory framework.
In the world of business transactions, cheques remain a staple for payments despite digital alternatives. However, a simple correction or alteration on a cheque can turn a routine payment into a legal nightmare. Many wonder: Alterations or corrections on instruments are prohibited under CTS—does this apply to Section 138 proceedings? This question arises frequently in cheque bounce cases under the (NI Act). Generally, unauthorized changes can render a cheque void, impacting its enforceability. Let's dive into the legal framework, RBI guidelines, court precedents, and exceptions to clarify this complex issue.
This post provides general insights based on established laws and judgments. It is not specific legal advice—consult a qualified lawyer for your situation.
Alterations or corrections on instruments, particularly cheques, are generally prohibited under RBI guidelines and principles governing negotiable instruments, especially in contexts. Material alterations without the drawer's authorization typically void the instrument. The 's (RBI) directives strictly limit changes, emphasizing the use of fresh cheque forms for corrections except in narrow cases like date validation.
Key court rulings affirm that such alterations discharge parties from liability unless consented to. This directly affects Section 138 complaints, where a dishonoured cheque must represent a . 2004 0 Supreme(Ker) 488 2024 0 Supreme(UK) 593
The RBI's guidelines dated , applicable to (CTS) cheques, explicitly state: No changes/corrections should be carried out on the cheque (other than for date validation purposes, if required). For any cheque in the payee's name, courtesy amount (amount in figure) and legal amount (amount in words), fresh cheque form should be used by customers.
These guidelines carry statutory force, as upheld by the in Central Bank of India v. Ravindra (2002) 1 SCC 367. CTS-200 guidelines further reinforce this by prohibiting alterations to curb fraud. 2025 Supreme(Online)(SCDRC) 3863 In one case, a cheque returned with the memo alter/correct on instruments are prohibited in CTS highlighted how banks enforce this, leading to dishonour. 2016 0 Supreme(Del) 4199
Non-compliance can invalidate the cheque, making it unreliable for Section 138 proceedings.
Section 87 of the NI Act is pivotal: Any 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. 2004 0 Supreme(Ker) 488
Courts have ruled that changes to date, amount, or payee without the drawer's signature or consent qualify as material alterations:- In , alterations in date without signature voided the cheque. 2024 0 Supreme(UK) 593- quashed proceedings due to unauthorized change from 'thousand' to 'lacs'.
The burden falls on the holder/payee to prove the alteration was authorized. 2004 0 Supreme(Ker) 488 2024 0 Supreme(UK) 593
Section 138 punishes dishonour due to insufficient funds or exceeding arrangements, but only if the cheque evidences a . A materially altered cheque fails this test, as it's . Courts consistently quash or dismiss complaints where alterations are evident and unauthorized. 2004 0 Supreme(Ker) 488
However, not all corrections are fatal. In a ruling, voluntary corrections by the drawer did not constitute under Section 87, keeping the cheque valid for trial. The court noted: Voluntary corrections on a cheque do not constitute under Section 87 of the N.I Act, thus the cheque remains valid. 2024 Supreme(Online)(Mad) 62045 Dishonour for alterations still triggers Section 138 if funds were inadequate, but validity is scrutinized at trial. 2023 0 Supreme(P&H) 1758
While prohibitions are strict, exceptions exist:- Authorized alterations: If the drawer makes and authenticates (e.g., initials/signs) the change, it may be valid, though proof lies with the holder. 2004 0 Supreme(Ker) 488- Voluntary drawer corrections: Non-material if self-corrected by issuer. 2024 Supreme(Online)(Mad) 62045- Minor clerical errors: Courts may overlook if not affecting substance, but RBI advises against any changes. 2024 0 Supreme(UK) 593
In Ex.C8 under CTS, banks must reject altered cheques: Prohibiting alterations/ Corrections on cheques: No Changes / Corrections should be carried out on the cheque (other than date validation purposes, if required). 2025 Supreme(Online)(SCDRC) 3863
Banks return such cheques with specific memos, shifting focus to underlying debt proof.
To safeguard transactions:1. Adhere to RBI/CTS rules—use new cheque forms for changes.2. Authenticate all alterations with full signature.3. In Section 138 cases, gather evidence of authorization early.4. Consider digital payments to bypass cheque risks.
Courts emphasize: Examine if alteration aligns with original intent and bears drawer's consent. 2024 0 Supreme(UK) 593
Generally, alterations or corrections on cheques are prohibited under RBI CTS guidelines and render instruments void under if unauthorized, making them unenforceable under Section 138. While exceptions for drawer-authenticated changes exist, the safe approach is avoidance. Courts balance fraud prevention with fairness, often requiring trial proof.
2004 0 Supreme(Ker) 488 2024 0 Supreme(UK) 593
Key Takeaways:- Unauthorized changes void cheques—use fresh forms.- Burden on holder to prove validity.- RBI guidelines binding; CTS memos trigger scrutiny.- Voluntary drawer fixes may save the cheque. 2024 Supreme(Online)(Mad) 62045
Stay compliant to avoid costly litigation. For tailored advice, reach out to a legal expert.
References:1. 2004 0 Supreme(Ker) 488: Material alterations void instruments without consent.2.
: RBI prohibition on cheque corrections.3. 2024 0 Supreme(UK) 593: Judicial views on date/amount changes.4. 2024 Supreme(Online)(Mad) 62045: Voluntary corrections not material.5. 2025 Supreme(Online)(SCDRC) 3863: CTS alteration rules. #ChequeBounce, #Section138, #NIACT
Section 138 of the Negotiable Instruments, reads as under:- 138. Dishonour of cheque for insufficiency, etc., of funds in the account. ... System (CTS). ... Collecting banks should ensure, ab-initio, that such cheques are not accepted for presentment in CTS. ... It is true that in two cases alterations, though material, do not vitiate the in....
Alteration corrections are prohibited under CTS”. Since the cheque issued without adequate fund, offence under Section 138 of N.I Act is made out. 2. ... Inchoate stamped instruments. ... The short point involved in this case is whether the alternation in the subject cheque will attract Section 87 of N.I Act, if not, whether return of cheque for that reason will not at....
As per the circular issued on 15th March, 2021, by the Reserve Bank of India, the CTS has been made applicable from 1st October, 2021. ... Even, as per this circular, acceptance of non-CTS cheques has not been totally discontinued. 18. ... In para-ii of the said circular it was advised that the separate clearing session for CTS non-compliant cheques will be discontinued after December 31, 2018. Banks can,....
The Ex.C8 speaks about various rules to be followed and at 1.8 reads as Prohibiting alterations/ Corrections on cheques: No Changes / Corrections should be carried out on the cheque (other than date validation purposes, if required). ... under CTS. ... alterations thereby control fraudulent transactions. ... Ex.C7 the regulation directing the bank to strictly adhere to the Ex.C8 is CTS-2....
Hence, the petitioner's contention relying upon the above two judgments is not applicable to the facts and circumstances of the present case. ... The petitioner's main contention is that there are corrections in the promissory note (Ex.P1) in many places which were not authenticated and initialled. Ex.P1 is a printed promissory note. The words which are not required are normally struck out. ... In the chi....
Section 138 of the Act. Whether the reasons for dishonour were bonafide and whether the accused was liable to be convicted was a matter of trial.
Section 258 of the Code is not applicable to a summons case instituted on a complaint. Therefore, Section 258 cannot come into play in respect of the complaints filed under Section 138 of the Act. The judgment of this Court in Meters & Instruments [Meters & Instruments (P) Ltd. v. ... Per contra, learned counsel for opposite party no.2 and State Law Officer has submitted that proceeding under the Act, 188....
Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint before the learned Trial Court against the accused for the commission of an offence punishable under Section 138 of the Negotiable Instruments (NI) Act. ... In that view of the matter, we are of the view that the complaint with respect to the offence under Section 138 read with Section 141 of the Act was not maintainabl....
Negotiable Instruments (Amendment and Miscellaneous Provisions Act 2002 leads this Court to a conclusion that the offence made punishable under Section 138 of N.I. ... Act is not only an offence qua property but it is also of the nature of an economic offence, though not covered in the list of statutes enacted in reference to Section 468 of Cr.P.C. Thus, the parties, in reference to offence under Section 138#HL_E....
As seen from the record, the contention of the learned counsel for the petitioner is that the bank itself is not existing on the date of issuance of cheque and there is notice to the customers by Reserve Bank of India, advising complete withdrawal of non-CTS instruments by June 2017 and bank has been ... Allegedly the cheque issued by the petitioner is non-CTS instrument. 7. Learned counsel for the petitioner submits that ....
I affirm hereby that these documents are not duplicate or bogus. Perusal of the prescribed forms reveal that whenever a person intends to contest an election, he would be required to approach the Scrutiny Committee only when the election is declared and he has made up his mind to contest a seat from the reserved category from any of the wards. These documents are true and correct and obtained by following proper procedure. No alterations/ corrections/changes are mad....
Not bubbling or double bubbling also invalidates the entry. The consistent stand of TSPSC is in accordance with the above instructions. No prohibited instruments should be allowed inside examination centre/hall; candidates using prohibited instruments should face penal consequences; corrections in any form is not valid.
Such kind of corrections or alterations can be done. He has failed to produce the memory card before the Court. He has admitted in his cross examination that the photographs are used to be corrected or altered with the help of photo-shop software if there is demand of customer. It has come in the evidence of PW-14, Suhas Pathak that he was called for snapping photographs by the Investigating Officer.
In other words, do the amended provisions of Section 145 (1) and (2) of the Act operate retrospectively? (B) Whether the provisions of Section 145 of the Act, as amended by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act 2002, (for short “the amending Act of 2002”) are applicable to the complaints under Section 138 of the Act pending on the date on which the amendment came into force? “(A) Whether sub-section (2) of Section 145 of the Negotiable Instru....
8. Though the appellant/defendant before the Trial Court did not place the letter dated 8th March, 2014 of the Bank on which the cheque was issued but has as Annexure-A-7 to the memorandum of appeal filed a copy of the said letter dated 8th March, 2014 of Axis Bank Ltd. on which the cheque was issued confirming that the subject cheque was returned for the reason “alter/correct on instruments are prohibited in CTS.”
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