DOES INK AFFECTS VALIDITY OF NEGOTIABLE INSTRUMENT?
To understand what this article says, it is of utmost importance to understand what does negotiable instrument means in the first place. A negotiable instrument is a signed document that promises a sum of payment to a specified person or the assignee. In other words, it is a formalized type of IOU. An example of a negotiable instrument includes a personal cheque.
In other terms, negotiable instruments are documents that promise payment to the assignee or a specified person. These instruments are transferable signed documents that promise to pay the bearer/holder the sum of money when demanded or at any time in the future. There are certain types of negotiable instruments. Firstly is the promissory note which refers to a written promise to its holder by an entity or an individual to pay a certain sum of money by a pre-decided date. Promissory notes show the amount which someone owes to another person or that person owes to someone together with interest rate and also the date of payment. The second type of negotiable instrument includes a bill of exchange. Thirdly is the cheque which refers to an instrument in writing which contains an unconditional order, addressed to a banker and is signed by a person who has deposited his money with the banker.
There was an amendment in the Negotiable Instruments which was The Negotiable Instruments (Amendment) Bill, 2017 which was introduced in the Lok Sabha on the 2nd of January, 2018. This bill sought an amendment in the existing Act. The Negotiable Instruments Bill also gives the definition of the promissory note, bill of exchange, and cheques. The bill also specifically states the penalties for the dishonor of cheques and various other violations related to negotiable instruments.
The key matter is related to a case in which the facts say that the plaintiff sought a decree against the defendant for a sum of Rs. 60,200 together with interest at the rate of 24% p.a., on Rs. 35,000 from the date of the suit till the date of the decree. This suit came up for consideration before the District Munsif Court, Sholinghur and the suit was decreed. The main subject revolves around whether the ink affects the validity of the negotiable instrument.
The plaintiff filed the Second Appeal which was admitted to two questions of law-
1- Whether the Appellate Court correctly appreciated Sections 72 and 73 of the Indian Evidence Act 1872
2- Whether the First Appellate Court has considered Section 120 of Indian Evidence Act, 1872?
The first substantial question of law was related to Section 73 of the Indian Evidence Act which talks about a Comparison of signature, writing or seal with others admitted or proved. This section also says that the Court may direct any person present in Court to write any words or figures for the purpose of enabling the Court to compare the words or figures so written with any words or figures alleged to have been written by such person.
The effect of material alteration has been provided under Section 87 of the Negotiable Instrument Act which says any material alteration of a negotiable instrument renders the same void as against anyone 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.
A perusal of the promissory note reveals that it was a printed note and on it, the name of the defendant along with the name of his father and his residence villages, the amount of Rs. 5,000 and the rate of interest at Rs. 2 have been written in Green ink. However, before the digit 5 in the amount column, there is an addition of the digit 3 in blue ink. This has been construed by the learned First Appellate Court as a material going the root of the case. The other writings have also been written in blue ink. Particularly the amount 35,000 had been filled up in two separate inks with the digit 3 in blue ink and the amount 5000 immediately succeeding the digit 3 in green ink.
This material alteration was held under Section 87 of the Negotiable Instrument Act which rendered the instrument void in accordance with this Section. It was observed by the Court that the material alteration is visible to the naked eye and the fact that the amount which is the basis for the claim had been written in two different inks which raise a strong suspicion regarding the circumstances surrounding the execution of the promissory note. It also gives rise to a doubt whether the digit 3 had been subsequently appended after the defendant had signed the promissory note. The Court said that this would render the document void as against the plaintiff/appellant.