Technical Errors in Cheques Do Not Invalidate Legal Proceedings: Delhi High Court
By Abhishek Jat, Advocate
In a significant ruling, the Delhi High Court has
clarified that minor discrepancies in the amount mentioned in words and figures
on a cheque, or overwriting of the date, do not render the cheque invalid under
the Negotiable Instruments Act, 1881 (NI Act). The judgment, delivered by
Justice Neena Bansal Krishna, underscores the importance of substance over
technicalities in cases involving dishonored cheques.
Background of the Case
The petitioner filed a complaint under Section 138
of the NI Act against Respondent 2, alleging that a cheque issued for Rs.
4,65,000 was dishonored with the remark “payment stopped by the drawer.” The
cheque was issued to discharge a loan liability of Rs. 5,00,000. However, the
cheque contained a discrepancy: while the amount was written as Rs. 4,65,000 in
figures, it was stated as “Rupees Four Lac Sixty-Five only” in words.
Additionally, the date on the cheque was overwritten.
Respondent 2 sought discharge, arguing that the
overwritten date rendered the cheque void under Section 87 of the NI Act. They
also contended that the discrepancy in the amount mentioned in words and
figures created ambiguity, as Section 18 of the NI Act mandates that words
prevail over figures. Consequently, the correct amount should be deemed Rs.
4,00,065, not Rs. 4,65,000 as claimed in the demand notice.
The Metropolitan Magistrate (MM) dismissed these
objections, summoning Respondent 2 for trial. However, the Additional Sessions
Judge (ASJ) set aside the MM’s order, ruling that the ambiguity in the amount
payable entitled Respondent 2 to discharge.
Court’s Analysis and Findings
The Delhi High Court set aside the ASJ’s order,
holding that the complaint under Section 138 of the NI Act was maintainable
despite the discrepancies. The Court observed that the error in writing the
correct figure in words appeared inadvertent and did not indicate a different
amount. It emphasized that the bank had not treated the overwritten date as a
material alteration, and thus, it could not be a ground for discharge without a
trial.
Justice Krishna relied on precedents such as Rangappa
v. Sri Mohan (2010) and Suman Sethi v. Ajay K. Churiwal (2000),
which established that minor discrepancies in the amount demanded in the notice
and the cheque do not invalidate proceedings under Section 138. The Court noted
that Respondent 2 had failed to reply to the legal notice, which strengthened
the petitioner’s case.
The Court reiterated that the primary objective of
the NI Act is to ensure the credibility of negotiable instruments and that
technical defects should not defeat this purpose. It emphasized that the
discrepancy in the amount and the overwritten date were matters for trial, not
grounds for discharge at the preliminary stage.
Key Legal Principles Established
- Presumption of Liability: Under Section 139 of the NI Act, there is a
rebuttable presumption that the cheque was issued to discharge a legally
enforceable debt.
- Primacy of Words Over Figures: While Section 18 of the NI Act states
that words prevail over figures in case of discrepancy, inadvertent errors
do not invalidate the cheque.
- Material Alteration: Overwriting of the date is not considered a
material alteration unless it affects the cheque’s validity or the bank’s
processing.
- Technical Defects: Minor technical errors in cheques should not
defeat the object of the NI Act, which is to promote the credibility of
negotiable instruments.
Implications of the Judgment
This ruling reinforces the principle that courts
should focus on the substance of the dispute rather than technical defects in
cheques. It provides relief to complainants facing frivolous objections based
on minor discrepancies and ensures that the NI Act’s objectives are not
undermined by hyper-technical interpretations.
Conclusion
The Delhi High Court’s ruling in Nitesh
Yadav v. State NCT of Delhi marks a pivotal moment in the
interpretation of the Negotiable Instruments Act, 1881 (NI Act), particularly
in cases involving technical discrepancies in cheques. By setting aside the
discharge order and allowing the complaint under Section 138 of the NI Act to
proceed, the Court has reaffirmed the legislative intent behind the Act—to
uphold the credibility of negotiable instruments and ensure swift redressal in
cases of dishonored cheques.
The judgment underscores the judiciary’s commitment
to prioritizing substantive justice over procedural technicalities. The Court’s
observation that minor errors, such as discrepancies in the amount written in
words and figures or overwriting of the date, do not invalidate a cheque, is a
significant relief for complainants who often face undue delays and dismissals
due to hyper-technical objections. This approach aligns with the broader
objective of the NI Act, which is to deter the issuance of dishonored cheques
and maintain trust in financial transactions.
Furthermore, the Court’s reliance on precedents such
as Rangappa v. Sri Mohan and Suman Sethi v. Ajay K.
Churiwal reinforces the principle that the NI Act is a remedial
statute designed to protect the payee’s interests. The ruling also highlights
the importance of the rebuttable presumption under Section 139, which places
the burden on the drawer to disprove the existence of a legally enforceable
debt. By emphasizing that technical defects should not defeat the purpose of
the Act, the judgment sends a clear message to litigants and lower courts
alike: the focus should remain on the merits of the case rather than inconsequential
errors.
This decision is particularly significant in the
context of commercial transactions, where cheques remain a widely used
instrument for payment. It provides much-needed clarity and reassurance to
businesses and individuals that minor discrepancies will not derail legitimate
claims. At the same time, it serves as a reminder to drawers of cheques to
exercise due diligence when issuing such instruments, as courts will not
entertain frivolous defenses aimed at evading liability.
In remanding the matter for trial, the Delhi High
Court has ensured that justice is not only done but also seen to be done. The
ruling strikes a balance between protecting the rights of complainants and
ensuring that respondents are not unfairly burdened, thereby upholding the
principles of fairness and equity in the adjudication of cheque dishonor cases.
Ultimately, this judgment is a testament to the
judiciary’s role in interpreting laws in a manner that aligns with their
intended purpose. It reinforces the NI Act’s role as a robust mechanism for
resolving financial disputes and maintaining the integrity of commercial
transactions in India.
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