Section 138 NI Act: Supreme Court Says Altered Cheque Cannot Be Used to Convict Drawer

The Supreme Court has held that where a cheque itself clearly shows signs of material alteration, courts need not insist on additional evidence to prove the alteration. It said a conviction under Section 138 of the Negotiable Instruments Act for cheque dishonour cannot be sustained if the cheque has been manifestly tampered with, as such alteration renders the instrument invalid.

A Bench of Justices Sanjay Kumar and Sanjeev Sachdeva allowed an appeal filed by Rajasab, holding that the insertion of words and numerical digits on the face of the cheque amounted to a material alteration. Court said this made the cheque invalid and the appellant's conviction unsustainable.

The appellant had challenged an April 25, 2025 judgment of the Karnataka High Court's Dharwad Bench, which had upheld his conviction under Section 138 of the Negotiable Instruments Act while reducing the fine from Rs 1,15,000 to Rs 1,10,000. The reduced amount was directed to be paid as compensation to the complainant, and the appellant subsequently deposited the amount.

Was the cheque originally for Rs 10,000 or Rs 1.10 lakh?

The central issue before the Supreme Court was whether the cheque had originally been issued for Rs 10,000 or whether it had been materially altered to make it appear as a cheque for Rs 1,10,000.

The trial court, by its judgment dated August 11, 2014, had accepted the complainant's case that the cheque was issued for Rs 1,10,000 and convicted the appellant. The District and Sessions Judge, Koppal, dismissed the appellant's appeal on March 25, 2019. The Karnataka High Court also rejected his contention that the cheque had been materially altered.

Supreme Court finds material alteration on face of cheque

After examining the cheque placed on record, the Supreme Court found that the words "One Lak" had been inserted before the words "Ten Thousand only", while the numerical digit "1" had also been inserted before "10,000/-" in the amount box.

"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. We are, therefore, of the opinion that the conviction of the appellant, Rajasab, on the ground that the aforestated cheque was dishonoured, upon presentation, cannot be sustained," the Bench observed.

Accordingly, Court set aside the judgments of the trial court, the appellate court and the High Court.

Refund of compensation ordered

The Supreme Court directed that the amount received by the respondent pursuant to the earlier court orders be reimbursed to the appellant within four weeks.

It further clarified that if any part of the amount deposited by the appellant was still lying before the concerned court, he would be at liberty to seek its release along with any accrued interest.

Case Title: Rajasab Vs Hulagappa

Bench: Justices Sanjay Kumar and Sanjeev Sachdeva

Date of Judgment: July 17, 2026