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1. The question that has come up for consideration in this case is as to whether insertion of a date on an undated cheque would amount to material alteration within the meaning of Section 87 of the Negotiable Instruments Act, 1881.

2. The appellant was the defendant in O. S. No. 16 of 1986 of the Sub-Court, Kottarakkara. A suit was instituted by the respondent-plaintiff for realisation of Rs. 30,000 with interest. According to him, the defendant had borrowed an amount of Rs. 30,000 and issued a cheque dated June 11, 1985, for the said amount. The cheque was sent for collection through the Catholic Syrian Bank, Kottarakkara. But the cheque was dishonoured stating "refer to drawer". Advocate's notice dated July 8, 1985, was issued to the defendant. The defendant did not respond to the notice. Hence the plaintiff instituted the suit. The defendant in his written statement stated that he had not borrowed Rs. 30,000 from the plaintiff. However, he admitted the issuance of the cheque. According to him, it was issued without consideration for adjustment of certain transactions in connection with toddy shops of Kottarakkara Range.

6. Counsel for the defendant contended that the cheque was issued for the purpose of certain adjustments, and settlement of accounts, between the plaintiff and the defendant in connection with certain toddy shops business. According to him, on settlement of accounts, an amount of Rs. 16,346.95 was due to the defendant. For realising the same, he was intending to initiate appropriate proceedings. It was stated that he issued an undated cheque as security for a loan transaction, in connection with certain abkari business, which was not supported by any consideration. The plaintiff, however, without the consent of the defendant, inserted a date on the cheque. Counsel contended that the insertion of a date on a cheque without consent would amount to material alteration within the meaning of Section 87 of the Negotiable Instruments Act. Counsel relied on the decision of the Andhra Pradesh High Court in Jayantilal v. Zubeda Khartum, AIR 1986 AP 120, and contended that material alteration takes in not only a case where a certain thing which is already written has been altered or erased, but also a new insertion.

16. The general rule is that a material alteration renders the negotiable instrument void. However, if an alteration is made with the consent of the drawer of the cheque, it may not amount to material alteration, because the holder of the undated cheque has got the implied authority to put the date on the cheque. Once the date is shown on the cheque, the burden is on the drawer of the cheque to prove that the payee had no authority to do so.

17. There is no provision in the Act which makes a cheque or any of the negotiable instruments void, if it is not dated. However in England, under the Bill of Exchange Act, a bill of exchange is not valid on the reason that it is not dated. In India the position is different. In India the legal position is that an undated cheque may be invalid, but not void. Banks may also not bounce the cheque if it is not dated. There may be cases where the bank may honour the undated cheque, considering the standing of the parties and other surrounding circumstances.

22. We, therefore, hold that insertion of a date on an undated cheque would not amount to material alteration, since the holder in due course has got implied authority to do so, unless it is otherwise proved by the drawer of the cheque. Consequently, we uphold the judgment of the learned single judge and dismiss the appeal.