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What is the meaning of material alteration in a cheque?

What is the meaning of material alteration in a cheque?

Any alteration in the original state of a cheque such as date, amount, payee’s name, changing the word ‘order’ to bearer appearing after payee’s name or in endorsement is called material alteration. All material alteration must have drawer’s approval with his full signature (not initials) where the alterations are made. One of the mandatory features of the CTS-2010 cheque format, prescribed by RBI, is that No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations.

Effects of material alteration:

The material alteration of a cheque renders such instrument void and same cannot be enforced against any person who was a party to such instrument at the time of material alteration and did not give his/her approval to it.

The following are not considered as material alteration under N.I.Act:

  1. filling up of incomplete instrument (sec 20)
  2. Conversion of blank endorsement into a special endorsement (section 49).
  3. Qualifying or limiting an acceptance (section 86)
  4. Crossing of a cheque by holder (section 125)

    Related articles:

    Definition of a cheque

    Rules for cash payment of a cheque

    Effects of not negotiable mark on a cheque

    General and special crossing of a cheque

    Meaning of inchoate cheque

    Cheque bounce implications

    Difference between bill of exchange and cheque

    Little more to know about a cheque

(2) Comments

  1. Kamal Garg

    What is the legal position:- the drawers cheque has account no stamp on the face of the cheque where the space for account no has been provided b the bank, the stamp has been put by the Bank, the cheques are non cts cheque, the account no with the stamp of account no has been has been closed long back, the holder of the cheque has striked off the stamped account no on the cheque and has put another cheque no by hand in hand writing by a pen, there are no signatures nor initials on the cutting of the said cutting alteration. Please guide and advise.

    1. Surendra NaikSurendra Naik - Post author

      You may return the cheque with a reason " the cheque leaf belongs to differnt account" or in the similar line. Cheque leaves of closed accounts should be surrendered to the bank and the customer cannot use unused cheque leaves of closed account for another account. Sometime some bank utilise surrendered unused cheque leaves for issuing loose cheque leaf required by another customer.In such case it is boldly written on the cheque leaf " Loose cheque issued to accountNo.......and same should be recorded in the cheque book issued register as well as in the system.

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