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)

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