Section 87 NI Act: Effect of material alteration

Negotiable Instruments Act, 1881

Section 87 NI Act at a Glance

Section 87 NI Act makes a materially altered negotiable instrument void against any non-consenting party at the time of the alteration, unless made for the original parties' common intention. Alteration by an indorsee also discharges the indorser for the consideration.

Section 87 NI Act Bare Act Text

87. Effect of material alteration.

Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;

Alteration by indorsee.—And any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof.

The provisions of this section are subject to those of sections 20, 49, 86 and 125.

Section 87 NI Act in Simple Words

Section 87 NI Act sets out the legal effect of a material alteration of a negotiable instrument. Under the first paragraph of Section 87 NI Act, any material alteration of a negotiable instrument renders the instrument void as against anyone who is a party to it at the time of making the alteration and does not consent to it, unless the alteration was made in order to carry out the common intention of the original parties.

Under the second paragraph of Section 87 NI Act, if any such material alteration is made by an indorsee, the alteration discharges that indorsee's indorser from all liability to the indorsee in respect of the consideration for the instrument.

The third paragraph of Section 87 NI Act states that its provisions are subject to Sections 20, 49, 86 and 125 NI Act.

When Section 87 NI Act Applies

  • A negotiable instrument undergoes a material alteration.
  • A person is a party to the instrument at the time of making the alteration and does not consent to the alteration.
  • The alteration was not made in order to carry out the common intention of the original parties, and is not covered by Sections 20, 49, 86 or 125 NI Act.
  • The instrument is rendered void as against that non-consenting party, and if made by an indorsee, the alteration also discharges the indorser from all liability to that indorsee in respect of the consideration.

Example of Section 87 NI Act

Deepak draws a cheque in Kanpur for ₹20,000 payable to Neha, and Neha indorses and delivers the cheque to Mahesh in payment for goods worth ₹20,000. Without the consent of Deepak or Neha, and not to carry out any common intention of the original parties, Mahesh alters the sum on the cheque from ₹20,000 to ₹50,000. Under Section 87 NI Act, the cheque becomes void as against Deepak and Neha because both were parties to the cheque when the material alteration was made and neither consented to it. In addition, because Mahesh made the alteration as an indorsee, Section 87 NI Act discharges Neha, the indorser, from all liability to Mahesh in respect of the ₹20,000 consideration.

FAQs on Section 87 NI Act

What is Section 87 NI Act?▼

Section 87 NI Act states that any material alteration of a negotiable instrument renders the instrument void against anyone who was a party to it at the time of the alteration and did not consent to it, unless the alteration was made to carry out the common intention of the original parties. It also provides that if an indorsee makes such an alteration, the indorsee's indorser is discharged from all liability to the indorsee in respect of the consideration.

When does a material alteration not render a negotiable instrument void under Section 87 NI Act?▼

Under Section 87 NI Act, the instrument is not void against a party who consents to the alteration, or where the alteration was made to carry out the common intention of the original parties. In addition, Section 87 NI Act is subject to Sections 20, 49, 86 and 125 NI Act.

What happens to the underlying consideration if an indorsee makes a material alteration under Section 87 NI Act?▼

Under Section 87 NI Act, if an indorsee makes such a material alteration, the indorsee's indorser is discharged from all liability to that indorsee in respect of the consideration for the instrument.

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Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·