Canara Bank v. Canara Sales Corporation Ltd. & Ors.
Supreme Court of India(1987) 2 SCC 666On Section 87 (material alteration): the Supreme Court held that a material alteration without the consent of all parties liable on the instrument renders it void as against any party who was a party to it prior to the alteration. A "material alteration" is any change that alters the business effect of the instrument — amount, date, time of payment, place of payment, or the parties. The bank was held liable for paying an altered instrument. A collecting or paying bank is not protected by a "holder in due course" argument when a material alteration was apparent or discoverable on reasonable examination. Banks must exercise care while processing instruments showing signs of alteration.