TMI Blog2004 (4) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ute about additional financial charges levied by the owner against the terms of the agreement. 2. Annexure A1 complaint was filed by respondent No. 2 against the petitioner/hirer alleging that the cheque dated September 5, 1999 for a sum of ₹ 20034/- issued by her in favour of respondent No. 2/owner was dishonoured when it was presented for encashment. The complaint was filed after complying with all statutory formalities and within the statutory period of limitation. 3. It is contended by learned counsel for the petitioner that the proceedings initiated under Annexure A1 complaint is a sheer abuse of process. The cheque was presented for encashment alter the vehicle was re-possessed by the owner. By such re-possession the hire purchase agreement had been determined ipso facto . Under such circumstances, the owner was not entitled to present any of the post dated cheques for encashment, since those cheque had become unenforceable. The cheques were not supported by any consideration. And as such there was no legally enforceable debt or liability. 4. However, it is contended by learned counsel for respondent No. 2/complainant that as long as the hire remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcepted) and at the Hirer s risk and expenses. The determination of the hiring as aforesaid shall not affect or prejudice the claim of the owner for arrears of hire payments due upto to the date of return of the vehicle or to sue for damages for breach of the agreement due to default in payment of installments. 9. It is evident from a perusal of the above clause that the hirer can terminate the hiring by returning the vehicle to the owner. But the owner s right to claim arrears of hire charges which are due upto the date of return of the vehicle and to sue for damages for breach of the agreement is safeguarded. 10. The next clause deals with the rights of the owner if the hirer commits breach of any of the terms and conditions. Relevant portions of clause 9, which are extracted hereunder, may be noticed. 9. In case the hirer shall, during the continuation of the agreement, do or suffer any of the following act or thing viz., either: (a) fail to pay any of the hiring installments within the stipulated time, whether demanded or not; (i) break or fail to perform or observe any conditions on his part herein contained, then and on the occurrence of any such ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains in force. 12. It is undoubtedly true that the owner/financier is entitled to enforce payment of monthly instalments as undertaken by the hirer. The post dated cheques issued by the hirer towards equaled monthly hire can be presented for encashment every month. Those cheques represent payments towards discharge of the liability covered under the agreement between the parties. According to the petitioner 48 post dated cheques were handed over to the owner at the time when Annexure A8 agreement was executed. This assertion made by the petitioner has not been controverted by respondent No. 2/owner in the counter affidavit filed before this court. The details of these cheques are given in the agreement itself. Bach of these cheques had to be presented for encashment on an agreed date every month. The due date for payment of monthly hire charges as stipulated in Annexure A8 agreement was 5th of every month. Thus, every cheque issued by the petitioner albeit in advance can be said to be supported by consideration at least on the date when the hire charges would become due. But a reading of clause 9 extracted above, will clearly show that the agreement gets determined ipso facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at when the owner re-possessed the hired vehicle for default in repayment of the hire charge, the remedy open to the owner was to hold the hirer to his contract and to take action if he commits default in repayment of the balance amount as specified in the agreement. It was also held that section 43 of the Negotiable Instruments Act would come into play in such cases and in the absence of consideration, the instrument would not be legally enforceable. 17. The above decision was rendered by the Lahore High Court in the following circumstances: The hirer had purchased a car from the appellant for a total consideration of ₹ 2100/- under a hire purchase agreement. A sum of ₹ 1,000/- was agreed to be paid as advance and the remaining sum of ₹ 1100/- was to be paid in instalments spread over a period of 8 months. The hirer paid ₹ 50/- in cash. A cheque for the balance sum of ₹ 950/- was handed over to the owner. But the drive by the hirer from Delhi to Kathgodam was not so uneventful. The radiator of the car developed major problems. It was noticed that there was a leak in the radiator. Contrary to the promise, the tyres were also in bad shape. Someh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by any consideration, since the agreement had stood determined ipso facto and also since the owner had admittedly re-possessed the vehicle even before the cheque was presented for encashment. Thus, there is no doubt that by effecting seizure of the vehicle, the owner had exercised the option available to him under the agreement. The post-dated cheques in the hands of the owner had become instruments for which consideration had failed. In that view of the matter, no offence punishable under Section 138 of the Act would be attracted, since it is trite that in order to attract the above penal provision, the debt or other liability must be a legally enforceable debt or liability . If the negotiable instrument is not supported by consideration, there is no question of the provisions of Section 138 of the Act being attracted. 20. There is yet another reason to take the above view in this case. It is admitted by the complainant that the seized vehicle was sold later and the sale price was adjusted towards the liability payable by the hirer. It is on record that respondent No. 2/complainant has already filed a suit before the High Court of Madras (Annexure A9) for recovery of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the financier (owner) is not entitled to take forcible possession of the vehicle if the hirer commits default in repayment of the hire. 23. I am not inclined to consider the above questions since they do not arise for consideration in this proceeding. It is true that the learned Judge of the Punjab and Haryana High Court had proceeded to construe the hire purchase agreement in the above case as a loan transaction on the strength of the dictum laid down by their Lordships of the Supreme Court in Sundaram Finance Limited v. State of Kerala (AIR 1966 SC 1178). In the above decision their Lordships held that the hire purchase agreement is nothing but a loan agreement. The question that arose for consideration in the case was whether the vehicle which were given on hire to the prospective purchasers by the financiers/dealers were exigible to tax under the Kerala General Sales Tax Act. By a majority decision, their Lordships held that the real intent behind the hire purchase agreement in the above case was only advancement of a loan. 24. The contention of the petitioner that Annexure A8 hire purchase agreement is in essence a loan agreement may have some relevance if we perus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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