9911796707
TMI Blog2014 (8) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... through Complaint Case No. 246/2008 filed before the Court of Chief Judicial Magistrate, Korba. 3. Facts leading to the instant case are that the Petitioner had entered into a hire-purchase agreement with the Respondent and had obtained loan for the purchase of a Truck and, subsequently, the Petitioner had purchased a Truck, bearing Registration No. CG04-JA/2383. As per the said agreement, the Petitioner had to make installments, and by way of security the Petitioner had also given postdated cheques in the form of security to the Respondent so that the same could be utilized by the Respondent in the event if the Petitioner defaults in paying the monthly installments. That, in the month of January' 2008, the Respondent on account of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f is not maintainable for the reason that the parties to the dispute i.e. the Respondent and the Petitioner, have entered into a hire-purchase agreement and the said hire-purchase agreement stands automatically terminated the moment the vehicle, for which the hire-purchase agreement was entered into, was forcefully seized by the Respondent and the moment the hire-purchase agreement stands terminated, the Respondent would not be entitled to sue the Petitioner under the provisions of the N.I. Act. A cheque issued as a security put to clearance after termination of the agreement is perhaps not permissible under the eye of law nor can the said presentation of the cheque for clearance be said to be in connection with a live transaction as the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Respondent, all that is required under the proceedings of Section 138 of the N.I. Act is the fact that the accused has given a cheque towards discharge of his liabilities and when the said cheque towards discharge of the liability is presented for clearance, the cheque is dishonoured assigning the reason of "insufficiency of funds". As per the learned Counsel for the Respondent, in the instant case also admittedly the Petitioner had given a cheque to the Respondent for using the same towards encashment of their unpaid liabilities and that for the said encashment of the unpaid liability, the Respondent had put the cheque for clearance which got dishonoured for insufficiency of funds and as such the complaint case cannot be said to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case between the financial institution and the hirer stood determined by the act of parties, the cheques which were accepted by the financial institution towards advance for repayment of the hire would become instruments without consideration and that they will be instruments for which consideration had failed and under the said circumstances the remedy available to the financial institution is only to realize the balance hire due by filing appropriate suit for damages on account of breach of terms of agreement. It was also held that since the financial institution had admittedly got repossession of the vehicle and that the said repossession was even before the filing of the complaint case, the hire-purchase agreement between the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he option of seizure of vehicle, the postdated cheques cannot be permitted for encashment, particularly, after the seizure of the vehicle and the only recourse available to the said financier is to initiate appropriate legal remedy for recovery of the balance amount. Likewise, the Punjab and Haryana High Court at Chandigarh also in a recent decision made on 31.7.2013 in the case of M/s. Guru Nanak Tractors v. Swarn Singh, took the same view that as per the Section 138 of the N.I. Act in order to attract the penal provision the debt or other liability must be legally enforceable debt or liability and if the instrument is not supported by consideration, there is no question of attracting the provisions of Section 138 of the N.I. Act. 8. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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