2020 (12) TMI 511 - HC - Indian Laws

Dishonor of Cheque - presumption in favour of the complainant under Section 139 of the Negotiable Instrument Act - acquittal of the accused - whether the accused committed the offence under Section 138 of N.I Act? - HELD THAT - The admitted case of the complainant is that to discharge the liability, Ext.P1 cheque was issued by the accused and when the cheque was presented, it was dishonoured. The complainant also says that based on Ext.P7 hire purchase agreement, the company seized the vehicle and sold the same. The sale proceeds were already taken by the complainant company. Based on these admitted facts, the trial court found that when the complainant proceeded based on Ext.P7 agreement and re-possessed the vehicle from the accused and sold the vehicle, whether the amount of ₹ 87,600/- will be there as amount due can be decided only by a civil court or through the method mentioned in Ext.P7 hire purchase agreement. The trial court considered the entire aspect. After considering the oral and documentary evidence and based on Ext.P7 hire purchase agreement, the trial court came to such a conclusion. This is an appeal against acquittal - there are no reason to interfere with the finding of fact by the trial court - appeal dismissed.

Summary

Issues:
1. Whether the accused committed the offence under Section 138 of the Negotiable Instruments Act.

Analysis:
The appellant, who is the complainant, filed a case against the 1st respondent for allegedly committing an offence under Section 138 of the Negotiable Instruments Act. The complainant, a financing company, claimed that the accused failed to make payments as per the agreement, resulting in a liability of ?87,600. The accused issued a cheque towards this liability, which was dishonoured, leading to the complaint. The trial court acquitted the accused, prompting the appeal.

The main contention in the appeal was whether the accused indeed committed the offence under Section 138 of the N.I Act. The complainant argued that there was a presumption in their favor under Section 139 of the Act, which the trial court allegedly failed to consider. On the other hand, the counsel for the accused defended the trial court's decision, stating that there was no basis to interfere with the acquittal order.

The crucial point for consideration was whether the accused was guilty of the offence under Section 138 of the N.I Act. The trial court found that the complainant's actions, particularly seizing and selling the vehicle based on a hire purchase agreement, did not conclusively establish the amount due from the accused. The court emphasized that the liability determination should be through a civil court or as per the terms of the agreement, not unilaterally fixed by the complainant.

The judgment highlighted the legal aspects of the cheque issued by the accused, emphasizing the need for consideration and the nature of payment—conditional or unconditional. The court analyzed the impact of the seizure of the vehicle post cheque dishonourment on the validity of the cheque. It concluded that the cheque lost its character as a negotiable instrument due to conditional payment and lack of consideration, rendering it invalid.

Ultimately, the High Court dismissed the appeal against the trial court's acquittal order, confirming the decision and reasoning provided by the lower court. The judgment underscored the importance of legal principles governing negotiable instruments and considerations in determining liabilities under such agreements.