2023 (11) TMI 669 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - discharge of legally enforceable cheque or not - vehicle covered by the hire purchase loan agreement was already seized by the complainant/1st respondent and it was sold out for profit - HELD THAT - The case of the 1st respondent is that the cheque was issued after seizure and sale of the vehicle, and after adjusting the sale price towards the loan amount. But PW1 admitted that Rs. 57,000/- was already repaid in ten installments and the vehicle was seized and sold, and to his memory, the sale price was Rs. 25,000/-. But he has not produced any scrap of paper to show that the balance amount was calculated as Rs. 1,24,500/-. No notice was seen issued to the revision petitioner intimating the balance due, and asking him to remit that amount. The vehicle was seized and sold in the year 1998. The cheque is dated 06.02.2002. There is nothing to show that in the year 2002, the revision petitioner reached the office of the 1st respondent to issue Ext.P3 cheque. No evidence is there to prove that Ext.P3 cheque was issued towards the balance amount due, after adjusting the sale price. The conviction and sentence imposed on the revision petitioner under Section 138 of the Negotiable Instruments Act is set aside - Revision petition is allowed.

Summary

Issues involved:
The judgment involves the revision of a conviction under Section 138 of the Negotiable Instruments Act, with issues related to the issuance of a cheque as security for a hire purchase loan and subsequent legal proceedings.

Issue 1: Conviction under Section 138 of the Negotiable Instruments Act

The case involved a complaint by a company against the revision petitioner for defaulting on a hire purchase loan and issuing a dishonored cheque. The trial court convicted the petitioner, sentencing him to imprisonment and compensation. The appellate court modified the compensation amount and reduced the sentence. The petitioner contested the judgment on grounds that the cheque was not for a legally enforceable debt and the vehicle had already been seized and sold by the complainant.

Issue 2: Legality of the Cheque Issuance

The petitioner argued that the cheque was given as security for the loan in 1997 and not towards a debt. The petitioner highlighted discrepancies in the complainant's claims regarding the sale of the vehicle and the amount due. The petitioner contended that the cheque was not issued in 2002 as claimed by the complainant, casting doubt on the legitimacy of the debt claimed.

Issue 3: Legal Precedent and Considerations

The petitioner relied on legal precedent to support his case, citing a judgment where the repossessed vehicle's sale price was adjusted against the loan amount. The petitioner emphasized that the complainant failed to prove the actual sale price of the vehicle or issue a notice for the balance due. Discrepancies in the timeline of events raised doubts about the complainant's claims and the legitimacy of the debt.

Conclusion:
The court allowed the revision petition, setting aside the conviction and sentence under Section 138 of the Negotiable Instruments Act. The court found that the cheque was not issued towards a legally enforceable debt, supporting the petitioner's claim that it was given as security for the loan. The judgment highlighted inconsistencies in the complainant's case, leading to the reversal of the conviction and the petitioner's immediate release.