Hire purchase cheques lose enforceability after repossession when the underlying debt fails under Negotiable Instruments law.

A cheque issued under a hire purchase arrangement does not support prosecution under Section 138 of the Negotiable Instruments Act, 1881 once the vehicle is repossessed and the agreement stands determined, because the underlying consideration for the cheque fails. Section 43 applies where an instrument is made or drawn without consideration, or where consideration subsequently fails, leaving no obligation of payment between the parties. On that basis, the essential requirement of a legally enforceable debt or liability was absent. The text also notes that the creditor had pursued civil recovery for the balance, reinforcing that criminal prosecution on the cheque was unsustainable and that the complaint was liable to be quashed.

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Issues: Whether a cheque issued under a hire purchase arrangement remains enforceable under Section 138 of the Negotiable Instruments Act, 1881 after the vehicle is repossessed and the agreement stands determined.

Analysis: The post-dated cheques were issued towards monthly instalments under the hire purchase agreement, but the vehicle had already been repossessed before the cheque in question was presented. Once the agreement stood determined ipso facto on default and repossession, the consideration supporting the cheque failed. Under Section 43 of the Negotiable Instruments Act, 1881, a negotiable instrument made or drawn without consideration, or where consideration has subsequently failed, creates no obligation of payment between the parties. In such circumstances, the essential ingredient of Section 138, namely a legally enforceable debt or liability, was absent. The owner had also already proceeded to recover the balance amount by civil remedies, reinforcing that criminal prosecution on the cheque was unsustainable.

Conclusion: The cheque was not supported by consideration after repossession of the vehicle, and no offence under Section 138 of the Negotiable Instruments Act, 1881 was made out. The complaint was liable to be quashed.

Final Conclusion: Criminal prosecution based on the post-dated cheque could not be sustained after the hire purchase agreement had been determined and the vehicle had been repossessed.

Ratio Decidendi: A cheque issued under a hire purchase agreement ceases to support prosecution under Section 138 of the Negotiable Instruments Act, 1881 when the agreement is determined and the underlying consideration fails, because the cheque no longer represents a legally enforceable debt or liability.

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