2009 (10) TMI 981

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....r a sum of ₹ 6,00,000/- (Rupees six lakhs) to purchase lorry bearing Registration No. TN 69 E 4657 as per hypothecation agreement No. 625053 from the Respondent bank. As per the schedule of payment given by the Respondent herein, the Petitioner has to pay a sum of ₹ 21,514/- for 35 equally monthly instalments. With a view to discharge his liability, the Petitioner had given 35 post dated cheques bearing Nos. 448001 to 448035 drawn on City Union Bank Ltd., Tuticorin to the Respondent Bank. 3. Since the Respondent bank has withheld an amount of ₹ 95,000/- out of ₹ 6,00,000/-, the Petitioner stop the payment of cheques and thereafter the Respondent disbursed the balance amount of ₹ 95,000/-. The Respondent contra....

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....ondent in order to settle the liability, the Petitioner issued cheques for equal monthly instalments and he could not able to honour the same for some time. In view of the failure to comply with the payment for each and every month, the Respondent herein seized the vehicle and also repossessed the same. Whereas, the cheques were given as per the earlier agreement in order to settle the liability, post dated cheques were given by the Petitioner herein. 7. The learned Counsel appearing for the Petitioner further submitted that due to the failure on the part of the Petitioner, the Respondent repossessed the vehicle and also sold the same in auction and the sale proceeds were also received by the Respondent herein. 8. Further, the learned Cou....

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....o when the vehicle was re-possessed. The consideration had failed subsequently. Therefore, I have no hesitation to hold that, the cheque dated September 3, 1999 which was the subject matter of Annexure A1 complaint was not supported 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 1....

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....the learned Counsel appearing for the Petitioner as well as the learned Counsel appearing for the Respondent. 13. Considering the facts and circumstances of the case, this Court is of the view that where it is a hire purchase agreement or purchase on the basis of hypothecation, the same is laid down by the Kerala High Court based on the following principles: (i) The post-dated cheques issued by the hirer were supported by consideration at the time when they were issued, they had ceased to be so when the vehicle was re-possessed. The consideration had failed subsequently. (ii) The post-dated cheques in the hands of the owner had become instruments for which consideration had failed. (iii) As per Section 138 of Negotiable Instrument Ac....