TaxTMI 
TaxTMI 
2022 (1) TMI 800
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the eyes of law. 2. The petitioner states that he had purchased the vehicle being Maruti Swift bearing Registration No.GJ-06-FK-4360, availing the financial assistance from respondent no.2 - Shriram Transport Finance Company Ltd. by Hire Purchase Agreement in the year 2013. The value of the car was Rs. 6,29,263/-, out of which the financial assistance availed by the petitioner was Rs. 4,90,000/-, which the petitioner was to pay to respondent no.2 in 48 equal monthly installments along with interest of Rs. 2,45,082/-. The petitioner states that seven cheques in the form of security were issued while entering into the Hire Purchase Agreement in the year 2013. It is stated that it was specifically agreed upon that, the cheques would be treated as security. 2.1 The petitioner further states that in pursuance of the Hire Purchase Agreement, he had paid Rs. 5,35,830/- against the total amount of Rs. 7,35,082/- and Rs. 1,99,252/- was the outstanding amount as on December, 2018. It is stated that respondent no.2 had not issued few receipts against the payments made and as per their accounts, the outstanding total sum was Rs. 4,13,350/-. The petitioner states that because of the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....refore there would not be any legally enforceable debt for respondent no.2 to present any cheque before the Bank given by way of security. Mr. Gajjar, therefore, submitted that any criminal proceeding for dishonour of Cheque No.477285 would not be towards any legally enforceable debt prior to the complaint dated 22.02.2019. The possession of the vehicle was taken away from the petitioner and the said vehicle was sold to Kirtiji Ranchhodji Solanki and the sale proceeds were adjusted towards the outstanding debt. 3.1 Mr. Gajjar further submits that the complaint has been filed by some power of attorney holder, since the said person has no knowledge of the transaction undertaken by the petitioner and the respondent no.2, the complaint would not be maintainable. 3.2 Mr. Gajjar to fortify his submissions, has relied on the judgments; (i) Rajkumar Sharma Vs. Shriram Finance Co. Ltd., reported in 2015 (4) Banking Cases 38: [2015 (2) RCR (Cr.) 915] (ii) Shriram Transport Finance Co. Ltd. Vs. Akhilabanu, rendered in Criminal Appeal No.2722/2009 on 11.02.2015 (iii) Sudha Beevi Vs. State of Kerala, reported in (2004) Cr. L.J. 3418. 4. Countering the arguments, Mr.Manish J.Patel, lear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plaint dated 22.01.2019, it is stated by the respondent no.2 - Company that, under instructions of the accused, the complainant - Company had presented Cheque No.477285 of State Bank of India Ramakaka Temple Road Branch, dated 13.12.2018 for the amount of Rs. 8,34,941/-, for clearance in the account maintained with Axis Bank, Sayajigunj Branch and the same came to be returned unpaid with remarks/reason "Funds Insufficient" vide return memo dated 17.12.2018, which was received by the complainant - Company on 19.12.2018. The complainant before the learned Magistrate further urged that it had persuaded the accused and had made a call to inform that the cheque has been returned by the Bank because of fund insufficiency and despite assurance, neither the petitioner turned-up to ensure the payment nor picked up phones. Thus, from the doubtful behaviour of the accused, the Company came to a conclusion that accused had dishonesty in his mind for deceiving and cheating the Company and the entire behaviour amounted to be offence under Section 420 of IPC as well. 6. The whole of the averments in the complaint by the respondent Company does not disclose the fact that on 28.12.2018, the vehi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure of advance payment indicates that at the time of drawal of cheque, there was no existing liability. If at the time of entering into a contract, it is one of the conditions of the contract that the appellant purchaser had to pay the amount in advance and there is breach of such condition then the appellant purchaser may have to make good the loss that might have occasioned to the seller but that does not create a criminal liability under Section 138. For a criminal liability to be made out under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque." 7.1 In the case of Rajkumar Sharma Vs. Shriram Finance Co. Ltd. (supra), Chhattisgarh High Court has referred to the facts of the case, observing that petitioner therein had entered into Hire Purchase Agreement with respondent - Shriram Transport Finance Company Ltd. and had obtained loan for the purchase of a Truck. As per the agreement, the petitioner had to make installments and petitioner had also given postdated Cheques by way of security, so that the same could be utilized by the company in the event, if any defaults in paying the monthly installment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed and the complaint case initiated by the Respondent against the Petitioner deserves to be and is hereby quashed." 8. Here, in the instant case, prior to the filing of the criminal complaint before the concerned Judicial Magistrate, the financial institution, Shriram Transport Finance Company Ltd., had admittedly got repossession of the vehicle, therefore, the agreement entered into between the parties would get determined ipso facto by such repossession. 8.1 The Kerala High Court in case of Sudha Beevi Vs. State of Kerala (supra), raised a short question to the effect that, whether postdated Cheques issued by the hirer at the time of execution of the agreement continue to remain as valid instruments supported by consideration once the agreement gets "determined ipso facto"? While giving the meaning of consideration, it was observed that consideration is sine quo non for any legally enforceable contract. The facts of the case, as observed in the case of Sudha Beevi (supra) revealed that Cheque was presented for encashment after the vehicle was seized by the complainant. It is was observed that, going by the terms of agreement, it stood "determined ipso facto" on default of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or repayment of the hire would become instruments without consideration as the consideration has failed. In such circumstances, the remedy available to the owner is to realise the balance hire due from the hirer or to sue for damages for the breach of the agreement. 8.5 It is stated by advocate Mr. Gajjar that the complainant Company had failed to produce the copy of the Hire Purchase Loan Agreement. It was necessary for the complainant Company to have produced the original Hire Purchase Agreement for the perusal of the trial Court Judge. The complainant - Company, however, had disclosed before the Judicial Magistrate, First Class, Vadodara, in the complaint that, the Company is a Non-Banking Financial Institution and its business was Hire Purchase of vehicle, which suggests that the agreement entered into would have been a Hire Purchase Agreement and the terms and conditions has been decided. The act of repossessing the vehicle has determined the agreement and therefore, the cheque in the hands of the Company would be an instrument without consideration. The cheque, which were accepted by the Company towards advance of repayment would become an instrument for which consideratio....