At, High Court of Kerala
By, THE HONOURABLE MR. JUSTICE P.V. KUNHIKRISHNAN
For the Appellant: P. Martin Jose, P. Martin Jose, P. Prijith, Thomas P. Kuruvilla, Advocates. For the Respondent: R1, P. Sathisan, Advocate, R2, K.B. Udayakumar, Public Prosecutor.
1. The appellant is the complainant in C.C.No.558/2000 of the Judicial First Class Magistrate Court-I, Ernakulam. The complainant filed the above case before the lower court for prosecuting the 1st respondent herein, alleging the offence punishable under Section 138 of the Negotiable Instruments Act. (Hereinafter the parties are mentioned in accordance to their rank before the trial court)2. The case of the complainant is that the complainant is a financing company carrying on the business of lending money. The accused availed financial assistance from the complainant company for the purchase of a TATA Bus bearing No.KL-10C/855. As per the agreement, the accused would discharge the amount with interest on monthly instalments. But he could not make payment from 7th instalment onwards. Hence, according to the complainant the liability reached upto Rs.87,600/-. The complainant contended that Ext.P1 cheque was issued by the accused in favour of the complainant towards the liability. When the cheque was presented before the bank, the same was dishonoured with an endorsement 'insufficient funds'. When statutory notice was issued, it was returned 'unclaimed'. Hence the complaint was filed.3. To substantiate the case, PW1 was examined on the side of the complainant. Exts.P1 to P7 are the exhibits.4. After going through the oral and documentary evidence, the trial court found that the accused is not guilty under Section 138 N.I Act and he was acquitted under Section 255(1) Cr.P.C. Aggrieved by the above acquittal order, this appeal is filed.5. Heard the counsel for the complainant and the counsel for the accused. I heard the learned Public Prosecutor also.6. The counsel for the complainant submitted that, this is a case in which the complainant proved the offence under Section 138 N.I Act. The counsel submitted that there is a presumption in favour of the complainant under Section 139 of the Negotiable Instrument Act. The counsel submitted that, trial court has not considered the same while acquitting the accused.7. The counsel for the accused submitted that the trial court after considering the entire oral and documentary evidence acquitted the accused. The counsel submitted that there is nothing to interfere with the acquittal order. According to the counsel, it is a well considered judgment and this Court may kindly confirm the acquittal order of the trial court.8. The point for consideration in this appeal is whether the accused committed the offence under Section 138 of N.I Act.9. 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 Rs.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 discussion of the trial court is there in paragraph 10 of the impugned judgment.“10. Sale proceeds of the vehicle would not suffice to cover the entire liability of the accused towards the complainant. What was the liability of the accused after seizure shall be ascertained on adjudication. Unilateral fixation by the complainant is not fare. The complainant ought to have appointed arbitrators or approach the Civil court to ascertain the liability since it is not a liquidated one. The financier could not fix the liability according to his whims and fancy. Therefore, further liability of the accused subsequent the seizure is absolutely material concerning this cheque.11. Cheque would be issued for discharging a liability and with the consideration. Here the consideration or liability is only for discharging the dues of Rs.87,600/- towards the complainant which is the due accrued in instalment payment. After satisfying this claim, the cheque becomes cancelled or becomes discharged.12. Remedy of seizure could be exercised only on default from the side of accused. Issuance of cheque is for payment. It was dishonoured. After exercising the right in pursuance of default, whether the complainant is entitled to proceed in furtherance of Ext.P1 cheque is the main question requiring attention in this case.13. Correct perspective of cheque is necessary to find out this issue. The factual matrix of issuance of cheque and seizure throws doubt about the impact of cheque against the accused on exercising simultaneously both rights. Cheque is defined U/s.6 of Negotiable Instruments Act. For getting a clear picture of cheque, Sec.5, 6 and 43 of N.I Act and Sec.2(d) of Contract Act would be ransacked. Especially cheque is an unconditional order to pay certain some of money to the payee or bearer and it should be supported with consideration. A cheque without consideration is an invalid document contemplated U/s.43 of N.I Act. Consideration would be stated in Sec.2(d) of Contract Act.14. Whether the cheque is conditional or unconditional is the first thing to be looked into. In case a cheque was issued for discharging a liability, the existing liability would be merged with the cheque and no action would be taken in furtherance thereon. This view was upheld by the Hon'ble Supreme Court in the decision reported in 2004(1) SCC Page 12. Therefore, issuance of Ext.P1 cheque would be deprived the right of the complainant to seize the vehicle on the basis of hire purchase agreement after issuing cheque. But revival of the right would prove that the issuance of a cheque is a conditional one. In such circumstance, the cheque shall be treated to be waste paper as reported by Hon'ble Supreme Court in 1954SC 429. That means, on exercising right of seizure provided in hire purchase agreement, the complainant treated it as an invalid document. Therefore, the complaint is estopped from proceeding on the basis of Ext.P1 cheque.15. Sec. 5 of Negotiable Instruments Act states that cheque is a bill of exchange and it is an unconditional undertaking to pay some money. But seizure of the vehicle after dishonouring the cheque would prove that it was a conditional payment and not an absolute one. Conditional payment would not give any character of cheque to this Ext.P1 document. Therefore, Ext.P1 cheque would lose its character of cheque on exercising seizure provided in hire purchase agreement. The aforesaid ruling vindicates that the cheque issued is only a conditional payment.16. Conditional payment and absolute payment absolutely depends upon the intention of the parties at the time of issuing the same. The seizure subsequent dishonour of Ext.P1 cheque would prove that it was a conditional payment and not an absolute one. Therefore, the cheque is not a negotiable instrument.17. Whether the cheque is supported with consideration is the next question to be looked into. Consideration means the promise or any other person had done or abstained from doing any act at the desire of the promise that act or abstain is called consideration for the promise. Here the accused issued Ext.P1 cheque for discharging his liability towards the complainant. Complainant would give valid discharge to the liability of the accused towards him. That means the liability would come to an end on accepting the cheque. Otherwise the element of consideration would disappear in the transaction. Besides this a reciprocal consideration should be performed from the part of the complainant by giving discharge to the liability of the accused existing in the hire purchase transaction. In case of absolute payment the original liability in the hire purchase transaction come to an end on accepting cheque. In case of dishonour, the liability of the drawer arise out of the cheque and not on the basis of original transaction. Exercising any right in original transaction absolutely affect the consideration since it implies that the cheque was handed over with a condition reserving the right of the complainant
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to seize the vehicle as provided under hire purchase agreement. That means the consideration is only a conditional one. When the complainant went back the original consideration the cheque become a waste paper as observed by Hon'ble Supreme Court in the Ruling reported in 1954 S.C.429. Therefore, the cheque is absolutely invalid on account of the failure of consideration.”10. I see no reason to interfere with the above finding of fact by the trial court. 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. I see no reason to interfere with the finding of fact by the trial court.Therefore, this Criminal Appeal is dismissed, confirming the judgment dated 9.9.2004 in C.C.No.558/2000 of the Judicial First Class Magistrate Court-I, Ernakulam.