Is the hirer of a motor vehicle liable to be prosecuted under Section 138 of the Negotiable Instruments Act after the vehicle has been repossessed by the owner and the hire purchase agreement has been terminated? This interesting question has arisen in the following facts and circumstances.

2. The petitioner entered into a “hire purchase agreement” with respondent No.2 on June 28, 1997 for purchase of a motor vehicle on the basis of the terms and conditions incorporated in Annexure A8 agreement. The hirer (the petitioner) agreed to pay the “hire” to the owner (respondent No.2) in 48 equal monthly instalments. The hirer handed over post-dated cheques to the owner towards the instalments payable as hire. There is no dispute that the hirer committed default in repayment of the hire. According to the hirer, default occurred in view of the dispute about “additional financial charges” levied by the owner against the terms of the agreement.

3. Annexure A1 complaint was filed by respondent No.2 against the petitioner/hirer alleging that the cheque dated September 5, 1999 for a sum of Rs.20034/- issued by her in favour of respondent No.2/owner was dishonoured when it was presented for encashment. The complaint was filed after complying with all statutory formalities and within the statutory period of limitation.

4. It is contended by learned counsel for the petitioner that the proceedings initiated under Annexure A1 complaint is a sheer abuse of process. The cheque was presented for encashment after the vehicle was re-possessed by the owner. By such re-possession the hire purchase agreement had been “determined ipso facto”. Under such circumstances, the owner has not entitled to present any of the post dated cheques for encashment, since those cheques had become unenforceable. The cheques were not supported by any consideration and as such there was no legally enforceable debt or liability.

5. However, it is contended by learned counsel for respondent No.2/complainant that as long as the hire remained unpaid, the owner is entitled to recover the liability by encashing the cheques issued by the hirer towards payment of the hire. The post dated cheques issued by the hirer are for the discharge of the liability which is a legally enforceable debt as provided under section 138 of the act. If the cheque is dishonoured, the penal consequences as provided under the Act would follow. Unless and until the debt or liability is discharged, the drawer of the cheque is liable to be prosecuted. Thus it is contended by the learned counsel that Annexure AI complaint filed against the petitioner is not liable to be quashed invoking the power of this Court under Section 482 of the Code of Criminal Procedure.

6. Heard learned counsel for the petitioner and respondent No.2.

7. It is not disputed by the petitioner/accused that 48 post dated cheques were handed over by her to the complainant/owner at the time when the hire purchase agreement was executed. It is also admitted that the cheque which is the subject matter of Annexure A1 complaint is one of the above 48 cheques. The said cheque was dated September 5, 1999.

8. But it is contended by learned counsel that the vehicle was re-possessed by the complainant in May 1999. The factum of seizure is admitted by the complainant also, though there is some confusion about the exact date. According to the petitioner, the vehicle was seized on May 18, 1999, whereas the complainant would contend that it was taken into custody on May 24, 1999. Anyhow, the fact remains that the vehicle was in the custody of the owner long before the cheque in question was presented for encashment in September 1999. It is therefore contended by the petitioner that the owner having exercised his option available under the agreement by effecting seizure of the vehicle, it was not open to him to present any of the post dated cheques for encashment thereafter, unless and until the dispute was settled as provided under the terms of t