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2024 Supreme(Online)(GUJ) 15441
HIGH COURT OF GUJARAT
M. K. THAKKER, J
SHRIRAM FINANCE LTD(KNOW AS SHRIRAM TRANSPORT FINANCE CO. LTD) THRO RATHOD PRITHVIRAJSINH BHAGWANJI – Appellant
Versus
STATE OF GUJARAT – Respondent
R/CRIMINAL MISC.APPLICATION (FOR LEAVE TO APPEAL) NO. 7322 of 2024 In F/CRIMINAL APPEAL NO. 14320 of 2024
MR MANISH J PATEL(2131), MS NAMRATA R MULCHANDANI(9956), MR.JAY MEHTA, APP
Postdated cheques lose validity once the underlying agreement is terminated due to default and repossession, as no consideration exists for the cheque.
Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138 and 139 - Acquittal of accused in a cheque dishonor case - Complainant lent Rs.8,40,000/- for vehicle purchase, cheque issued was dishonored - Trial court acquitted accused without cogent reasons - Court emphasized that postdated cheques lose validity once the agreement is terminated due to default and repossession - Acquittal upheld as no consideration existed for the cheque post-resale of the vehicle. (Paras 1, 7, 9)
(B) Presumption of consideration - Under Section 118, every negotiable instrument is presumed to be made for consideration unless proven otherwise - The court reiterated that the presumption does not apply when the underlying agreement has been terminated. (Paras 4, 5)
Facts of the case:
The complainant company lent amounts for vehicle purchase, which was later repossessed and sold, leading to the issuance of a cheque that was dishonored. The trial court acquitted the accused, leading to this appeal.
Findings of Court:
The court found that the cheque was without consideration due to the termination of the agreement upon repossession of the vehicle.
Issues: The main issue was whether the cheque issued after the repossession of the vehicle was valid and enforceable.
Ratio Decidendi: The court ruled that once the agreement is terminated due to default, postdated cheques cannot be presented for encashment, reaffirming that consideration is essential for a valid negotiable instrument.
Result: Application for leave to appeal refused.
| Table of Content |
|---|
| 1. loan for vehicle purchase (Para 1 , 2 , 3) |
| 2. relevant provisions of the n.i. act (Para 4 , 5 , 6 , 7) |
| 3. validity of postdated cheques (Para 8 , 9 , 10) |
ORAL ORDER
1. This application is filed by the applicant-original complainant challenging the judgment and order of acquittal dated 15.03.2024 passed by the learned 2nd Additional Civil Judge & Judicial Magistrate First Class, Bhuj at Kachchh in Criminal Case No.3476 of 2019 acquitting the respondent-accused from the offence punishable under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the “N.I.Act”).
2. It is the case of the complainant that complainant company is carrying the business of finance for the purchase of vehicles. On demand of the accused, the complainant company lent the amount of Rs.8,40,000/- on 11.03.2016 for the purchase of vehicle bearing No.GJ- 12-AT-8982. In addition to the above amount for the purchase of tyres an amount of Rs.25,000/- and for the payment of the insurance premium further amount of Rs.46,356/- was lent. The installment was fixed up to 05.03.2020. On making default, the vehicle was repossessed and it was sold on 26.03.2018 and thereafter, cheque for the remaining amount of the debt issued for the amount of Rs.8,40,000/- on 19.08.2019. On depositing the same it was dishonoured with an endorsement of “kindly contact drawer/drawee bank and pleasen” and on following due procedure under the N.I.Act a private complaint came to be filed. To substantiate the allegation against the respondent- accused, in addition to the deposition of the complainant below Exh.4, 17 other documentary evidences were produced. At the end learned trial court after considering the evidence has acquitted the respondent- accused from the charges, which is subject matter of challenge before this Court.
3. Heard learned advocate Mr.Manish Patel for the applicant-original complainant.
3.1. Learned advocate Mr.Patel submits that though execution of the cheque is not disputed, neither the signature was challenged and though the statement of account produced below Exh. 19 (c) showing the amount of debt has not been disputed by the respondent- accused. However, learned trial court without assigning cogent reasons has acquitted the respondent-accused from the charges and therefore, application for seeking leave to prefer an appeal requires to be allowed and appeal is required to be admitted.
4. Considering the submissions advanced by the learned advocate for the appellant, relevant provisions of the Negotiable Instruments Act are required to be re-looked, which are reproduced herein below:-
“Section 118 – Presumptions as to negotiable instruments Until the contrary is proved, the following presumptions shall be made:
1. of consideration; that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
2. as to date; that every negotiable instrument bearing a date was made or drawn on such date;
3. as to time of acceptance; that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
4. as to time of transfer; that every transfer of a negotiable instrument was made before its maturity;
5. as to order of indorsements; that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
6. as to stamp; that a lost promissory note, bill of exchange or cheque was duly stamped;
7. that holder is a holder in due course; that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an SP offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burthen of proving
