Post-repossession, cheques issued for repayment become unenforceable due to lack of consideration under Section 138 of the Negotiable Instruments Act.

1.The petitioner approaches this Court with a prayer to quash the case in S.T.C.No.486 of 2004 on the file of the Judicial Magistrate No.III, Madurai.  

2. The brief facts of the case are as follows:  
The petitioner herein is an accused and the defacto complainant is the respondent herein. The petitioner has availed a loan for a sum of Rs.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 Rs.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 Rs.95,000/- out of Rs.6,00,000/-, the petitioner stop the payment of cheques and thereafter the respondent disbursed the balance amount of Rs.95,000/-. The respondent contrary to the schedule of payment has tendered the cheque bearing No.448009 dated 23.04.2001 and cheque No.448010 dated 14.05.2001 instead of 29.05.2001. Since the petitioner was availing over draft facility in bank, the cheques were honoured even though it was tendered on prior to the actual schedule date. But, the respondent bank has forcibly taken custody of the lorry bearing No. No.TN 69 E 4657. The petitioner was not able to repay the loan amount as per the schedule.  

4. Further, it is the case of the petitioner that the respondent bank has sold the vehicles belong to the petitioner and adjusted the sale proceeds in the loan amount and informed the same to the petitioner. Hence, the petitioner is not liable to pay any amount and there is no liability exists at the time of presenting the impugned cheques.  

5. The respondent had filed a private complaint under S.138 of Negotiable Instruments Act before the Judicial Magistrate No.1, Madurai, where the same was taken cognizance in C.c.No.294 of 2003. Thereafter, the petitioner filed a petition under S.204 Cr.P.C to rescind the process as there is no legal liability exists, which was dismissed by the learned Judicial Magistrate concerned. Hence, the petitioner approaches this Court to quash the complaint filed in S.T.C.No.486 of 2004.  

6. The main contentions raised by the learned counsel appearing for the petitioner is that as per the hypothecation agreement between the petitioner and respondent in oder 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 counsel appearing for the petitioner submitted that the said earlier post dated cheques, on the basis of the amount liable to be paid at the time of agreement, cannot be utilised by the respondent herein after the recovery of the vehicle and the same is disposed of and the respondent received