- (1.)This appeal is directed against the judgment of the learned VI Metropolitan Magistrate, Hyderabad, in C.C. No.884 of 1996 wherein the respondent herein was acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act. The case of the appellant (complainant) is that the respondent (accused) sought for financial assistance to acquire computer hard disk drives, UPS, on line etc., on hire purchase basis and accordingly the appellant herein advanced an amount of Rs.7,35,120/- to the respondent and entered into hire purchase agreement on 10-4-1995 with him for a period of three years. The respondent undertook to pay the entire amount financed by the appellant in 36 monthly instalments @ Rs.20,460/-. While so, the respondent paid the instalments for one year and the subsequent instalments were not paid. It is alleged that when the cheques for the months of April, May and June, 1996 were presented by the appellant with their banker, the same were dishonored with an endorsement "insufficiency of funds". Pursuant to that, the appellant after following the procedure as contemplated under Section 138 of the Negotiable Instruments Act filed the present complaint.
(2.)In order to prove the case, the complainant himself was examined as P.W.1 and his Accountant was examined as P.W.2. Exs.P.1 to P-22 were marked on behalf of the complainant. On a perusal of the entire evidence on record, both oral and documentary, the court below came to the conclusion that there is no legally enforceable debt and as such it does not satisfy the requirements of Section 138 of the Negotiable Instruments Act and accordingly acquitted the accused i.e., the respondent herein. Hence, this appeal. The contention of the learned counsel for the appellant Mr. Viswanatha Reddy is that the respondent issued 36 post-dated cheques out of which only 12 cheques were honoured and the cheques issued for the months of April, May and June 1996 were dishonoured. According to him, the cheques were issued in discharge of a legally enforceable debt and when the same were presented and bounced, it clearly attracts the provisions of Section 138 of the Negotiable Instruments Act and that the finding of the court below that there is no legally enforceable debt and the cheques are issued only by way of collateral security is, therefore, not correct. Heard the learned Public Prosecutor. No doubt, it is true that the cheques issued by the respondent are towards discharge of the loan amount advanced by the appellant herein and they are not issued by way of any collateral security. Because, if really the cheques are issued by way of collateral security, the question of presenting the same for payment in the bank in the months of April 1995 to March 1996 would not have happened. But, the judgment of the court below is not liable to be setaside on that ground. From the fact that the appellant herein advanced amount to the respondent herein and in discharge of the said loan amount, the respondent has given 36 post-dated cheques, it can safely be presumed that there was a legally enforceable debt between the parties and the cheques are issued only in discharge of such legally enforceable debt. But subsequently i.e., on 8-4-1996, the respondent herein addressed a letter (marked as Ex.P-18) informing the appellant herein that owing to operational difficulties and immense competition in the computer education field, they intended to reduce their level of operations and overheads and consequently they wanted the hire purchase agreement with the appellant to be terminated with effect from 25-4-1996. In view of the above, the respondent also requested the appellant through Ex.P-18 for return of the post-dated cheques issued for the months from May 1996 to March 1998. From the above document Ex.P-18, it can safely be concluded that the contract entered into between the parties is no more in existence with effect from 25-4-1986 and in which case, under the hire purchase scheme, it is always open for the appellant to sell the goods hypothecated to it i.e., the hard discs etc., for whose purchase loan amount was advanced to the respondent, and realize the remaining loan amount. Thus, by virtue of the Ex.P-18-letter, the contract between the parties was terminated and by virtue of the said termination of the contract, it can be construed that there is no debt much less any legally enforceable debt, within the meaning of Section 138 of the Negotiable Instruments Act, with effect from the date on which the contract was terminated. Thus, the post-dated cheques in question issued by the respondent herein cannot be said to have been issued in discharge of any legally enforceable debt.
(3.)For the foregoing reasons, I see no merit in the appeal. The appeal is accordingly dismissed.