PAUL DAVIS Vs. GUJARAT LEASE FINANCING LTD.

JUDGEMENT

(1.) A complaint was filed against him by first respondent herein, alleging offence under Section 138 of the Negotiable Instruments Act ('the Act', for short) in respect of two cheques alleged to have been issued by petitioner in favour of the first respondent. The cheques were allegedly issued in connection with the purchase of a vehicle. Complainant/first respondent is the financier. The vehicle was purchased by petitioner from complainant based on a hire purchase agreement. Petitioner allegedly issued the cheques towards discharge of a legally enforceable debt in favour of complainant. But the cheques when presented were returned as unpaid. Thereafter, complying with the formalities under the provisions of the Act, the complaint was filed against petitioner.

(2.) ACCORDING to petitioner, cheques are not covered by consideration. Those were given as security and those cannot be used against the undertaking given by first respondent. The cheques were not liable to be encashed or presented by the first respondent, since the vehicle purchased on hire purchase agreement was sold by petitioner, to third party with the knowledge and consent of the first respondent. As the sale was with the consent and knowledge, cheques were undertaken not to be presented. Petitioner also filed suits against complainant as well as the third party who purchased the vehicle.

(3.) LEARNED Counsel appearing for petitioner placed reliance on the decision reported in Megaphone Number v. Bharathan, 1995(1) KLT 591, in support of his contention and argued that stay of criminal proceedings can be granted in this case. The relevant portion from the above decision can be extracted hereunder: