STATE OF KERALA v. SUNDARA RAMA & CO. — 1985 DIGILAW 185 (KER)

Judgment :- 1. In this appeal by defendants 3 and 4, the State of Kerala and the Assistant Excise Commissioner, Trivandrum, the only question raised by the learned Government Pleader appearing on behalf of the appellants is relating to the correctness of the decision of the lower court granting a decree declaring the confiscation of Ambassador Car KLV 5682 belonging to the 1st defendent as illegal and void. 2. The suit was by the financier who had advanced a sum of Rs. 10,000/- to the 1st defendant under a hire purchase agreement between them dated 25-11-1974 produced as Ext. Al in this case. According to the plaintiff the first defendant had defaulted repayment of the amount in instalments as required by Ext. Al and a sum of Rs. 10,030/- is due from him. The second defendant is the guarantor for repayment of the amount to the plaintiff as per the hire purchase agreement Ext. Al. Defendants 3 and 4 are impleaded for the reason of an order of confiscation of the vehicle to the Government passed by the fourth defendant on 29-11-1975 for offences committed under the Abkari Act. 3. In this appeal by defendants 3 and 4 we are not concerned with the contentions raised by defendants 1 and 2 in the suit. The appellants raised the contention that the vehicle was involved in an offence under S.55 and 58 of the Abkari Act in that at the time of its seizure it was found transporting twelve tins of illicit arrack, each tin containing 18.5 litres. Proceedings for confiscation of the goods and the vehicle were initiated as per S.67 of the Abkari Act, after due notice to the first defendant from whom it was seized. An order confiscating the vehicle to the Government was passed by the fourth defendant, the Assistant Excise Commissioner, Trivandrum on 29-11-1975 and by virtue of the said order which has become final, the vehicle in question has vested in the Government free of all encumbrances. The first defendant had challenged the order of confiscation before this Court in O. P. No. 3347 of 1975. The O. P. was dismissed and the order of dismissal was confirmed in writ appeal No. 448 of 1975. A certified copy of the judgment in writ appeal was produced as Ext. B2. 4. The court below decreed the suit for recovery of Rs. The O. P. was dismissed and the order of dismissal was confirmed in writ appeal No. 448 of 1975. A certified copy of the judgment in writ appeal was produced as Ext. B2. 4. The court below decreed the suit for recovery of Rs. 10,030/- with interest at 18 per cent per annum on Rs. 8,500/- from the date of the suit against defendants 1 and 2 personally and from their assets including the Ambassador Car bearing registration No. KLV 5682. The plaintiff was also granted a decree declaring that the order of confiscation of the vehicle is null and void for the reason that no notice of the proceedings was given to the plaintiff. It is against this part of the decree that defendants 3 and 4 have come up in appeal. 5. We find it difficult to sustain the decree passed by the court below in so far as it has declared the confiscation illegal and has allowed the plaintiff to recover the amounts due from defendants 1 and 2 by proceeding against the Ambassador car KLV 5682. The jurisdiction of the 4th defendant to initiate proceedings and pass an order of confiscation of the vehicle involved in an abkari offence is not specifically questioned in the plaint. The jurisdiction cannot also be questioned in view of S.67B of the Abkari Act as per which the fourth defendant, Assistant Excise Commissioner, is invested with jurisdiction to take confiscation proceedings by notification issued by the Government in that behalf. The only ground on which a declaration is sought for is that the proceedings of the fourth defendant culminating in the order of confiscation of the vehicle were without notice to the plaintiff. Ext. BI is the certificate of registration of the vehicle which contains an entry relating to the hire purchase agreement between the plaintiff and the first defendant. Ext. BI further shows that the first defendant was already the owner of the vehicle on the day on which the hire purchase agreement was entered into with the plaintiff. S.67C of the Abkari Act enjoins a notice to be issued to the person from whom the property is seized. The plaintiff has no case that the first defendant from whom the property was seized was not given notice of the proceedings. S.67C of the Abkari Act enjoins a notice to be issued to the person from whom the property is seized. The plaintiff has no case that the first defendant from whom the property was seized was not given notice of the proceedings. As adverted to earlier, the proceedings for confiscation of the vehicle was after due notice to the first defendant who had also challenged the order of confiscation before this Court as is evidenced by Ext. B2. Sub-s. (2) of S.67C enables the owner of the vehicle to prove to the satisfaction of the authorised officer that the vehicle was used in carrying illicit liquor without the knowledge or connivance of himself or of his agent or the person in charge of the vehicle and that they had taken all necessary and reasonable precautions against the use of the vehicle for any such purpose. The contention advanced on behalf of the plaintiff is that for the reason of the hire purchase agreement Ext. Al the plaintiff has become the owner of the vehicle and unless he is notified of the proceedings for confiscation, his right to prove that the vehicle was used for the transportation of illicit liquor without the knowledge or connivance of himself or his agent or the person in charge of the vehicle cannot be exercised. 6. The principal question, therefore, is as to whether the plaintiff has become the owner of the vehicle for the reason of the hire purchase agreement Ext. Al between the plaintiff and defendants 1 and 2. In Sundaram Finance Ltd. v. State of Kerala (AIR 1966 SC 1178) Shah J. stated on behalf of himself and Sikri J. at page 1185: "(23) A hire-purchase agreement is normally one under which an owner hires goods to another party called the hirer and further agrees that the hirer shall have an option to purchase the chattel when he has paid a certain sum, or when the hirerental payments have reached the hire-purchase price stipulated in the agreement. But there are variations when a financier is interposed between the owner of the goods and the customer. The agreement, ignoring variations of detail, broadly takes one or the other of two forms: (1) when the owner is unwilling to look to the purchaser of goods to recover the balance of the price, and the financier who pays the balance undertakes the recovery. The agreement, ignoring variations of detail, broadly takes one or the other of two forms: (1) when the owner is unwilling to look to the purchaser of goods to recover the balance of the price, and the financier who pays the balance undertakes the recovery. In this form, goods are purchased by the financier from the dealer, and the financier obtains a hire-purchase agreement from the customer under which the latter becomes the owner of the goods on payment of all the instalments of the stipulated hire and exercising his option to purchase the goods on payment of a nominal price. The decision of this Court in AIR 1965 SC 1082 dealt with a transaction of this character. (2) In the other form of transactions, goods are purchased by the customer, who in consideration of executing a hire-purchase agreement and allied documents remains in possession of the goods, subject to liability to pay the amount paid by the financier on his behalf to the owner or dealer, and the financier obtains a hire-purchase agreement which gives him a license to seize the goods in the event of failure by the customer to abide by the conditions of the hire-purchase agreement." It is further stated at the same page: "(24). But a hire-purchase agreement is a more complex transaction. The owner under the hire-purchase agreement enters into a transaction of hiring out goods on the terms and conditions set out in the agreement, and the option to purchase exercisable by the customer on payment of all the instalments of hire arises when the instalments are paid and not before. In such a hire-purchase agreement there is no agreement to buy goods; the hirer being under no legal obligation to buy, has an option either to return the goods or to become its owner by payment in full of the stipulated hire and the price for exercising the option. This class of hire-purchase agreement must be distinguished from transaction in which the customer is the owner of the goods and with a view to finance his purchase he enters into an arrangement which is in the form of a hire-purchase agreement with the financier, but in substance evidences a loan transaction, subject to hiring agreement under which the lender is given the license to seize the goods." The present case falls under the latter category of cases referred to above. We have already adverted to Ext. BI, registration certificate relating to the vehicle, to show that the first defendant was already the owner of the vehicle on the date on which the hire-purchase agreement Ext. Al was entered into. As per Ext. Al the plaintiff had advanced a sum of Rs. 10,000/-to be repaid in monthly instalments at the rate of Rs. 500/- and on default of payment as aforesaid with a right conferred on the plaintiff to seize the vehicle. Construed in the light of the decision of the Supreme Court we have no doubt in our minds that Ext. Al evidences only a loan transaction on the security of the vehicle despite the device adopted to call the transaction a 'hire-purchase agreement'. True, the agreement had authorised the financier to seize the vehicle on default of payment of the instalments by the first defendant. Neither for that reason nor for the reason of the financier being called the 'owner', it is possible to hold that the ownership of the vehicle was transferred to the plaintiff and had vested in him. The plaintiff is not, therefore, the owner of the vehicle entitled to prove under sub-s. (2) of S.67 C that the transport of illicit arrack in the vehicle was without the knowledge or connivance of himself, his agent or any person in charge of the vehicle. The seizure in the present case was from the first defendant himself who at the time of the seizure was also in charge of the vehicle. He had due notice of the proceedings for its confiscation. Even if an opportunity is given to the plaintiff, it is beyond our comprehension how he can prove that the transport of illicit arrack in the vehicle was without the knowledge or connivance of the person in charge of the vehicle and that he had taken all reasonable and necessary precautions against the use of the vehicle for the illicit purpose. 7. Construing a similar provision for confiscation contained in S.168(8) of the Sea Customs Act, 1878 the Supreme Court in Collector of Customs, Madras v. D. Bhoormull (AIR 1974 SC 859) stated thus at page 863: "22. 7. Construing a similar provision for confiscation contained in S.168(8) of the Sea Customs Act, 1878 the Supreme Court in Collector of Customs, Madras v. D. Bhoormull (AIR 1974 SC 859) stated thus at page 863: "22. A reading of S.167(8) and the related provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation under the first part of the entry in column(3) of clause(8) of the Schedule, is enforced against the goods irrespective of whether the offender is known or unknown. But, imposition of the other kind of penalty, under the second part of the entry in column 3, is one in personam: such a penalty can be levied only on the "person concerned" in any offence described in column 1 of the clause. 23. Goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without ascertaining who is their real owner or who was actually concerned in their illicit import." We are fully satisfied that the fourth defendant had jurisdiction under S.67B of the Abkari Act to confiscate the vehicle and the order of confiscation is not vitiated for want of notice to the plaintiff. 8. Counsel for the 1st respondent relies on the decisions in State of M.P. v Azad Bharat Finance Co. (AIR 1967 SC 276), Sat Pal v. State of Haryana (AIR 1979 SC 1767) and Vamadevan Pillai v. State of Kerala (1982 KLT 518) in support of the proposition that it is not obligatory or necessary in every case to confiscate the goods or the vehicle involved in an offence under the Abkari Act. Counsel submits that the expression 'may' used in sub-s. (2) of S.67B gives a discretion to the authorised officer to order confiscation and unless it is shown that the discretion had been exercised properly and correctly with due application of mind, the order cannot be sustained in law. No such contention is seen raised either in the pleadings or in the court below. The plaintiff has not even chosen to produce the order confiscating the vehicle. There is a presumption in illustration (e) of S.114 of the Indian Evidence Act "that judicial and official acts have been regularly performed." The plaintiff has placed no material before the court to rebut the presumption of regularity of the official act of confiscation of the vehicle involved in this case. There is a presumption in illustration (e) of S.114 of the Indian Evidence Act "that judicial and official acts have been regularly performed." The plaintiff has placed no material before the court to rebut the presumption of regularity of the official act of confiscation of the vehicle involved in this case. We have also no material to hold that the authorised officer had not applied his mind in passing the order for confiscation of the vehicle It is also seen that the order confiscating the vehicle was challenged by the first defendant before this Court and this Court declined to interfere as can be seen from Ext. B2 for the reason that there is provision for a statutory appeal under S.67E of the Abkari Act. For the aforesaid reasons the decree of the court below declaring the confiscation of the Ambassador car KLV 5682 as without jurisdiction and setting aside the order of confiscation is vacated. That part of the decree allowing the plaintiff to proceed against the vehicle for recovery of the amounts due to him is also vacated. We make it clear that we are not interfering with the decree against defendants 1 and 2. The appeal is allowed as indicated above. There will be no order as to costs.