Divakaran v. Abdul Kalam — 1998 DIGILAW 619 (KER)

ORDER K.A. Mohamed Shafi, J. 1. Crl.M.C.No. 5410 of 1998 is filed by the petitioner in C.M.P. No. 4788/98 on the file of the Judicial First Class Magistrate's Court - I, Thamarassery in Crime No. 266/98 registered by Thamarassery Police challenging the order dated 15-10-1998 passed by the Judicial First Class Magistrate's Court - I, Thamarassery dismissing his application for interim custody of the vehicle involved in the case and granting custody of the vehicle to the accused in the case as per order in C.M.P. No. 4448/98. 2. Crl.M.C. No. 6427/1998 is filed by the accused in the same crime to quash the entire proceedings against him under S.482 of the Code of Criminal Procedure. 3. The Thamarassery Police registered Crime No. 266/98 against the accused/petitioner in M.C.No. 6427/98 under S.102 of the CrPC, and seized a Tata Sumo vehicle bearing Registration No. KL11-F-9455 and produced the same before the Judicial First Class Magistrate's Court, Thamarassery. The accused filed Crl.M.P. No. 4448/98 and the petitioner in Crl.M.C. No. 5410/98 filed Crl.M.P. No. 4788/98 for custody of the vehicle. The learned Magistrate by common order dated 10-10-1998 released the vehicle to the petitioner in Crl.M.P. No. 4448/98 on certain conditions stating that he is the registered owner of the vehicle from whom the vehicle was seized and repelled, the contention of the petitioner herein that he being the manager of the finance company is entitled to custody of the vehicle as the owner of the same by virtue of the hire purchase agreement entered into between the accused and the finance company. 4. Since both the Crl.M.Cs. are arising out of the same crime registered by the police, they are heard and disposed of by the common order. 5. It is the common case that the second respondent has registered a case in Crime No. 266/98 on 20-9-1998 under S.102 of the Code of Criminal Procedure and took the Tata Sumo Van bearing registration No. KL-11/F-9455 into custody on the suspicion that it is a stolen article. 5. It is the common case that the second respondent has registered a case in Crime No. 266/98 on 20-9-1998 under S.102 of the Code of Criminal Procedure and took the Tata Sumo Van bearing registration No. KL-11/F-9455 into custody on the suspicion that it is a stolen article. The petitioner in Crl.M.C. No. 5410/98, the financier has contended that when they exercised the right to repossess the vehicle as stipulated in the hire purchase agreement, the hirer who is the first respondent in Crl.M.C. 541 0/98 and the petitioner in Crl.M.C. 6427/98 got registered the above crime and got custody of the vehicle by the police by registering the above case under S.102 of the Code of Criminal Procedure. On the other hand, the petitioner in Crl.M.C. 6427/98 has contended that when the financier who is petitioner in Crl.M.C. 5410/98 and the first respondent attempted to take custody of the vehicle illegally ignoring the fact that the civil suit is pending between him and the financier with regard to the actual amount due from him to the financier on the basis of the hire purchase agreement, the police intervened, registered the above case and took the vehicle into custody. 6. The version of the police is that when it was known that there was some commotion in Thamarassery town with regard to the vehicle the police intervened and as the petitioners in these cases could not produce the documents to prove the rival claim regarding ownership they took custody of the vehicle on the suspicion that it was stolen article, after registering the case under S.102 of the CrPC. But in the common order passed by the learned Magistrate dated 15-10-1988 in C.M.P. Nos. 4448/98 and 4788/98 filed by the petitioners in these cases for custody of the vehicle, it is stated that the police had reported before the court that there is no objection in releasing the vehicle to the registered owner of the same. But in the common order passed by the learned Magistrate dated 15-10-1988 in C.M.P. Nos. 4448/98 and 4788/98 filed by the petitioners in these cases for custody of the vehicle, it is stated that the police had reported before the court that there is no objection in releasing the vehicle to the registered owner of the same. The petitioner in Crl.M.C. No. 6427/98 has produced along with the application, a copy of that report filed by the investigating officer in these cases before the Judicial First Class Magistrate's Court - I, Thamarassery stating that the petitioners herein have not produced documents to establish their rival claim for the vehicle and on investigation it is found that this case is of a civil nature and therefore the court can pass appropriate orders. Therefore, from the facts and circumstances of the case and the materials available on record, it is clear that the FIR registered in these cases under S.102 of the CrPC. and the seizure of the vehicle as stolen article in these cases, are absolutely illegal and unsustainable and as such the FIR registered in these cases under S.102 of the CrPC, and the seizure of the vehicle are liable to be quashed by invoking the provisions of S.482 of the CrPC. 7. It is the common case that there was a hire purchase agreement in respect of the vehicle between the 1st respondent in Crl.M.C. 5410/98 and the petitioner therein. According to the petitioner, being the financier of the vehicle, petitioner company is the owner of the vehicle and they are entitled to repossess the vehicle when the 1st respondent hirer committed default of payment of the hire purchase installments as per the terms and conditions of the hire purchase agreement. Therefore, according to them, they are the persons entitled to custody of the vehicle and the learned Magistrate has committed manifest error in granting interim custody of the vehicle to the 1st respondent and rejecting their application for custody of the vehicle. 8. But the 1st respondent has contended that he has only borrowed money from the petitioner and there was only a credit transaction between the 1st respondent and the petitioner financier and though the document evidencing the transaction between the 1st respondent and the petitioner is styled as hire purchase agreement, it is only a loan transaction. Therefore, the financier cannot repossess the vehicle under law. Therefore, the financier cannot repossess the vehicle under law. The 1st respondent has also contended that the vehicle has been all along in his possession and the petitioner has not even exercised their alleged option to repossess the vehicle. Therefore, even if the petitioner is entitled to repossess the vehicle as per the terms of the agreement, since the petitioner has not exercised the option to repossess the vehicle, they cannot claim custody of the vehicle in this case. According to him, as the vehicle was taken into custody by the police from him and he being the R. C. owner of the vehicle, the order passed by the learned Magistrate giving him interim custody of the vehicle is perfectly just and proper. 9. It is well settled that the true nature and effect of a transaction should be determined from the terms of the agreement considered in the light of the surrounding circumstances. Even though it is contended by the 1st respondent that the hire purchase agreement entered into between him and the petitioner evidenced by Annexure I to Crl.M.C. No. 5410/98 created only a transaction in debt and not a hire purchase agreement regarding the vehicle, the recitals made in Annexure I clearly establish that it is not a mere financial transaction between the petitioner and the 1st respondent and it involves all the necessary ingredients of a hire purchase agreement with regard to the vehicle between them. Therefore, the contention of the 1st respondent that Annexure I agreement is only a financial transaction and not a hire purchase agreement, is not sustainable in this case. 10. The 1st respondent has not denied the fact that some installments as per the hire purchase agreement is due from him to the petitioner. But his contention is that the amount claimed by the petitioner is incorrect and a suit is pending before the civil court regarding the actual hire purchase amount due from the 1st respondent to the petitioner. Therefore, even though there is dispute with regard to the actual amount due, the fact remains that amounts are due from the 1st respondent to the petitioner toward hire purchase amount due in respect of the vehicle. Therefore, the right of the petitioner to repossess the vehicle from the 1st respondent for non payment of the hire purchase amount as per the terms and conditions of Annexure-I cannot be disputed. 11. Therefore, the right of the petitioner to repossess the vehicle from the 1st respondent for non payment of the hire purchase amount as per the terms and conditions of Annexure-I cannot be disputed. 11. The next question to the considered is whether the petitioner has exercised their option to repossess the vehicle as per the terms of the hire purchase agreement. While the petitioner contends that it is after the petitioner exercised their right of option to repossess the vehicle as per the terms of the hire purchase agreement, the 1st respondent managed to get custody of the vehicle at the intervention of the police by registering an illegal and unsustainable FIR. But the 1st respondent contended that when the petitioner attempted to possess the vehicle illegally by dispossessing him by force, the police intervened in the matter and took the vehicle into custody. In the FIR registered by the police in this case in Crime No. 266/98 under S.102 of the CrPC, copy of which is marked as Annexure B in Crl.M.C. 6427/98 filed by the 1st respondent in Crl.M.C. 5410/98 to quash the proceedings it is stated that the police received information regarding some commotion in Thamarassery bazar and accordingly when they reached the place, the petitioner herein stated before the police that he being the Manager of the financing company, is entitled to be in possession of the vehicle since the 1st respondent is in possession of the vehicle which is under a hire purchase agreement with their company, by cheating them. 12. From the above statement made by the Assistant Sub Inspector of Police in the F.I. Statement recorded by him, it is clear that the petitioner herein had exercised their right to repossess the vehicle as per the terms and conditions of the hire purchase agreement and it is thereafter the police intervened and the vehicle was taken into custody by the police. Therefore, the contention of the 1st respondent that the petitioner financier had not exercised their right to repossess the vehicle for non payment of the hire purchase amount due under the hire purchase agreement, is not sustainable. 13. Therefore, the contention of the 1st respondent that the petitioner financier had not exercised their right to repossess the vehicle for non payment of the hire purchase amount due under the hire purchase agreement, is not sustainable. 13. S.2(3) of the Motor Vehicles Act defines 'owner' which reads as follows: "'owner' means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor and in relation to a motor vehicle which is the subject of a hire purchase agreement or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement." S.51 of the M. V. Act lays down special provision regarding motor vehicles subject to hire purchase agreement etc. S.51(1) stipulates that the registering authority should make, an entry in the certificate of registration regarding the existence of hire purchase, lease or hypothecation agreement, when an application for registration of a motor vehicle is made, which is held under a hire purchase, lease or hypothecation agreement. S.51(5) stipulates that even if the registered owner did not produce the registration certificate, the registering authority can issue a fresh certificate of registration in the name of the person with whom the registered owner has entered into such an agreement if he satisfies the registering authority that he has taken possession of the vehicle owing to the default of the registered owner under the provisions of the hire purchase, lease or hypothecation. Therefore, mere possession of the registration certificate of the vehicle by the hirer is no ground to release the vehicle to the registered owner if it is found that the vehicle is under hire purchase agreement and the financier has exercised his right to repossess the vehicle for non payment of the hire purchase amount as stipulated in the hire purchase agreement. The general principle that normally the vehicle should be returned to the person in whose name the registration certificate stands, is not applicable in cases where there is hire purchase agreement in respect of the vehicle and the financier has exercised his right to repossess the vehicle for default of payment of the hire purchase installments. 14. The general principle that normally the vehicle should be returned to the person in whose name the registration certificate stands, is not applicable in cases where there is hire purchase agreement in respect of the vehicle and the financier has exercised his right to repossess the vehicle for default of payment of the hire purchase installments. 14. It is well settled that when the hire purchase agreement in respect of the vehicle empowers the financier or the hire purchase company to seize the vehicle in case of default of payment of the hire purchase installments, the seizure of the vehicle on default of payment of the hire purchase installments does not amount to an offence under S.379 of the IPC. or any other allied offence under the provisions of IPC. 15. In this case I have already held that seizure of the vehicle by the police on the allegation that it is stolen article by registering the case under S.102 of the CrPC, is absolutely illegal and unsustainable and the FIR is liable to be quashed. Therefore, in view of the admitted fact that the vehicle involved in this case is under hire purchase agreement with the petitioner herein, and my finding that the petitioner has exercised their right to repossess the vehicle as stipulated in the hire purchase agreement, though the 1st respondent has disputed the correctness of the amount or the interest claimed by the petitioner due under the hire purchase agreement, the learned Magistrate is not justified in granting interim custody of the vehicle to the 1st respondent, he being the registered owner of the vehicle, regardless of the special provisions relating to vehicles under hire purchase agreement made in S.51 of the M. V. Act and the settled position of law on the subject. 16. The finding of the lower court that the petitioner has acquired possession of the vehicle by unlawful means and he will not be able to use the vehicle on the road, if custody of the vehicle is given to the petitioner, is absolutely unfounded. Considering the fact that once the financier lawfully seizes the vehicle as provided under the terms and conditions of the hire purchase agreement, the other legal incidents regarding the vehicle should follow. Considering the fact that once the financier lawfully seizes the vehicle as provided under the terms and conditions of the hire purchase agreement, the other legal incidents regarding the vehicle should follow. Hence the order passed by the learned Magistrate dismissing the application filed by the petitioner and granting custody of the vehicle to the 1st respondent cannot be sustained, being illegal and unsustainable. 17. Hence Crl.M.C. 6427/98 is allowed and Crime No. 266/98 registered by the Thamarassery Police under S.102 of CrPC, is quashed. Crl.M.C. 5410/ 98 is allowed and the common order passed by the learned Magistrate in C.M.P. Nos. 4448 and 4788 of 1998 dated 15-10-1998 is quashed and C.M.P. 4788/98 filed by the petitioner in Crl.M.C. 5410/98 is allowed and C.M.P. 4448/98 filed by the petitioner in Crl.M.C. 6427/98 is dismissed. The learned Magistrate is directed to give interim custody of the vehicle to the petitioner in Crl.M.C. 5410/98 on his execution of bond for Rs. 5,00,000/- with two solvent sureties each for the like amount to the satisfaction of the Magistrate. Petitioner will maintain the vehicle properly and keep in good condition and without any alteration of the vehicle. Petitioner will produce the vehicle before the Magistrate as and when required. Petitioner will not encumber or alienate the vehicle till final order in the matter is passed by the Magistrate.