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2000 DIGILAW 497 (KER)

Amarchand Chajer v. Sub Inspector of Police

2000-09-06

K.A.MOHAMED SHAFI

body2000
ORDER K.A. Mohamed Shafi, J. 1. This R. P. is filed by the complainant in C.M.P. No. 4845/2000 on the file of the Judicial First Class Magistrate's Court, Tirur challenging the order dated 27.5.2000 dismissing the complaint filed, under S.203 of the CrPC. 2. The revision petitioner filed the complaint before the lower court alleging offences punishable under S.406 and 420 of I.P.C. Even though the revision petitioner had sought in the complaint to send the complaint to the police for investigation and report under S.156(3) of the CrPC., the learned Magistrate after recording the sworn statement of the revision petitioner and hearing him, dismissed the complaint. 3. The revision petitioner has alleged that on 29.1.2000 one K. Abdulnazar, S/o. Saidali entered into a hire-purchase agreement with the revision petitioner with respect to a 1996 model vehicle bearing No. KL/10E/3681 whereby he was liable to pay Rs. 4,12,000/- to the revision petitioner in 36 monthly instalments from 29.2.2000 onwards. The hirer did not remit any of the instalments and all efforts of the petitioner to re-possess the vehicle did not fructify. It is further alleged that on enquiry it was revealed that the hirer had dismantled the vehicle and disposed of the parts of the vehicle in utter violation of the terms and conditions of the agreement. It is also alleged that the intention of the hirer even at the time of entering into the hire-purchase agreement was somehow to get possession of the vehicle and later dismantle the vehicle and dispose of the same without remitting the hire amount. Therefore, he filed C.M.P. 4845/2000 against the accused alleging offences punishable under S.406 and 420 of I.P.C. 4. The learned Magistrate after recording the sworn statement held that the dispute involved in this case is only of civil nature and further held that the dictum laid down by this Court in the decision reported in 1999 (1) KLT 184 to the effect that when the financier under a hire-purchase agreement seizes the vehicle on default in payment of instalments, no criminal prosecution can be launched by the hirer against the financier applies vice-versa also. The learned Magistrate also held that if the complainant wants to repossess the vehicle from the accused, he has to approach the civil court and get the vehicle attached and no criminal complaint will lie against the accused on the given facts. 5. The learned Magistrate also held that if the complainant wants to repossess the vehicle from the accused, he has to approach the civil court and get the vehicle attached and no criminal complaint will lie against the accused on the given facts. 5. The petitioner has contended that the findings arrived at by the learned Magistrate and the dismissal of the complaint filed by him are absolutely illegal and unsustainable, and therefore, the order is liable to be set aside and the learned Magistrate should be directed to register the case against the accused and to proceed with the same in accordance with law. 6. Heard counsel for the revision petitioner and the Public Prosecutor. 7. In the decision in K. L. Johar and Company v. Deputy Commercial Tax Officer ( AIR 1965 SC 1082 ) a five Judges Bench of the Supreme Court has considered and laid down the distinction between a hire-purchase agreement and a sale in which the price is to be paid later by instalments. In para 11 of the judgment it is observed as follows: "The essence of a sale is that the property is transferred from the seller to the buyer for a price, whether paid at once or paid later in instalments. On the other hand, a hire-purchase agreement, as its very name implies, has two aspects. There is first an aspect of bailment of the goods subjected to the hire-purchase agreement, and there is next an element of sale which fructifies when the option to purchase, which is usually a term of hire-purchase agreement, is exercised by the intending purchaser. Thus the intending purchaser is known as the hirer so long as the option to purchase is not exercised, and the essence of a hire-purchase agreement properly so called is that the property in the goods does not pass at the time of the agreement but remains in the intending seller, and only passes later when the option is exercised by the intending purchaser. The distinguishing feature of a typical hire-purchase agreement therefore is that the property does not pass when the agreement is made but only passes when the option is finally exercised after complying with all the terms of the agreement." 8. The distinguishing feature of a typical hire-purchase agreement therefore is that the property does not pass when the agreement is made but only passes when the option is finally exercised after complying with all the terms of the agreement." 8. From the above observations it is clear that in cases of hire-purchase agreement, the financier continues to be the owner of the goods sold till the hirer has paid the entire hire-purchase amount and the property in the goods passed to the hirer after exercising the option on complying with all the terms of the agreement. 9. The Motor Vehicles Act also has recognized the above incidence of hire-purchase agreement and special provisions are made in the Act with regard to the vehicles subject to hire-purchase agreement. S.51 of the M.V. Act deals with special provisions regarding motor vehicle subject to hire-purchase agreement etc. S.51(4) of the Act provides that no entry regarding transfer of ownership of any motor vehicle which is held under the hire-purchase agreement shall be made in the certificate of registration except with the written consent of the person whose name has been specified in the certificate of registration as the person with whom the registered owner has entered into the hire-purchase agreement. Sub-s.(5) of S.51 stipulates that if the financier whose name is entered in the certificate of registration with whom the registered owner has entered into a hire-purchase agreement, satisfies the registering authority that he has taken possession of the vehicle in default of the registered owner under the provisions of the agreement and that the registered owner refuses to deliver certificate of registration or has absconded, the registering authority after giving the registered owner an opportunity to be heard, can cancel the certificate of registration and issue a fresh certificate of registration in the name of the person with whom the registered owner has entered into a hire-purchase agreement, notwithstanding the non-production of the certificate of registration before the authority. The above provisions of the M.V. Act recognize the right and authority of the financier to re-possess the vehicle in default of payment of the hire-purchase amount and to get the registration of the vehicle to be transferred in his name. 10. The above provisions of the M.V. Act recognize the right and authority of the financier to re-possess the vehicle in default of payment of the hire-purchase amount and to get the registration of the vehicle to be transferred in his name. 10. In the decision in Jaswantrai Manilal Akhaney v. The State of Bombay ( 1956 SCR 483 ) the Supreme Court has held that although the offence of criminal breach of trust presupposes an entrustment, such entrustment need not, conform to all the technicalities of the law of trust, and, consequently, in a case such as the present, where the accused had the necessary power and exercised dominion over the securities and caused wrongful loss to the pledgor and wrongful gain to the pledgee by dealing with the securities, he was guilty of the offence. 11. In the above case certain Government Promissory Notes were pledged with the bank by another bank to cover an overdraft account up to a specified amount. There was no overdraft by the pledgor. The pledgee bank, the appellant pledged those securities with a third party to get a loan for the bank's use and on its failure to pay the amount on demand, the creditors sold the securities for realising their dues, thus the pledgee bank was no longer in a position to return the securities on demand made by the pledgor. Therefore, prosecution was launched against the pledgee bank for the offence punishable under S.409 of the I.P.C. by the pledgor. The Supreme Court upheld the finding of guilt, entered by the trial court against the pledgee bank for the offence punishable under S.409 of I.P.C. after laying down the above principle of law. 12. It is clear from the hire-purchase agreement entered into between the revision petitioner and the accused that Clause.(13) of the agreement empowers the petitioner financier to terminate the contract of hire-purchase and to take possession of the vehicle forthwith on several conditions enumerated as sub-clause.(a) to (j) in that clause including removal of the vehicle to any other State or getting it registered there without the consent of the financier, breach of any of the conditions and obligations in the agreement etc. It is clear from the several clauses in the agreement that the hirer has no right to dispose of or transfer possession or encumber the vehicle till the entire hire-purchase amount is paid. 13. It is clear from the several clauses in the agreement that the hirer has no right to dispose of or transfer possession or encumber the vehicle till the entire hire-purchase amount is paid. 13. In the decision in Silas Moses v. Emperor (XVI Crl. LJR 665) a Division Bench of the Bombay High Court held that the mortgage of a motor car which was entrusted to the appellant under hire-purchase agreement providing inter alia, that the appellant shall not during the hiring, assign, underlet or part with the possession of the same in any way whatsoever is in violation of the agreement and the mortgage amounted to assignment within the meaning of the hire-purchase agreement and that the appellant was guilty of the offence of criminal breach of trust since he caused wrongful gain to himself by obtaining money on the security of the motor car, contrary to a legal agreement prohibiting him from assigning any interest in the car and he caused wrongful loss to the owners by putting in their way difficulties in recovering the money due from him to them and by subjecting their car to the risks of attachment and litigation. 14. From the above rulings it is clear that due to the mere fact that the registration certificate is in the name of the hirer, he will not be the owner of the vehicle till the sale is complete after discharging the entire hire-purchase amount and any act in contravention of the terms of the agreement in alienating or encumbering or parting with possession of the vehicle to the disadvantage of the financier will attract the offence of criminal breach of trust. 15. In the decision in Bharudan Dugar v. S.I. of Police ( 1986 KLT 430 ) this Court has held that seizure of the vehicle by the financier on default of payment of the amounts due under the hire-purchase agreement by enforcing the terms of the agreement will not attract the offence of theft under the I.P.C. 16. In the decision in Hameed v. Jayabharat Credit & Investment Ltd. ( 1986 KLT 997 ) this Court has held that if the vehicle which is subject to hire-purchase agreement is sold by the hirer to another person, in default of payment of the hire-purchase amount the owner can seize the vehicle. 17. In the decision in Hameed v. Jayabharat Credit & Investment Ltd. ( 1986 KLT 997 ) this Court has held that if the vehicle which is subject to hire-purchase agreement is sold by the hirer to another person, in default of payment of the hire-purchase amount the owner can seize the vehicle. 17. In the decision in 1999 (1) KLT 184 , (Vijayakumar v. Kamarudhin) I have also held that the financier is entitled to re-possess the vehicle by enforcing the terms and conditions of the hire-purchase agreement on default of payment of the instalments due under the hire-purchase agreement and the act of the financier will not attract the offence punishable under S.379 and the allied provisions of the I.P.C. 18. In this case it is clear that the revision petitioner has specifically alleged that the accused has dismantled the vehicle and disposed of the same in parts and thereby he has committed the offences punishable under S.406 and 420 of I.P.C. The dictum laid down in the judgment referred to by the learned Magistrate in the impugned order only lays down that the financier is entitled to re-possess the vehicle on default of payment of the instalments by the hirer and converse of the same is not applicable in this case. If the finding of the learned Magistrate that the dictum will apply vice-versa also is accepted, it will lead to disastrous consequences and enable the unscrupulous hirers to defeat the financier by alienating, encumbering or removing or dismantling the vehicle. Therefore, the impugned order passed by the learned Magistrate is absolutely unsustainable. Therefore, the impugned order is set aside and the learned Magistrate is directed to restore C.M.P. No. 4845/2000 to file and proceed with the same in accordance with law. Crl. R. P. is allowed as above.