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2014 DIGILAW 1414 (RAJ)

H. D. F. C. Bank Ltd. v. State of Rajasthan

2014-07-17

KANWALJIT SINGH AHLUWALIA

body2014
Hon'ble AHLUWALIA, J.—Petitioner/H.D.F.C. Bank Limited, (herein after called as bank) by way of filing instant petition under Section 482 Cr.P.C. has approached this Court for quashing of First Information Report bearing No.134/2009, dated 13/03/2009, registered at Police Station, Chomu, Jaipur Rural for commission of offence punishable under Section 382 I.P.C. 2. Succinctly stated the facts of the instant petition are that the respondent/complainant No.2 (Rajendra Kumar) had approached the petitioner-bank to purchase two-wheeler vehicle i.e. Hero Honda Splender plus; and believing that the respondent/complainant is financially sound, an agreement was executed and the bank had extended loan on 17.02.2006 amounting to Rs.30,529/-. As per agreement, the respondent/ complainant was bound to pay the installments, as agreed on the stipulated date and after purchase, the vehicle was hypotheticated in favour of the petitioner-bank, as per Hire Purchase Agreement. 3. The case of the petitioner/bank is that the respondent/complainant had neither produced the vehicle for inspection nor paid the monthly installment and had ignored the repeated reminders to pay the amount outstanding. 4. It is the case of the petitioner/bank that due to default on the part of the petitioner/bank, Rs. 62,856 as on 16.03.2009 were outstanding against the complainant/ respondents. 5. It is admitted case of the petitioner-bank that on 13.03.2009, in pursuance of the agreement made between the parties at the time of disbursing the loan, due to default the bank had taken possession of the vehicle. 6. Contrary to the stand of the petitioner/bank, the respondent/ complainant No.2 had lodged the present First Information Report in which he has alleged that on 13.03.2009 at about 09:00 P.M. he was going to the house from his plot on motorcycle and when he reached between Nakhralidhani, on three motorcycles, nine-persons came, they stopped him and their motorcycles; and thereafter they gave him beating and had taken away Rs.50,000/- from his pocket and also motorcycle. The shirt of the complainant was also torn. As a result of the above averments made in the impugned F.I.R., a criminal case was registered for commission of offence punishable under Section 382 I.P.C. 7. The shirt of the complainant was also torn. As a result of the above averments made in the impugned F.I.R., a criminal case was registered for commission of offence punishable under Section 382 I.P.C. 7. On behalf of the petitioner/bank, it is contended that the vehicle was repossessed by the Recovery Agent of the petitioner/bank and they were well within their rights to do so, as per agreement arrived at between the parties at the time of disbursement of the loan, as the vehicle was hypotheticated in faovur of the petitioner/bank. 8. The following question, arise for consideration of this Court :- (a) WHETHER repossession of the alleged vehicle hypotheticated to the financer, in pursuance of the Hire Purchase Agreement by use of force will constitute offence under Section 382 I.P.C. or not. 9. To answer the above question, it is to be noted here that a divergent opinion has been expressed in the judicial pronouncement rendered by the different Courts from time to time. 10. The controversy raised is not new to the Courts, therefore, an effort shall be made to take brief-note of all judgments cited and rendered by the different Courts till today. 11. It is to be kept in mind that wherever the vehicle hypotheticated is repossessed, cases have been registered for offences of forgery, cheating or extortion or robbery. 12. A distinguishing factor is to be kept in mind that for offence falling under Section 382 I.P.C., which is punishment for theft after preparation made for causing death, or hurt, or restraint, or fear of death, “force” is necessary ingredients. (emphasis supplied). Similarly, for commission of offence punishable under Section 392 I.P.C. i.e. punishment for robbery, in the definition of offence, which is given under Section 390 I.P.C., it is specifically stated that where the offender for committing robbery voluntarily causes or attempts to cause to any person death or hurt or wrongful restraint, or fear of instant death or of instant hurt, or of instant wrongful restraint offence of robbery is made out, here also it is to be noted that application of “force” (emphasis supplied) is pre-requisite for commission of the alleged offence. 13. Mr. 13. Mr. Pankaj Gupta, the learned counsel appearing for the petitioner/ bank has relied upon the case of Charanjit Singh Chadha and Others vs. Sudhir Mehta, reported in AIR 2001 SC 3721 , wherein it was observed that no offence of cheating, criminal breach of trust or theft of vehicle is said to have been committed by the Company in whose favour vehicle is hypotheticated. In the case cited due to hypothetication of vehicle, financier had the right to repossess the vehicle. It is to be noted here that in the said case application of “force” was neither a question nor a issue for consideration. 14. To similar effect are the other judgments relied in the cases of K.A. Mathal @ Babu and another vs. Kora Bibbikutty and another, reported in (1996) 7 S.C.C. 212 and in Trilok Singh and others vs. Satya Deo Tripathi, reported in A.I.R. 1979 S.C. 850, wherein, it was held that the seizure of the truck by the financier on default by the lonee constitute civil dispute. Even though offence was of the dacoity but the question that force was used was not considered. 15. To similar effect is the judgment of the Single Judge of this Court in the case of Aarif Khan vs. State of Rajasthan, reported in 2008(1) R.C.C. 309 = 2008(2) RLW 1318, wherein also in offence of dacoity even though reliance was placed in the case of Charanjit Singh Chadha and others (supra) the question regarding use of “force” was not considered. 16. In another judgment relied upon in the case of Bharath Metha vs. State by Inspector of Police Chennai, reported in 2008(2) Supreme 596 , issue was that who is entitled to “supardagi” of the alleged vehicle. 17. Similarly in the case of the Managing Director, Orix Auto Finance (India) Ltd. vs. Shri Jagmander Singh and Another, reported in 2006(1) Supreme 708 , wherein the order passed by the Civil Judge was challenged regarding return of the vehicle on payment of installments, “application of force” was not direct issue raised or considered. 18. However, counsel appearing for the petitioner/bank has also pressed into service as a star judgment, a judgment rendered by the Single Judge of this Court titled as H.D.F.C. Bank Ltd. vs. State of Rajasthan and Another, reported in 2014(1) R.L.W. 600. 19. 18. However, counsel appearing for the petitioner/bank has also pressed into service as a star judgment, a judgment rendered by the Single Judge of this Court titled as H.D.F.C. Bank Ltd. vs. State of Rajasthan and Another, reported in 2014(1) R.L.W. 600. 19. In the said judgment, law enunciated in the cases of Charanjit Singh Chadha and others (supra), K.A. Mathal @ Babu and another (supra), Trilok Singh and others (supra), Aarif Khan (supra), Bharath Metha (supra) and the Managing Director, Orix Auto Finance (India) Ltd. (supra) was considered, along with the recent judgment of the Hon'ble Apex Court in the case of Anup Sarmah vs. Bhola Nath Sharma and Others, reported in (2013) 1 S.C.C. 400 . 20. The entire reasoning given in the judgment rendered by the Single Judge of this Court in content and form is based upon the reasoning propounded in Anup Sarmah (supra), therfore, it will be apposite to reproduce here the following Paras from the judgment of Anup Sarmah (supra) :- “5. In K.A. Mathai vs. Kora Bibbikutty this Court had taken a similar view holding that in case of default to make payment of installments the financier had a right to resume possession even if the hire-purchase agreement does not contain a clause of resumption of possession for the reason that such a condition is to be read in the agreement. In such an eventuality, it cannot be held that the financier had committed an offence of theft and that too, with the requisite mens rea and requisite dishonest intention. The assertion of rights and obligations accruing to the parties under the hire-purchase agreement wipes out any dishonest pretense in that regard from which it cannot be inferred that the financier had resumed the possession of the vehicle with a guilty intention. 6. In Charanjit Singh Chadha vs. Sudhir Mehra this Court held that recovery of possession of the vehicle by the financier owner as per terms of the hire-purchase agreement, does not amount to a criminal offence. 6. In Charanjit Singh Chadha vs. Sudhir Mehra this Court held that recovery of possession of the vehicle by the financier owner as per terms of the hire-purchase agreement, does not amount to a criminal offence. Such an agreement is an executory contract of sale conferring no right in rem on the hirer until the transfer of the property to him has been fulfilled and in case the default is committed by the hirer and possession of the vehicle is resumed by the financier, it does not constitute any offence for the reason that such a case/dispute is required to be resolved on the basis of terms incorporated in the agreement. The Court elaborately dealt with the nature of the hire-purchase agreement observing that in a case of mere contract of hiring, it is a contract of bailment which does not create a title in the bailee. However, there may be variations in the terms and conditions of the agreement as created between the parties and the rights of the parties have to be determined on the basis of the said agreement. The Court further held that in such a contract, element of bailment and element of sale are involved in the sense that it contemplates an eventual sale. “8...... The element of sale fructifies when the option is exercised by the intending purchaser after fulfilling the terms of the agreement. When all the terms of the agreement are satisfied and the option is exercised a sale takes place of the goods which till then had been hired.” (Charanjit Singh Chadha case, SCC P. 422 Para 8). While deciding the said case, this Court placed reliance upon its earlier judgments in Damodar Valley Corpn. V. State of Bihar, Instalment Supply (P) Ltd. V. Union of India (SCC P. 744, Para 8) , K.L. Johar & Co. vs. CTO, (AIR P 1090, Para 17) and Sundaram Finance Ltd. vs. State of Kerala. 7. In view of the above, the law can be summarised that in an agreement of hire purchase, the purchaser remains merely a trustee/bailess on behalf of the financier/financial institution and ownership remains with the latter. Thus, in case the vehicle is seized by the financier, no criminal action can be taken against him as he is repossessing the goods owned by him.” 21. Thus, in case the vehicle is seized by the financier, no criminal action can be taken against him as he is repossessing the goods owned by him.” 21. With respect to the judgments rendered by the Single Bench of this Court or qua the judgments of the Hon'ble Supreme Court relied, it is to be highlighted that application of “force” (emphasis supplied), which is an essential ingredient of offence punishable under Section 382 or 392 I.P.C. was not specifically dealt with, even though the Single Bench of the Hon'ble Supreme Court had noted contrary judgment in the case of Manager, ICICI Bank Ltd. vs. Prakash Kaur and Others, reported in J.T. 2007(4) S.C. 39. 22. It is to be noted here that in the case of Anup Sarmah (supra), the case of Manager, ICICI Bank Ltd. (supra) was not considered. 23. In the case of Manager, ICICI Bank Limited (supra), the Hon'ble Supreme Court had observed regarding the role of recovery agents who are muscle-men employed by financier and their attitute to affect the recovery was described by using epithet “as Shylock's pound of flesh” and the Hon'ble Supreme Court had deprecated the conduct of the financer to repossess the vehicle by using force. 24. It will be apposite to note here the following observations made by Single Judge of Punjab & Haryana High Court at Chandigarh in the case of M/s. Sundaram Finance Limited, Chennai vs. Raj Kumar and another, reported in 2011 (4) R.C.R. (Criminal) 890:- “13. Despite some telling observations made by Hon'ble Supreme Court in regard to the mode adopted by the Banks or Finance Companies to employ recovery/collecting agents, who use aggressive manners and make the people taking credit a victim, the mode as adopted continues to be employed by the Finance Companies like the petitioner. The facts in the present case would reveal so and would further show that the observations made by the Hon'ble Supreme Court have had no effect on the modes and methods adopted by the Finance Companies like the petitioner. As observed by the Supreme Court, the Banks are the aggressors and the public is a victim. The facts in the present case would reveal so and would further show that the observations made by the Hon'ble Supreme Court have had no effect on the modes and methods adopted by the Finance Companies like the petitioner. As observed by the Supreme Court, the Banks are the aggressors and the public is a victim. Referring to the recovery/collection agents to be a dignified term, who in fact are the individuals and independent contractors hired by the Banks and the Finance Companies to detect defaulters and then torture them physically, mentally and emotionally to force them for clearing their dues. As observed by the Hon'ble Supreme Court, a man's self respect, stature in society are all immaterial to the agents, who are only primed at recovery. Using abusive language for recovery is noticed to be the norm of the day for most Banks and such institutions. The Hon'ble Supreme Court held that it did not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the petitioners therein. The Hon'ble Supreme Court had deprecated the practice of hiring the recovery agents, muscle men and discouraged the said practice. The Supreme Court accordingly has directed that the Bank should resort to the procedure recognized by law to take possession of the vehicle in cases where borrowers may have committed default in payment of installments instead of taking resort to strong arm tactics. (See Manager, ICICI Bank Ltd. vs. Prakash Kaur and Ors., 2007(2) R.C.R.(Criminal) 76 : 2007(1) R.A.J. 810 : AIR 2007 SC 1349 ). This is what has clearly happened in the present case, as has revealed from the facts noticed above. Atleast, the conduct of the petitioner- Finance Company needs to be deprecated.” 25. Another judgment where the Single Bench of Punjab & Haryana High Court dissected and analysised the entire law regarding Hire-Purchase and loan advanced has gone unnoticed by Single Bench of this Court. In the case of Tarun Bhargava vs. State of Haryana and another, reported in 2003(2) ARBLR 645 . Justice Adarsh Kumar Goel, as His Lordship was then Judge of Punjab & Haryana High Court had noted Sections 172 and 176 of the Contract Act, Sections 382 and 506 I.P.C., and in a very elucidate manner formulated the following questions and had concluded as under :- 7. Justice Adarsh Kumar Goel, as His Lordship was then Judge of Punjab & Haryana High Court had noted Sections 172 and 176 of the Contract Act, Sections 382 and 506 I.P.C., and in a very elucidate manner formulated the following questions and had concluded as under :- 7. The following questions arises for consideration;- 1) Whether the agreement in question, Annexure P-1, termed as hire purchase agreement, is in substance a loan agreement? 2) If the above agreement is a loan agreement, whether rights of the parties will be different and if so, to what extent? 3)(a) Whether Clause 4 of the agreement enabling the petitioner to forfeit all installments paid by the complainant and entitling the financier to enter the in house or place, where the vehicle is, to seize, remove and retake the possession is valid? (b) Whether Clause 7 of the agreement, which permits the petitioner to refuse to give credit or set off the payment already made, when the vehicle is seized by the petitioner under Clause 4 of the agreement or surrendered by the complainant, is valid? 4) What is the remedy of the complainant against unjustified repossession by the petitioner/financier? And 5) Whether proceedings against the petitioner are liable to be quashed?......................” 20. 1 may now summarise my conclusions as follows :- A) A hire-purchase agreement may in substance be a loan transaction and the label of such an agreement is not conclusive. It is open to the Court to determine whether a particular agreement is a loan transaction or a hire-purchase agreement. The parameters to be applied are laid down. Inter alia, in the judgment of the Supreme Court in Sundaram Finance Ltd. 's case (supra), In the present case, the agreement though termed as hire-purchase agreement, is held to be a loan agreement for the reasons already mentioned. B) In a loan agreement for financing goods on hypothecated basis, the creditor cannot forcibly repossess the hypothecated item, though he can enforce the security through the Court. C) If a specific Clause 18 inserted in an agreement authorising repossession of a vehicle or any other goods by the hypothecatee, such a clause may be unconscionable, unless otherwise shown by the hypothecatee and such a clause inserted in the present case is held to be void. C) If a specific Clause 18 inserted in an agreement authorising repossession of a vehicle or any other goods by the hypothecatee, such a clause may be unconscionable, unless otherwise shown by the hypothecatee and such a clause inserted in the present case is held to be void. In the present agreement, Clause 4 and Clause 7 permitting forfeiture of instalments already paid will be deemed to be void. D) Forcible repossession without intervention of the Court may involve commission of an offence and what offence has been committed will depend on facts of an individual case. The judgments of the Supreme Court in hire purchase cases holding that in a hire purchase agreement, the owner cannot be guilty of theft of his own property, will not be applicable to cases where the transaction is, in substance, a loan transaction, as in a loan transaction, the ownership will be of the borrower and the principle applicable to a hire purchase agreement will not apply. 26. This Court is conscious that the above said two judgments rendered by the Single Judge of the Punjab & Haryana High Court are not precedent binding, however, they have been only noted for a persuasive value. 27. Having pinpointed the application of force as ingredients of offence under Sections 382 and 392 I.P.C. or where extortion is alleged, this Court is of the view that the controversy is no longer res-integra. 28. A three-judge Bench of the Hon'ble Apex Court in the case of Citicorp Maruti Finance Limited vs. S. Vijayalaxmi, reported in (2012) 1 SCC 1 , held as under :- “26. ......................The aforesaid question has since been settled by several decisions of this Court and in particular in the decision rendered in ICICI Bank Ltd. V. Prakash Kaur. It is not, therefore, necessary for us to go into the said question all over again and we reiterate the earlier view taken that even in case of mortgaged goods subject to hire-purchase agreements, the recovery process has to be in accordance with law and the recovery process referred to in the agreements also contemplates such recovery to be effected by due process of law and not by use of force.” (emphasis supplied). 29. 29. Thus, it stand concluded that on the basis or strength of, hire-purchase agreement, qua the vehicle hypotheticated, finance company has to follow due process of law to repossess the vehicle and use of force is not permissible. 30. All judgments relied upon by Mr. Pankaj Gupta, the learned counsel appearing for the petitioner/bank have been rendered by two Judge Bench of Hon'ble Supreme Court or by Single Bench of this Court and in the said judgments decision rendered by three-judge Bench of Hon'ble Apex Court in the case of Citicorp Maruti Finance Limited (supra) has not been noticed. 31. The judgment rendered by three-judges Bench in Citicorp Maruti Finance Limited (supra) being binding precedent will hold field over and above all judgments cited by the learned counsel appearing for the petitioner. 32. Whether force has been used or not or it has been falsely stated by the complainant that recovery agents had torn his shirt, taken away Rupees Fifty Thousand or not, is a question of fact, which require evidence and same cannot be adjudicated in a petition under Section 482 Cr.P.C. Holding that allegation of the complainant/respondent reveals “use of force” by the persons employed by the bank, this Court is of the view that same is triable question, which can be determined during the course of trial. 33. Resultantly, the present petition, being devoid of merit is, hereby, dismissed. 34. Upon dismissal of main petition, the stay application, as well as, application for vacation of stay, filed therewith, do not survive and the same are also dismissed.