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Himachal Pradesh High Court · body

2014 DIGILAW 923 (HP)

Gurprit Singh v. State of H. P.

2014-07-17

RAJIV SHARMA

body2014
Judgment : Per Rajiv Sharma, Judge: The present petition is instituted against the order dated 31.11.2012 rendered by the learned Judicial Magistrate, 1st Class, Court No.2, Sundernagar, Mandi in case P.C. No. 202-I/08. 2. Key facts necessary for adjudication of the petition are that respondent No.4 raised loan of Rs.3,60,000/- from ICICI Bank, Sundernagar, District Mandi in the year 2004. A margin money of Rs.70,000/- was deposited by him with the bank. Hire-purchase agreement was entered into between the parties vide Annexure P-9. Since respondent No.4 did not pay installments regularly, the vehicle in question, i.e. Mahindra Pick-up Jeep No.HP-31B-0264 was taken into possession. Respondent No.4 filed complaint against the petitioner and respondents No. 2 and 3, on the basis of which FIR No.66/2007, dated 12.2.2007 was registered. Thereafter, charges were framed against the petitioner by the learned Judicial Magistrate, 1st Class, Court No.2, Sundernagar, Mandi, on 31.11.2012 under Sections 392 read with Section 34 of the Indian Penal Code. 3. Mr. N.S. Chandel, learned Advocate, has vehemently argued that the possession of the vehicle was taken over on 10.6.2006 strictly as per hirepurchase agreement entered into between the parties. He has referred to Annexures P5 to P7 and P9 to this effect. 4. Relevant portion of vehicle loan-cum-hypothecation agreement, Annexure P-9 reads as under:- ICICI bank shall be entitled to take possession of the collateral(s), irrespective of whether the loan has been recalled whenever in the opinion of ICICI bank there is an apprehension of any money not being paid or ICICI bank’s security being jeopardized. 5. The vehicle in question has been taken into possession strictly as per the clause of the loan-cum- hypothecation agreement entered into between the parties, more particularly, as per the clause quoted here-in-above. It is settled law by now that the recovery of the possession of goods by owner-financier, as per terms of the hire-purchase agreement, does not amount to a criminal offence. Respondent No.4 defaulted in making the installments, which led to taking over the possession of the vehicle by the bank. No offence was made out against the petitioner. If there was any dispute qua hire-purchase agreement, the same was to be resolved on the basis of terms incorporated in the hire-purchase agreement. Respondent No.4 could not become owner of the vehicle, till he had not paid entire loan amount. No offence was made out against the petitioner. If there was any dispute qua hire-purchase agreement, the same was to be resolved on the basis of terms incorporated in the hire-purchase agreement. Respondent No.4 could not become owner of the vehicle, till he had not paid entire loan amount. Initiation of criminal proceedings against the petitioner on the basis of registration of FIR No.66/2007 dated 12.2.2007 was gross misuse of process of law. 6 Their Lordships of Hon’ble Supreme Court in Charanjit Singh Chadha and others vs. Sudhir Mehra, (2001) 7 Supreme Court Cases 417 have held that the hire-purchase agreement is an executory contract of sale, conferring no right in rem on the hirer until the conditions for transfer of the property to him have been fulfilled. Their Lordships have further held that where hirer had defaulted in installment payments of motor vehicle and agreement specifically provided that the financiers were entitled to repossess the vehicle in case of default and their agents were authorized to enter any premises for the purpose and the financiers had actually recovered possession of the vehicle, no offence was made out against the persons, who had taken over the possession of the vehicle. Their Lordships have held as under:- 5. Hire-purchase agreements are executory contracts under which the goods are let on hire and the hirer has an option to purchase in accordance with the terms of the agreement. These types of agreements were originally entered into between the dealer and the customer and the dealer used to extend credit to the customer. But as hire-purchase scheme gained popularity and in size, the dealers who were not endowed with liberal amount of working capital found it difficult to extend the scheme to many customers. Then the financiers came into picture. The finance company would buy the goods from the dealer and let them to the customer under hire purchase agreement. The dealer would deliver the goods to the customer who would then drop out of the transaction leaving the finance company to collect instalments directly from the customer. Under hire purchase agreement, the hirer is simply paying for the use of the goods and for the option to purchase them. The dealer would deliver the goods to the customer who would then drop out of the transaction leaving the finance company to collect instalments directly from the customer. Under hire purchase agreement, the hirer is simply paying for the use of the goods and for the option to purchase them. The finance charge, representing the difference between the cash price and the hire purchase price, is not interest but represents a sum which the hirer has to pay for the privilege of being allowed to discharge the purchase price of goods by instalments. 10. The agreement executed by the parties in this case also is to the effect that the hirer would not become the owner of the property until he pays the entire instalments. A copy of the agreement is produced as Annexure P-1 wherein the appellants are referred to as the first party and the respondent as the second party and it is specifically stated that the first party would be the absolute owner of the vehicle and the respondent second party agreed to pay all the instalments punctually. Clause 7 of the agreement says that the hirer may at any time before the final payment under the hire purchase agreement falls due and after giving the owners not less than fourteen days notice in writing of his intention to do so and redelivering the vehicle to the owners at their office, terminate the hire purchase agreement. Clause 8(viii) gives a right to the owner to repossess the vehicle in case of default by the hirer. Clause 9(ii) gives the owner an irrevocable licence to enter any building, premises or place where the vehicle may be or supposed to be for the purpose of inspection, repossession or attempt to repossess the vehicle and the owner of the vehicle will not be liable for any civil or criminal action at the instance of the hirer. It is also made clear that the hirer would be liable for all the expenses of the owner in obtaining repossession or attempting to obtain re-possession of the vehicle. 11. The whole case put forward by the respondent-complainant is to be appreciated in view of the stringent terms incorporated in the agreement. If the hirer himself has committed default by not paying the instalments and under the agreement the appellants have taken re-possession of the vehicle, the respondent cannot have any grievance. 11. The whole case put forward by the respondent-complainant is to be appreciated in view of the stringent terms incorporated in the agreement. If the hirer himself has committed default by not paying the instalments and under the agreement the appellants have taken re-possession of the vehicle, the respondent cannot have any grievance. The respondent cannot be permitted to say that the owner of the vehicle has committed theft of the vehicle or criminal breach of trust or cheating or criminal conspiracy as alleged in the complaint. When the agreement specifically says that the owner has got a right to repossess the vehicle, there cannot be any basis for alleging that the appellants have committed criminal breach of trust or cheating. 12. Before the learned single Judge, the respondent had contended that the vehicle was in the possession of the respondent and it was taken out of his custody without his consent and therefore, the offence of theft is made out. This plea is also without any basis as the appellants have taken re-possession of the vehicle in exercise of their right under the agreement. There may be instances where the owner of the goods may commit theft of his own goods. The illustration (k) of Section 378, IPC, which is an instance of such a theft, is to the following effect : "Again, if A, having pawned his watch, to Z, takes it out of Z's possession without Z's consent, not having paid what he borrowed on the watch, he commits theft, though the watch is his own property inasmuch as he takes it dishonestly." 13. But in the instant case, the owner repossessing the vehicle delivered to the hirer under the hire purchase agreement will not amount to theft as the vital element of 'dishonest intention' is lacking. The element of 'dishonest intention' which is an essential element to constitute the offence of theft cannot be attributed to a person exercising his right under an agreement entered into between the parties as he may not have an intention of causing wrongful gain or to cause wrongful loss to the hirer. It is appropriate to note that the term 'dishonestly' is defined under Section 24 of the IPC as follows: "Dishonestly" - Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly". 17. It is appropriate to note that the term 'dishonestly' is defined under Section 24 of the IPC as follows: "Dishonestly" - Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly". 17. The hire-purchase agreement in law is an executory contract of sale and confers no right in rem on hirer until the conditions for transfer of the property to him have been fulfilled. Therefore, the repossession of goods as per the term of the agreement may not amount to any criminal offence. The agreement (Annexure P-1) specifically gave authority to the appellants to repossess the vehicle and their agents have been given the right to enter any property or building wherein the motor vehicle was likely to be kept. Under the hire purchase agreement, the appellants have continued to be the owners of the vehicle, and even if the entire allegations against them are taken as true, no offence was made out against them. The learned single Judge seriously flawed in his decision and failed to exercise jurisdiction vested in him by not quashing the proceedings initiated against the appellants. We, therefore, allow this appeal and set aside the impugned judgment. The complaint and any other proceedings initiated pursuant to such complaint are quashed. 7. Same principles have been reiterated by their Lordships of Hon’ble Supreme Court in Anup Sarmah vs. Bhola Nath Sharma and others, (2013) 1 Supreme Court Cases 400. Their Lordships have held as under:- “7. In view of the above, the law can be summarized that in an agreement of hire purchase, the purchaser remains merely a trustee/bailee 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 re-possessing the goods owned by him.” 8. In view of definite law laid down by their Lordships of Hon’ble Supreme Court (supra), the petition is allowed and the proceedings arising out of FIR No.66/2007 qua the petitioner and the impugned order dated 31.11.2012 are quashed. The proceedings pending before learned Judicial Magistrate, 1st Class, Court No.2, Sundernagar, Mandi, in case P.C. No. 202-I/08, qua the petitioner are closed. Pending application(s), if any, also stands disposed of. No order as to costs.