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Gujarat High Court · body

2020 DIGILAW 652 (GUJ)

AU Financiers(India) Limited Thro' Manojkumar Bhikhabhai Patel v. State of Gujarat

2020-07-30

ASHUTOSH J.SHASTRI

body2020
JUDGMENT : 1. Present petition under Articles 226 and 227 of the Constitution of India is filed by the petitioner company for challenging the legality and validity of the order dated 30.11.2016 passed in Criminal Misc. Application No.3692 of 2016. 2. Background of facts on account of which the present petition has come up for consideration is that the petitioner company is running the business of advancing financial facilities to the needy persons by executing contracts and loan agreements on stipulated terms. In respect of the said business, the petitioner company provided loan to one Kantilal Kalal for purchase of vehicle, i.e. Scorpio car, bearing registration No.GJ-09 BC-7056. The said vehicle was then run by said Kantilal Kalal and on 19.6.2016, when Kantilal Kalal along with his associate one Mr. Gopal Panchal, while traveling from Sagwara to Ahmedabad, were intercepted by the investigating team wherein it was found that they were carrying and transporting contraband heroin substance to the extent of 1.196 Kg. and after completing necessary formalities, these persons were arrested, produced before the Court on 22.6.2016 and the vehicle in question was seized as muddamal article. 3. The petitioner company, claiming to be the owner by virtue of hypothecation agreement, came out with a request to release the said vehicle, i.e. Scorpio car, so as to fetch the outstanding loan amount by selling away the same. With this request, an application was submitted before the Court below, namely learned City Civil Judge, Court No.23, at Ahmedabad under Sections 451 read with Section 457 of the Code of Criminal procedure and the said application was registered as Criminal Misc. Application No.3692 of 2016. So, in substance, the vehicle in question was seized as a muddamal in connection with a complaint, being C.R. No.03 of 2016 being Narcotic Control Bureau/Ahmedabad Zonal Unit Complaint, for the offences punishable under Sections 8(c), 21(c) and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (‘NDPS Act’). Application No.3692 of 2016. So, in substance, the vehicle in question was seized as a muddamal in connection with a complaint, being C.R. No.03 of 2016 being Narcotic Control Bureau/Ahmedabad Zonal Unit Complaint, for the offences punishable under Sections 8(c), 21(c) and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (‘NDPS Act’). At that time, the investigation was going on, as a result of which, the investigating machinery, i.e. Narcotic Control Bureau, specifically opposed release of the said vehicle in favour of the petitioner company by filing detailed affidavit-in-reply on 18.10.2016 and after hearing both the sides, learned City Civil & Sessions Judge, Court No.23, Ahmedabad was pleased to reject the application of the petitioner company vide order dated 30.11.2016, which is made the subject matter of the present petition before this Court. 4. Pursuant to the Rule having been issued in the month of July 2018, the matter has come up for consideration before this Court, in which the Court heard learned advocate Mr. Jignesh L. Hajare for the petitioner company, learned advocate Mr. Kshitij Amin for respondent No.2 and learned Public Prosecutor Mr. Mitesh Shah for respondent No.1-State. 5. Learned advocate Mr. Jignesh Hajare for the petitioner has raised multiple contentions and basic contention was to the tune that the petitioner company, being a financier, is the owner till the higher purchase agreement is exhausted by making full payment of loan. Following are the contentions which are raised before this Court:- (A) That the impugned order passed by the Ld. Trial Court is absolutely illegal and contrary to the law and contrary to the facts and circumstances on record and hence the same is liable to be quashed and set aside in the interest of justice. (B) That the Ld. Trial Court has not appreciated the facts and circumstances of the case in question and thereby have committed a serious error of law in not believing that the petitioner company is the real owner of the Scorpio Car as the accused has borrowed the loan from the petitioner company to the tune of Rs.7 lakh to purchase the Scorpio Car and also executed the hypothecation agreement in favor of the petitioner company. It is settled legal position that if the vehicle is the hypothecated with any of the finance company or bank, until and unless the hypothecation would not be over, the purchaser cannot said to be the owner of the vehicle as per the terms and conditions of the hypothecation agreement. And therefore, as per the definition of the vehicle owner envisaged under Section 2(3) of the Motor Vehicles Act, the petitioner company is the owner of the vehicle Scorpio Car bearing no.GJ-09-BC-7056 and not the Kantilal Kalal and therefore, the order in question passed by the Ld. Trial Court is liable to be quashed and set aside. (C) It is humbly submitted that the Ld. Trial Court have not been consider the judgments cited by the petitioner company in its true and perspective manner. The Ld. Trial Court has committed grave error in interpretation of the authorities produced before him for adjudication of the issue and thereby wrongly answered the question of law involved for the consideration that in what circumstances according to facts of the case, the seized vehicle can be release therefore also, the order in question passed by the Ld. Trial Court is liable to be quashed and set aside. (D) It is respectfully submitted that the Ld. Trial Court has committed grave error in not appreciating that the hire purchase agreement are executor contracts under which the goods are let on the 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 schemes gained in popularity, the dealer’s who are not endowed with liberal amount of working capital found it difficult to extend the scheme to many customers. Then the finances came into the picture. The finance company would buy the goods from the dealer and led them to the customer under hire purchase agreement. The dealer would deliver the goods to the customer who would then drop out the transaction leaving the finance company to collect installments directly from the customer. Under hire purchase agreement, the higher is simply paying for the use of goods and for the option to purchase them. The dealer would deliver the goods to the customer who would then drop out the transaction leaving the finance company to collect installments directly from the customer. Under hire purchase agreement, the higher is simply paying for the use of goods and for the option to purchase them. The finance charge, representing the difference between the case price and the hire purchase price, is not interested but represents a sum which the hirer has to pay for the privilege of being allowed to discharge the purchase price of goods by installments. And thus, the possessor of the agreement executed by the parties, the hirer would not become the owner of the property until he pays the entire installment. So even as per the RTO records, the ostensible I ownership is with somebody of say the hirer, the goods under the HP agreement would remain under the ownership of the finance as per the terms of HP agreement, and therefore also, the Learned Trial Court has committed grave error in not appreciating the petitioner company as a real owner as per the terms of the HP agreement, so the impugned order is required to be interfered by this Honorable Court and the custody of the said vehicle is required to be handed over to the petitioner company. (E) It is respectfully submitted that the Ld. Trial Court has not appreciated the facts in the light of the relevant law applicable in the terms of HP agreement available on record. It is respectfully submitted that no special reasons are offered for keeping the vehicle with the court. A valuable vehicle unnecessarily is lying with the police and the value of the vehicle is getting deteriorated day by day. The learner trial court ought to have appreciated one aspect that the vehicle in question needs to be handed over to the petitioner when discretion is required to be exercised in the light of the facts available on record and the law applicable to the facts of the case. Balanced and objective appreciation is only important arm of a disciplinary decision is called for. And therefore also, the order impugned is required to be quashed and set aside and the custody of the vehicle in question is required to be handed over to the petitioner company in the large interest of justice. Balanced and objective appreciation is only important arm of a disciplinary decision is called for. And therefore also, the order impugned is required to be quashed and set aside and the custody of the vehicle in question is required to be handed over to the petitioner company in the large interest of justice. (F) It is respectfully submitted that it is clear that registration and issuing of registration certificate are essential for any such motor vehicles, before it is put to use that any person in whose favor such a certificate of registration is issued, obviously the registered owner and it would ordinarily be prudent and in consensus with the provisions of the MV Act. Until, transfer of ownership, is entered in the certificate of registration in accordance with relevant rule the person in whose favor such certificate of registration is issued is the owner and entitled to custody of the said vehicle but in the light of the scheme of section 48, 50 and 51 of the MV Act, this ordinary principle would not help 1/3 person claiming to be the perfect purchaser with value without notice against the finance having written HP agreement executed in its favor by purchaser in whose favor/ benefit the finance has been disbursed. Same is the case under the lease agreement or hypothecation agreement, in the present case, the sale of the petitioner company is that the vehicle in question has been financed by it and there is a clear argument between the company and the registered owner. So, unless the amount is paid and formality of transfer of vehicle is concluded, the registered owner would remain only ostensible owner. In this connection, ostensible it is pleaded for the custody of the vehicle before the court or the police in a criminal offence, the question of real ownership should be examined because the real ownership is acquired by the purchase of exclusive ownership and ownership as per certificate of registration are two different aspects. A registered owner under HP agreement has to pay the full amount of the consideration or agreed amount under hire purchase/ hypothecation agreement as the case may be to become exclusive real owner. It seems that the landed trial judge has not applied the facts and law in the correct perspective and this is the error it needs rectification. A registered owner under HP agreement has to pay the full amount of the consideration or agreed amount under hire purchase/ hypothecation agreement as the case may be to become exclusive real owner. It seems that the landed trial judge has not applied the facts and law in the correct perspective and this is the error it needs rectification. And therefore also, the order impugned is required to be quashed and set aside. (G) It is respectfully submitted that whenever a clear mollified or such oblique motive in a commercial transaction or financial matters by any act or omission, delivers a criminal wrong, then it should be viewed with sensitivity and different angle; otherwise the value base the normative behavior which is the backbone of such transaction, would sustained a great damage. So while passing order in such or similar matters, especially when the court below is asked to exercise discretion, it becomes obligatory on the part of the Court below also to see that a person who is wrong doer, is not put to an advantageous position; otherwise it may carry wrong signal to the society and so the finding of the learned trial court should be set at naught. On this very ground also, the impugned order needs to be quashed and set aside in the interest of justice. (H) That even otherwise the impugned order is illegal, bad and arbitrary and deserves to be quashed and set aside as per the facts and the circumstances and therefore, no prudent person can believe the same to be true and therefore, the petitioner is requesting to this Hon’ble Court with the folded hand and bowed head by knocking the doors of this temple of law that the custody of the said vehicle of Scorpio Car bearing registration no.GJ-09-BC 7056 kindly be handed over to the petitioner by quashed and set aside the impugned order in the interest of justice. 6. While substantiating these submissions, learned advocate Mr. Hajare has relied upon few decisions of the Apex Court, reported in (2008)5 SCC 752 , 2002(10) SCC 283 and AIR 2010 SCW 2967 and reiterated his request to set aside the impugned order and release the vehicle in question in favour of the petitioner. 7. As against the aforesaid submissions, learned advocate Mr. Hajare has relied upon few decisions of the Apex Court, reported in (2008)5 SCC 752 , 2002(10) SCC 283 and AIR 2010 SCW 2967 and reiterated his request to set aside the impugned order and release the vehicle in question in favour of the petitioner. 7. As against the aforesaid submissions, learned advocate Mr. Kshitij Amin appearing for the contesting respondent No.2 has contended that the order passed by learned City Civil & Sessions Judge is perfectly just and proper within four corners of law and after assigning proper reasons, the discretion is exercised and as such, there is no jurisdictional error nor any material irregularity is committed. In the affidavit-in-reply, which has been filed in the Court below, it has been specifically contended that the vehicle in question was seized as muddamal under a separate Statute and as such, general proposition about release of the vehicle being a muddamal is not applicable. There is a stringent provision of the Statute, under which for serious offence against society, the vehicle in question is seized as a muddamal and further, when learned Trial Judge passed the order, the investigation was going on and as such, there is no error committed by learned Judge in any form. To substantiate his contention, learned advocate Mr. Kshitij Amin has referred to the provisions contained under Sections 451 and 457 of Cr.P.C. and correspondingly, has also referred to Sections 60(3) of the NDPS Act and as such, looking to these provisions, the contention which has been raised by the petitioner company is not available to be canvased and additionally, Mr. Kshitij Amin has pointed out that this very contention came up for consideration before Hon’ble the Apex Court in the case of Ganga Hire Purchase Pvt. Ltd. Vs. State of Punjab and others reported in (1999)5 SCC 670 [Equivalent citation: AIR 2000 SC 449 ], in which after considering the definition of the ‘owner’, defined under the Act, the Apex Court has also turned down the contention which has been raised, like the present petitioner company, and accordingly, Mr. Kshitij Amin has submitted that there is no contrary view visible till date. Learned advocate Mr. Kshitij Amin has submitted that there is no contrary view visible till date. Learned advocate Mr. Kshitij Amin has further contended that looking to the object of the Act and stringency of the provisions, the vehicle in question was not rightly released in favour of the petitioner since the petitioner company was intending to sell away the vehicle after getting possession thereof and as such, when the Court requires muddamal, the same would not be available, and as such, there is no illegality committed by the Court below. 8. Additionally, learned advocate Mr. Kshitij Amin on instruction, has pointed out that in the present case, by passage of time, trial has already been on the verge of conclusion, evidence has been recorded and even arguments have also been substantially over and the case is kept for judgment. When that be the situation, now at this stage, it is not desirable to release the vehicle in question in favour of the petitioner company, especially when the case itself is likely to be decided one way or the other. Hence, keeping this peculiar set of circumstance in mind, learned advocate Mr. Kshitij Amin has requested the Court not to grant the relief as prayed for in the petition. 9. To the aforesaid stand of the respondent No.2, learned Public Prosecutor Mr. Mitesh Amin appearing on behalf of the respondent No.1- State has completely supported the stand of the respondent No.2 and has stated that by virtue of the fact that now the entire trial is over, judgment is awaited, there is no desirability of release of the vehicle at this stage. Hence, since the issue is answered by the Apex Court, there is no need to set aside the impugned order and further, in the present petition filed under Articles 226 and 227 of the Constitution of India, no interference is expedient since the order in question is a reasoned order and is passed after giving full opportunities to the parties to the proceedings. 10. 10. Having heard learned advocates for the parties and having gone through the material on record, it appears that first of all, the vehicle in question, i.e. Scorpio car, is undisputedly seized as a muddamal under the special Statute, named as NDPS Act, and undisputedly, when the vehicle was intercepted, the registered owner, i.e. Kantilal Kalal, was present, in which huge quantity of contraband article, i.e. heroin, is seized. The Act of 1985 is a Special Act enacted to give effective control over trafficking of such kind of psychotropic substance and for implementation of International Conveyance relating to Narcotic Drugs and Psychotropic substances. So, with view to make a stringent provision for control and regulation of operation relating to narcotic drugs and psychotropic substances, this Act has been enacted. The Act has given definition of ‘Conveyance’ in Section 2(viii), that ‘Conveyance’ means a conveyance of any description whatsoever, which includes any aircraft, vehicle or vessel. A further provision which has been made about confiscation is Section 60, which deals with liability of illicit drugs, substances, plants, articles and conveyances to confiscation. This Section 60 has sub-section (3), which is very relevant to the issue. Hence, the Court deems it proper to reproduce the same hereinafter:- “60(3). Any animal or conveyance used in carrying any narcotic drug or psychotropic substance [or controlled substance], or any article liable to confiscation under sub-section (1) or subsection (2) shall be liable to confiscation, unless the owner of the animal or conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person-in-charge of the animal or conveyance and that each of them had taken all reasonable precautions against such use.” Now, keeping this statutory provision in mind, a bare perusal of the order, impugned in this petition, indicates that from the registered owner Mr. Kantilal Kalal, who is accused No.2 of this serious offence, in which heroin to the extent of more than 1 kg is seized and when request was made by the petitioner company, the investigation of this serious offence was going on. Kantilal Kalal, who is accused No.2 of this serious offence, in which heroin to the extent of more than 1 kg is seized and when request was made by the petitioner company, the investigation of this serious offence was going on. Hence, in due discharge of discretion, learned City Civil & Sessions Judge, Court No.23 was pleased to reject the application and the order appears to be a well reasoned order which, in considered opinion of this Court, cannot be said to be perverse in any form nor suffers from any material irregularity. 11. In light of the aforesaid circumstance, the issue raised by the petitioner company appears to be clearly answered by the Apex Court in the case of Ganga Hire Purchase Pvt. Ltd. (supra). Relevant observations contained in para 2 and 3 of the said judgment, since relevant and considered by this Court, are reproduced hereinafter:- “2. Under Sub-section (3) of Section 60 of the NDPS Act, any animal or conveyance used in carrying any narcotic drug or psychotropic substance is liable to confiscation, unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person-in-charge of the animal or conveyance and that each of them had taken all reasonable precaution against such use. There is no dispute that the vehicle in question was found to be carrying certain narcotics. The bone of contention of the appellant is that in view of the hire purchase agreement, the appellant continues legally to be 'the owner' of the vehicle so long as the entire hire purchase money has not been paid and therefore unless and until it is established that the vehicle was used for carrying of narcotics with the knowledge of the appellant, an order of confiscation could not have been passed. In support of this contention, reliance has been placed on a decision of a learned single Judge of Rajasthan High Court in the case of Bidhi Singh v. M.S. Mandyal 1993 Cri LJ 498, The expression "owner" has not been defined in the NDPS Act. There is also no dispute that under the hire purchase agreement the title to the vehicle is retained with the appellant until and unless the entire hire purchase money is paid back. There is also no dispute that under the hire purchase agreement the title to the vehicle is retained with the appellant until and unless the entire hire purchase money is paid back. But, if the contention of the appellant is accepted, then all the vehicles which have been purchased on hire purchase basis, cannot be confiscated notwithstanding the fact that the vehicles were found to be used for commission of offences under the NDPS Act in carrying narcotic and psychotropic substances. The very purpose for engrafting Sub-section (3) of Section 60 of the NDPS Act is to have it as a deterrent measure to check the offences under the Act in question which have been found to be dangerous to the entire society. In the absence of any definition of "owner" in the NDPS Act, it would be reasonable for us to construe that the expression "owner" must be held to mean the "registered owner" of the vehicle in whose name the vehicle stands registered under the provisions of the Motor Vehicles Act. 3. In view of the aforesaid interpretation of the expression "owner" in Sub-section (3) of Section 60 of the NDPS Act, the appellant cannot be permitted to urge that the order for confiscation is bad as he had no knowledge of the fact that the vehicle was used for carrying any narcotic substances. The High Court, therefore, in our opinion, was justified in rejecting the contention of the appellant that the truck in question having been taken on a hire purchase agreement, for the purpose of Sub-section (3) of Section 60, the appellant shall be treated to be the owner.” From the aforesaid discussion, when the issue raised by the petitioner company is substantially answered by the Apex Court, this Court is of the clear opinion that the petitioner’s petition contains no merit. 12. Additionally, the Court has also found on instruction that the vehicle in question was seized in respect of the offence, which is already now tried by the Court below, entire trial is over, arguments are over, and the case is put up for judgment. When that be the situation, at this stage, the Court would not like to exercise the extraordinary jurisdiction, especially when there reflects no perversity and no irregularity of any nature. 13. When that be the situation, at this stage, the Court would not like to exercise the extraordinary jurisdiction, especially when there reflects no perversity and no irregularity of any nature. 13. In view of the aforesaid peculiarity of circumstance and the issue having been substantially covered by the decision of the Apex Court in the case of Ganga Hire Purchase Pvt. Ltd. (supra), the case law which has been cited by the petitioner company is of no avail to the petitioner as having gone through those decisions, it appears to this Court that same are not in any way helpful to the petitioner in view of this peculiar background of facts. 14. It is a settled position of law that if there is a change in circumstance, even one additional fact would make a world of difference in applying the precedent. Hence, considering this proposition of law also, this Court is of the view that there is no circumstance available for the Court to deviate from the observations made by the Apex Court in the case of Ganga Hire Purchase Pvt. Ltd. (supra). Hence, the petition deserves to be dismissed. However, dismissal of the present petition would not come in the way of the petitioner company to take out any other measure of recovery against recovery of loan, stated to be outstanding. 15. In view of the above, the petition stands dismissed. Rule is discharged.