Calcutta High Court (Appellete Side)
Manoj Kumar & Anr vs The State Of West Bengal on 25 September, 2023
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IN THE HIGH COURT AT CALCUTTA
CRIMINAL REVISIONAL JURISDICTION
APPELLATE SIDE
Present:
The Hon'ble Justice Ananya Bandyopadhyay
C.R.R. 1327 of 2014
Manoj Kumar & Anr.
-Vs-
The State of West Bengal
For the Petitioners : Mr. Dipanjan Dutt
Mr. Surojit Saha
Mr. Amitava Mitra
Mr. Subhadip Banerjee
For the State : Mr. N. P. Agarwal
Mr. Pratick Bose
Heard on : 28.03.2023, 07.08.2023
Judgment on : 25.09.2023
Ananya Bandyopadhyay, J.:-
1. The instant revisional application is filed by the petitioners praying for
quashing of the Charge-Sheet no. 641 dated September 30, 2013
under Section 341/406/384/506/34 of the Indian Penal Code,
pertaining to the proceedings of G. R. Case no. 2400 of 2013, pending
before the Court of the Learned Chief Judicial Magistrate, Paschim
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Midnapore, which arose out of Kharagpur (L) Police Station Case NO.
411 dated 13.07.2013 under Section 341/506/34 of the Indian Penal
Code.
2. The petitioners are employees of L & T Finance Ltd., holding the post
of Branch Manager and Collection Manager respectively. Both the
petitioners are working for gain from the office of the aforesaid
company situated at India, O.T. Road, Post Office Inda, Police Station
Kharagpur (Local), District Paschim Midnapore, Pin Code - 721305,
West Bengal.
3. A petition of complaint was filed by the opposite party no.2 before the
Court of the Learned Chief Judicial Magistrate, Paschim Midnapore,
therein alleging commission of offences punishable under Sections
341/406/384/506/34 of the Indian Penal Code and praying for a
direction in terms of Section 156(3) of the Code of Criminal Procedure
upon the Officer-in-Charge of Kharagpur (L) Police Station to treat the
said petition of complaint as First Information Report and cause
investigation thereon. The Learned Chief Judicial Magistrate, Paschim
Midnapore, upon receipt of such petition of complaint, was pleased to
direct the Officer-in-Charge of Kharagpur (L) Police Station to treat
the said petition of complaint as First Information Report and
investigate. Pursuant to such direction passed by the Learned
Magistrate, Kharagpur (L) Police Station Case No. 411 dated
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13.7.2013 under Sections 341/406/384/506/34 of the Indian Penal
Code was registered for investigation.
The complaint aforesaid inter alia narrated the following :-
a) The accused no.1, being L&T Finance Ltd., is a finance
company while the accused nos.2 and 3, being the petitioners
herein, are employees of the accused no.1 company.
b) On 16.12.2010, the witness no. 1, Nirmal Utthasini, took
financial assistance from the accused no. 1 company and
purchased a truck bearing registration no. Wb-29/9596.
Subsequently the said witness no. 1 due to financial
constrained sold the said vehicle, to the complainant/opposite
party no. 2 after entering into an Agreement for Sale. However,
due to non-payment of installments the vehicle could not be
transferred in the name of the opposite party no. 2.
c) It was decided that if the opposite party no. 2 repaid the entire
loan amount, then the witness no. 1 would transfer the said
vehicle bearing registration no. WB-29/9596 in the name of the
opposite party no. 2. In such circumstances, the opposite party
no. 2 started transportation of goods in the said truck and
gradually started clearing the dues.
d) It was alleged after clearing all the dues when the opposite party
no. 2 went to collect the No Objection Certificate (NOC), the
accused no. 2 and 3, being the petitioners, demanded more
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money from the opposite party no. 2. On protest by the opposite
party no. 2, an altercation started between the opposite party
no. 2 and the accused persons and as such, the opposite party
no. 2 returned without collecting the NOC. Since then, the
accused persons on one pretext or the other deferred the date
for giving NOC to the opposite party no. 2.
e) It is alleged that on 25.5.2013 when the aforesaid truck was
proceeding towards Golbazar, the petitioners along with 4/5
other miscreants stopped the said vehicle at NH-6. On query by
the driver of the said vehicle, the petitioners and their
associates started assaulting the driver and helper of the truck
and ultimately dragged them out of the truck. Thereafter the
accused no. 2 made the driver of the truck (witness no. 2) sign
on certain documents at gun point and thereafter snatched the
said vehicle and fled towards Chowringhee.
f) Thereafter the opposite party no. 2 lodged a complaint with the
Superintendent of Police, Paschim Midnapore.
g) It was the allegation of the opposite party no. 2 that his vehicle
had been illegally snatched by the accused persons and they
also threatened the driver of the opposite party no. 2 with
consequences of death and made him sign on certain
documents.
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4. After completion of a purported investigation, the Investigation Agency
submitted its report in final form vide Charge Sheet No. 641 dated
30.9.2013 wherein it was stated that a prima facie case had been
made out under Sections 341/406/384/506/34 of the Indian Penal
Code against the petitioners.
5. The Learned Advocate for the petitioners submitted as follows :-
a) L & T Finance Ltd. is a non banking company providing
financial assistance to individuals as well as to corporate
bodies.
b) In such usual course of business, one Nirmal Utthasini, son of
Sasanka Utthasini, of Village Brojolal Chowk, Post office -
Dakshin Chowk, District - Purba Midnapore, Pin - 721654, had
approached L & T Finance Ltd. for financial assistance for
purchase of a vehicle of model AL2516, having Chassis No.
MNA088668 and Engine No. MNA518053. On the basis of the
representations made by Nirmal Utthasini, L & T Finance Ltd.
had provided the said vehicle on a Loan-cum-Hypothecation
basis to Nirmal Utthasini. As per the terms and conditions
contained in the Loan-cum-Hypothecation Agreement dated
25.3.2008, Nirmal Utthasini stood at the borrower while Mrs.
Radharani Utthasini ( wife of Nirmal Utthasini) and Durga
Charan Jana stood as guarantors. The said vehicle, bearing
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registration No. WB-29/9596, stood hypothecated under the
said Agreement in favour of L & T Finance Ltd.
c) As per the terms of the said Agreement, Nirmal Utthasini agreed
to repay the loan amount in 53 monthly installments of which
the 1st installment consisted of an amount of Rs. 17,255/- and
remaining 52 installments consisted of an amount of Rs.
27,495/- each.
d) Clause 12 of the said Agreement provides for "Events of
Default", which includes non-payment of the monthly
installments by the borrower within the time specified under
the Agreement. Thus, failure to pay monthly installments within
the period mentioned in the said Agreement clearly constitute
an event of default and clause 13 of the said Agreement
provides for consequence for arising of "Event of Default",
whereby L & T Finance Ltd. was entitled to take re-possession
of the said vehicle.
e) However, after obtaining the loan amount, Nirmal Utthasini
failed to pay his dues in terms of the repayment Schedule under
the said Loan-cum-Hypothecation Agreement dated 25.03.2008
and thus, became a defaulter in terms of the condition of the
said Agreement. Despite having knowledge of such default, the
borrower did not repay the loan amount. Consequently the
Learned Advocate for L & T Finance Ltd. issued a notice dated
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June 01, 2012 to Nirmal Utthasini, inter alia terminating the
said agreement. By the said notice, the disputes between the
parties had been referred to the sole arbitrator in terms of the
said agreement as provided under Section 21 of the Arbitration
& Conciliation Act, 1996 for adjudication of said disputes in
accordance with the provision of the Arbitration & Conciliation
Act, 1996.
f) Subsequently notices were sent to Nirmal Utthasini, therein
informing him about the commencement of arbitration
proceeding before the Learned Arbitrator Sri Bharat B. Jain, but
the said borrower did not appear. Subsequently an Award was
passed by Sri Bharat B. Jain, Learned Arbitrator on October 22,
2012 against the borrower and his guarantor to the said loan
agreement.
g) From a perusal of the aforesaid Award dated 22.10.2012 passed
by the Learned Arbitrator, it would transpire that it was held in
favour of L & T Finance Ltd. that they were entitled to possess
the vehicle bearing registration no. WB-29/9596 and Nirmal
Utthasini was directed to forthwith surrender possession of the
said vehicle to L & T Finance Ltd.
h) Despite passing of the Award in favour of L & T Finance Ltd.,
Nirmal Utthasini failed to hand over the vehicle in favour of L &
T Finance Ltd. Under such circumstances, L & T Finance Ltd.
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took possession of the said vehicle from a third party, namely
Sk. Nizammuddin (opposite party no. 2).
i) The petitioners have no knowledge till date as to whether the
said award has been challenged either by the said borrower &
his guarantor before the appropriate court of law in terms of the
provision of the Arbitration & Conciliation Act, 1996 and
therefore the said award stands binding upon the parties
thereto being a decree passed by a competent Civil Court in
terms of the provisions of the Code of Civil Procedure.
j) Subsequently from a perusal of the First Information Report of
the proceeding impugned, it transpired that an illegal sale had
taken place in respect of the Hypothecated vehicle between
Nirmal Utthasini and the opposite party no. 2, which was
completely contrary to the terms of the Loan-cum-
Hypothecation Agreement. The opposite party no. 2 was not the
person entitled to possession of the vehicle in question and
thus, continuance of his possession of the said vehicle was
contrary to the terms of the said Agreement.
k) As a retaliatory measure, the proceeding has been initiated by
the complainant/opposite party no. 2.
6. Learned Advocate for the petitioners further submitted that the right of a
financier and/or hire purchase owner to take repossession of his vehicle
due to non-payment of the hire charges by the hirer has been well
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established by various decisions of the Hon'ble Supreme Court as also by
this Hon'ble Court. The Agreement of Loan executed between the accused
company and the opposite party no. 2 also clearly state that in the event
of failure on the part of the opposite party no. 2 to pay monthly
installments, the Agreement would stand terminated and the accused no.
1 company would be entitled to take repossession of the vehicle. In the
instance case, it is apparent that the opposite party no. 2 had failed to
pay the equal monthly installments as agreed to be paid by him in the
Loan-cum-Hypothecation Agreement, thereby forcing the accused no. 1
company, to take repossession of the said vehicle. The said Act of the
financier, in such circumstances, cannot be termed to be illegal and as
such the impugned proceeding is liable to be quashed.
7. It was further contended that initiation of a proceeding before a criminal
court with regard to a dispute arising out of a hire purchase agreement
between the hirer and the financier, whosoever has initiated the
proceedings, is not maintainable in the eye of law in as much as the
dispute is purely civil in nature.
8. From a perusal of the documents relied upon by the petitioners, it would
transpire that the act of repossession was conducted by L & T Finance
Ltd. on the strength of the order/Award passed by the Arbitrator and as
such, was in exercise of legitimate right of the said Company. In such
circumstances, the offences as alleged, cannot be said to have been made
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out. In such premise, the proceeding impugned is liable to be quashed
forthwith.
9. Learned Advocate for the State submitted that the proceedings should
not be quashed at a nascent stage without adjudication through trial.
10. In Sardar Trilok Singh & Ors. V. Satya Deo Tripathi1, the Hon'ble
Supreme Court observed as follows:
"5. We are clearly of the view that it was not a case where any
processes ought to have been directed to be issued against any of
the accused. On the well-settled principles of law if was very
suitable case where the criminal proceeding ought to have been
quashed by the High Court in exercise of its inherent power. The
dispute raised by the respondent was purely of a civil nature even
assuming the facts stated by him to be substantially correct. Money
must have been advanced to him and his partner by the financier on
the basis of some terms settled between the parties. Even assuming
that the agreement entered on 29th March, 1973 was not duly filled
up and the signature of the complainant was obtained on a blank
form, it is to be noticed that the amount of the two monthly
installments admittedly paid by him was to the tune of Rs. 3, 566/-
exactly @ Rs. 1,783/- per month. The complaint does not say as to
when these two monthly installments were paid. In the First
Information Report which he had lodged he had not, stated that the
third monthly installment was payable on July 31, 1973. Rather,
from the statement in the First Information Report it appears that the
installment had already become due on 28-7-1973 when the
complainant went out of Kanpur according to his case. The question
as to what were the terms of the settlement and whether they were
duly incorporated In the printed agreement or not were all questions
which could be properly and adequately decided in a civil court.
Obtaining signature of a person on blank sheet of paper by itself is
not an offence of forgery or the like. It becomes an offence when the
paper is fabricated into a document of the kind which attracts the
relevant provisions of the Penal Code making it an offence or when
such a documents is used as a genuine document. Even assuming
(1979) 4 SCC 396
that the appellants either by themselves or in the company of some
others went and seized the truck on 30-7-1973 from the house of the
respondent they could and did claim to have done so in exercise of
their bonafide right of seizing the truck on the respondent's failure to
pay the third monthly installment in time. It was therefore, a bona
fide civil dispute which led to the seizure of the truck. On the face of
the complaint petition itself the highly exaggerated rated version
given by the respondent that the appellants went to his house with a
mob aimed with deadly weapons and committed the offence of
dacoity in taking away the truck was so very unnatural and
untrustworthy that it could not sake the matter out of the realm of
civil dispute. Nobody on the side of the respondent was hurt. Even a
scratch was cot given to anybody."
11. In K.A. Mathai Alias Babu And Anr. V. Kora Bibbikutty and Anr.2, the
Hon'ble Supreme Court observed as follows:
"3. It is more than clear that the hire-purchase agreement with the
financier was entered into much prior in time, whereafter the
agreement of sale between A-2 and the complainant took place, and
which was subject to the rights of the financier. It is even otherwise
understandable that A-2 could not have passed a better title of the
bus to the complainant than that she had acquired for herself under
the hire-purchase agreement. Though we do not have the advantage
of reading the hire-purchase agreement, but as normally drawn it
would have contained the clause that in the event of the failure to
make payment of installment/s the financier had the right to resume
possession of the vehicle. Since the financier's agreement with A-2
contained that clause of resumption of possession, that has to be
read, if not specifically provided in the agreement, as part of the sale
agreement between A-2 and the complainant. It is, is there
circumstances, the financier took possession of the bus from the
complainant with the aid of the appellants. It cannot thus be said
that the appellants, in any way, had committed the offence of theft
and that too, with the requisite mens rea and requisite dishonest
intention. The ascertain of rights and obligations, accruing to the
appellants under the aforesaid two agreements, wiped out any
dishonest pretence in that regard from which it could be inferred
that they had done so with a guilty intention. In this view of the
(1996) 7 SCC 212
matter, we think that the High Court was in error in upsetting the
well-considered judgment of the Court of Session. We thus set aside
the impugned judgment and order of High Court and acquit the
appellants of the charges. They are on bail. Their bail bonds stand
cancelled. Fine if already paid, be refunded to the appellants. The
appeal is, thus allowed."
12. In Charanjit Singh Chadha and Ors. V. Sudhir Mehra3, the Hon'ble
Supreme Court observed as follows:
"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
installments 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
installments.
6. Though in India the Parliament has passed a Hire Purchase Act,
1972, the same has not been notified in the official gazette by the
Central Govt. so far. An initial notification was issued and the same
was withdrawn later. The rules relating to hire purchase agreements
are delineated by the decisions of higher courts. There are series of
decisions of this Court explaining the nature of the hire purchase
agreement and mostly these decisions were rendered when the
question arose whether there was a sale so as to attract payment of
tax under the Sales Tax Act.
(2001) 7 SCC 417
7. In M/s Damodar Valley Corporation vs. State of Bihar, this Court
took the view that a mere contract of hiring, without more, is a species
of the contract of bailment, which does not create a title in the bailee,
but the law of hire purchase has undergone considerable
development during the last half a century or more and has
introduced a number of variations, thus leading to categories and it
becomes a question of some nicety as to which category a particular
contract between the parties comes under. Ordinarily, a contract of
hire purchase confers no title on the hirer, but a mere option to
purchase on fulfilment of certain conditions. But a contract of hire
purchase may also provide for the agreement to purchase the thing
hired by deferred payments subject to the condition that title to the
thing shall not pass until all the installments have been paid. There
may be other variations of a contract of hire purchase depending
upon the terms agreed between the parties. When rights in third
parties have been created by acts of parties or by operation of law,
the question may arise as to what exactly were the rights and
obligations of the parties to the original contract.
8. In K.L. Johar & Co. vs. The Deputy Commercial Tax Officer,this
Court took the view that a hire purchase agreement has two
elements: (1) element of bailment; and (2) element of sale, in the sense
that it contemplates an eventual sale. 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.
9. Similar views were expressed earlier in Installment Supply (Pvt.)
Ltd. & Anr. vs. Union of India & Ors. and reiterated in Sundaram
Finance Ltd. vs. State of Kerala.
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 installments. 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 installments
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 re-delivering the vehicle to the
owners at their office, terminate the hire purchase agreement. Clause
8(viii) gives a right to the owner to re-possess 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, re-possession 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 re-possession 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 installments 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 re-possess 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:
"(k) 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 in as much as he takes it dishonestly."
13. But in the instant case, the owner re-possessing 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:
"24. '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'.
14. It is also to be noticed that learned author R.M. Goode, in his
book Hire Purchase Law & Practice (2nd Edn.) has observed as
follows at page 846:-
"It would seem that so long as the hirer is in possession of the
goods they belong to him for the purpose of the Act [The Theft
Act, 1968] even though his possession is unlawful, e.g.
because the hire-purchase agreement has come to an end. If
the owner has an enforceable right to possession then he will
not be guilty of theft in seizing the goods if he knew of his
legal rights since he will not be acting dishonestly but will
have taken the goods in the well founded belief that he has a
right to resume possession."
15. This Court also had occasion to consider this question. One of
the earlier decisions is Sardar Trilok Singh & Ors. vs. Satya Deo
Tripathi. In that case, the parties had entered into a hire purchase
agreement. The complainant alleged that the accused, in a high
handed manner during his absence came to his house and forcibly
removed the truck and thereby committed the offence of dacoity. The
police investigated the case and filed a final report. The accused
filed his objection before the Magistrate, but the objection was not
considered. The accused filed a revision before the session court
which was dismissed. Thereafter the accused filed a petition under
section 482 Cr.P.C. to quash the proceedings. That was summarily
dismissed by the High Court and the matter reached up to this Court
at the instance of the accused. In paragraph 5 of the judgment, this
Court observed:
"5. We are clearly of the view that it was not a case where
any processes ought to have been directed to be issued
against any of the accused. On the well-settled principles of
law it was a very suitable case where the criminal proceeding
ought to have been quashed by the High Court in exercise of
its inherent power. The dispute raised by the respondent was
purely of a civil nature even assuming the facts stated by him
to be substantially correct. Money must have been advanced
to him and his partner by the financier on the basis of some
terms settled between the parties... Even assuming that the
appellants either by themselves or in the company of some
others went and seized the truck on July 30, 1973 from the
house of the respondent they could and did claim to have
done so in exercise of their bona fide right seizing the truck on
the respondent's failure to play the third monthly installment
in time. It was, therefore, a bona fide civil dispute which led to
the seizure of the truck."
16. In K.A. Mathai & Anr. vs . Kora Dibbikutty & Anr., the bus was
obtained by the complainant on a hire purchase agreement. The
complainant paid only part of the consideration and defaulted in
paying the installments and the vehicle was taken possession of by
the financial and at that time, both the first accused who had
derived away the bus from the possession of the complainant and
the second accused were present in the bus. They were prosecuted
for the offence punishable under Section 379 read with Section 114
IPC. This Court holding that the bus was taken away at the instance
of the financier and the accused had not committed any offence
observed as under: (SCC pp. 212 - 13, para 3)
"Though we do not have the advantage of reading the hire-
purchase agreement, but as normally drawn it would have
contained the clause that in the event of the failure to make
payment of installments the financier had the right to resume
possession of the vehicle. Since the financier's agreement with
A-2 contained that clause of resumption of possession, that
has to be read, if not specifically provided in the agreement,
as part of the sale agreement between A-2 and the
complainant. It is in these circumstances, the financier took
possession of the bus from the complainant with the aid of the
appellants. It cannot thus be said that the appellants, in any
way, had committed the offence of theft and that too, with the
requisite mens rea and requisite dishonest intention."
17. The hire-purchase agreement in law is an executory contract of
sale and confers no right in rem on hire until the conditions for
transfer of the property to him have been fulfilled. Therefore, the re-
possession 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 re-possess 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
owner 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."
13. In Anup Sarmah V. Bhola Nath Sharma And Ors.4, the Hon'ble Supreme
Court observed as follows:
"4. In Trilok Singh and Ors. v. Satya Deo Tripathi, this Court
examined the similar case wherein the truck had been taken in
possession by the financier in terms of hire purchase agreement, as
there was a default in making the payment of installments. A
criminal case had been lodged against the financier under Sections
395, 468, 465, 471, 12B/34, Indian Penal Code. The Court refused
to exercise its power under Section 482, Code of Criminal Procedure
and did not quash the criminal proceedings on the ground that the
financier had committed an offence. However, reversing the said
judgment, this Court held that proceedings initiated were clearly an
abuse of process of the Court. The dispute involved was purely of
civil nature, even if the allegations made by the complainant were
substantially correct. Under the hire purchase agreement, the
(2013) 1 SCC 400
financier had made the payment of huge money and he was in fact
the owner of the vehicle. The terms and conditions incorporated in
the agreement gave rise in case of dispute only to civil rights and in
such a case, the Civil Court must decide as what was the meaning
of those terms and conditions.
5. In K.A. Mathai alias Babu and Anr. v. Kora Bibbikutty and Anr.,
this Court had taken a similar view holding that in case of default to
make payment of installments 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 assertions of rights and obligations accruing to the
parties under the hire purchase agreement wipes out any dishonest
pretence in that regard from which it cannot be inferred that
financier had resumed the possession of the vehicle with a guilty
intention.
6. In Charanjit Singh Chadha and Ors. v. Sudhir Mehra, this Court
held that recovery of possession of the vehicle by 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 option is exercised a sale takes place of the
goods which till then had been hired."
While deciding the said case, this Court placed reliance upon its
earlier judgments in M/s. Damodar Valley Corporation v. The State
of Bihar, Installment Supply (Private) Ltd. and Anr. v. Union of India
and Ors., K.L. Johar and Co. v. The Deputy Commercial Tax Officer,
Coimbtore III and Sundaram Finance Ltd. v. 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/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 repossessing the goods owned by him.
8. If the case is examined in the light of the aforesaid settled legal
proposition, we do not see any cogent reason to interfere with the
impugned judgment and order. The petition lacks merit and,
accordingly, dismissed."
14. In Suryapal Singh V. Siddha Vinayak Motors And Anr.5, the Hon'ble
Supreme Court observed as follows:
"2.Under the Hire Purchase Agreement, it is the financier who is the
owner of the vehicle and the person who takes the loan retain the
vehicle only as a bailee/trustee, therefore, taking possession of the
vehicle on the ground of non-payment of installment has already
been upheld to be a legal right of the financier. this Court vide its
judgment in Trilok Singh and Ors. v. Satya Deo Tripathi has
categorically held that under the Hire Purchase Agreement, the
financier is the real owner of the vehicle, therefore, there cannot be
any allegation against him for having the possession of the vehicle.
This view was again reiterated in K.A. Mathai alias Babu and Anr.
v. Kora Bibbikutty and Anr.; Jagdish Chandra Nijhawaa v. S.K.
Saraf and Charanjit Singh Chadha and Ors. v. Sudhir Mehra,
following the earlier judgment of this Court in Sundaram Finance
Ltd. v. State of Kerala and another; Smt. Lalmuni Devi v. State of
Bihar and Ors. and Balwinder Singh v. Asstt. Commissioner, C.C.E.
(2012) 12 SCC 355
3. In view of the above, prima facie we are of the view that the
courts below has committed an error in granting compensation to the
present Petitioner and which appears to be non-sustainable in law."
15. In Tata Motors Finance Limited V. State of West Bengal6, the Hon'ble
Calcutta High Court observed as follows:
"Now from records, it appears that before repossessing the vehicle the
notice was issued to the de facto complainant of the case, opposite
party no. 2 and both the pre-repossession intimation and post
repossession intimation were sent to the concerned police station. The
position has not been disputed by the learned counsel of the opposite
party except that relying on a decision of the Hon'ble Apex Court in the
case of Manager, ICICI Bank Limited v. Prokash Kaur reported in AIR
2007 Supreme Court 1349, he contended the recovery of bank loans
and seizure of vehicle can only be done only through legal means and
not in the way resort to by the petitioner.
Thus from the rival submissions of the parties and materials available
from the records, I find this is a case where the financier repossessed a
vehicle invoking the default clause contained in the hire purchase
agreement for non-payment of the instalments amount. Having regard
to that no criminal offence can said to have been committed. In this
regard reliance may be placed in the case of Trilok Singh v. Satya Deo
Tripathi reported in AIR 1979 SC 850. The view taken by the Hon'ble
Apex Court in the said case has been reaffirmed in the case of K.A.
Mathai @ Babu v. Kora Bibbikutty reported in (1996) 7 SCC 212 as
well as in the case of Charanjit Singh Chaddya v. Sudir
Mehera reported in (2001) 7 SCC 417.
This criminal revision accordingly succeeds and the impugned
complaint is quashed."
2013 SCC OnLine Cal 18655
16. Clause 12 of the Loan cum Hypothecation agreement stipulated the events
of default which inter alia includes -
"12.1. fails to pay the Loan installments, Interest and all other
monies payable or part thereof within the stipulated time
whether demanded or not or any other charge or payment
required hereunder within 7 days of their becoming due;......
12.4. without the Lender's consent, sells, transfers, or
attempts to sell or pledge, parts with possession or sublets or
charges or encumbers or creates any lien on the Assets or the
Assets or any item of the Assets is endangered in the opinion
of the Lender or the interest of the Lender is jeopardised"
17. Clause 13 and 14 of the aforesaid agreement states as follows:-
"13. Consequences in the event of default
On the occurrence of any of the events specified above, without any
notice to the Borrower, the Lender shall have right to :
13.1. Terminate this Loan agreement
13.2. Recover from the Borrower the arrears of moneys due and
unpaid upto the date of termination and such other future
installments for the unexpired period, had this agreement continued
13.3. Initiate legal action as available under applicable laws
13.4. repossess, sell, or otherwise dispose off/deploy the assets in
such manner, as the Lender may think fit.
13.5. Give suitable publicity and such particulars of the Borrower as
the Lender may deem fit
14. Repossession of Assets
14.1. In the event of Repossession, the Borrower shall, if required by
the Lender, forthwith deliver or cause to deliver the Assets to the
Lender at the address of the Lender stated in this Agreement or at
such other addresses as the Lender may specify or if not so
required, shall hold the assets in trust for the Lender so as to make
it available to the Lender for collection by itself or by its employees
or agents; the Lender or its employees or agents shall be entitled to
enter upon any land or buildings on or in which the assets are or are
believed by the Lender or its employees or agents to be situated.
14.2. In the event of the Lender taking repossession of the Asset, the
Borrower hereby unconditionally and irrevocably undertakes to and
agrees with the Lender that the Borrower shall sign, execute and
deliver all such instruments forms applications and writings and
shall do all such other acts, deeds and things as may be required by
the Lender/may chose and for this purpose the Borrower hereby
irrevocably and unconditionally authorizes the Lender that in the
event of the Borrower refusing or being unable to or failing to sign
and deliver any of the aforesaid instruments application forms of
other writings as may be required by the Lender, the Lender shall be
entitled without being obliged to do so to sign such instruments
forms, applications papers and writings for and on behalf of the
Borrower as a duly constituted attorney of the Borrower."
In the instant case the borrower had sold the vehicle in question to
opposite party no. 2, complainant without the knowledge of the
petitioner/financial institution which in itself is a cause of default
along with non-payment of the installments. The financial institution
is legally the owner of the vehicle till the repayment of the loan
amount and to transfer the possession without the consent of the
petitioner/financial institution is a breach of the Loan cum
Hypothecation agreement.
18. Clause 8.8 of the aforesaid agreement states as follows:-
"8.8. Hereby further agree and declare that the BORROWER's
liability and obligations to repay the amounts of the Loan,
interest, cost, charges, expenses and all other monies as may
be payable under this Agreement shall be absolute and
unconditional and the BORROWER shall pay it to the LENDER
the same in time regardless of any circumstances/disputes"
19. Clause 9.1 of the aforesaid agreement states as follows:-
"9.1. The Borrower hereby agrees and declares that the
Borrower's obligation to pay all Loan Installments, Interest
and all other charges & moneys payable under or pursuant to
this Agreement, shall be absolute and unconditional"
Clause 9.6 of the aforesaid agreement states as follows:-
"9.6. Shall not attempt to sell, dispose off or encumber in any
way or part with the possession of the said Asset without the
prior written consent of the LENDER".
20. Clause 11.1 of the aforesaid agreement states as follows:-
"11.1. In consideration of the LENDER agreeing to lend the
said loan, the BORROWER do hereby create an exclusive
charge through hypothecation of the said Asset in favour of
LENDER, in such form as may be acceptable to and to the
satisfaction of LENDER, for the repayment to the LENDER of
the said Loan, interest and other monies and all costs,
charges and expenses as may become due and payable to
LENDER under these presents."
21. Clause 12.1 of the aforesaid agreement states as follows:-
"12.1. fails to pay the Loan Installments, Interest and all other
monies payable or part thereof within the stipulated time
whether demanded or not or any other charge or payment
required hereunder within 7 das of their becoming due;"
22. Clause 12.4 of the aforesaid agreement states as follows:-
"12.4. without the Lender's consent, sells, transfers, or
attempts to sell or pledge, parts with possession or sublets or
charges or encumbers or creates any lien on the Assets or the
Assets or any item of the Assets is endangered in the opinion
of the Lender or the interest of the Lender is jeopardised".
23. The act of the petitioners to repossess the vehicle from the illegal
possession of the opposite party no. 2 cannot be considered to be obstructive
with an intention of wrongful restraint or criminal breach of trust. The financial
institution did not enter into any contractual relationship with the opposite
party no. 2 nor entrusted any property or the vehicle to him. On the contrary
opposite party no. 2 is an intruder being aware of his status to have entered
into an unlawful nexus with the borrower. The petitioners abiding by the
direction of the Arbitral Award repossessed the vehicle and in terms of the
Loan-cum-Hypothecation agreement. The possibility of an allegation of
extortion is figmentary. The dispute between the parties is civil in nature and
devoid of criminal intent on the part of the petitioners.
24. In the case of State of Haryana and Others v. Bhajan Lal and Others7
the Hon'ble Supreme Court has held as follows :
"102. In the backdrop of the interpretation of the various
relevant provisions of the Code under Chapter XIV and of the
principles of law enunciated by this Court in a series of
decisions relating to the exercise of the extraordinary power
1992 Supp (1) SCC 335
under Article 226 or the inherent powers under Section 482 of
the Code which we have extracted and reproduced above, we
give the following categories of cases by way of illustration
wherein such power could be exercised either to prevent
abuse of the process of any court or otherwise to secure the
ends of justice, though it may not be possible to lay down any
precise, clearly defined and sufficiently channelised and
inflexible guidelines or rigid formulae and to give an
exhaustive list of myriad kinds of cases wherein such power
should be exercised.
. (1) Where the allegations made in the first information report
or the complaint, even if they are taken at their face value and
accepted in their entirety do not prima facie constitute any
offence or make out a case against the accused.
(2) Where the allegations in the first information report and
other materials, if any, accompanying the FIR do not disclose
a cognizable offence, justifying an investigation by police
officers under Section 156(1) of the Code except under an
order of a Magistrate within the purview of Section 155(2) of
the Code.
(3) Where the uncontroverted allegations made in the FIR or
complaint and the evidence collected in support of the same do
not disclose the commission of any offence and make out a
case against the accused.
(4) Where, the allegations in the FIR do not constitute a
cognizable offence but constitute only a non− cognizable
offence, no investigation is permitted by a police officer
without an order of a Magistrate as contemplated under
Section 155(2) of the Code.
(5) Where the allegations made in the FIR or complaint are so
absurd and inherently improbable on the basis of which no
prudent person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused.
(6) Where there is an express legal bar engrafted in any of the
provisions of the Code or the concerned Act (under which a
criminal proceeding is instituted) to the institution and
continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act, providing
efficacious redress for the grievance of the aggrieved party.
(7) Where a criminal proceeding is manifestly attended with
mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance on
the accused and with a view to spite him due to private and
personal grudge."
25. In the instant case the facts disclosed in the complaint do not make out
any contravention of the provisions of Sections 341/406/384/506/34 of
the Indian Penal Code and as such no offence under the aforesaid sections
of the Indian Penal Code can be said to have been made out. To allow to
continue with the trial will result in abuse of process of law.
26. In view of the above discussions, Charge-Sheet no. 641 dated
September 30, 2013 under Sections 341/406/384/506/34 of the Indian
Penal Code, pertaining to the proceedings of G. R. Case No. 2400 of
2013, pending before the Court of the Learned Chief Judicial Magistrate,
Paschim Midnapore, which arose out of the corresponding investigational
proceedings of Kharagpur (L) Police Station Case No. 411 dated
13.07.2013 under Section 341/506/34 of the Indian Penal Code is
quashed.
27. The criminal revisional application being no. 1327 of 2014 is allowed.
28. Accordingly, CRR 1327 of 2014 stands disposed of. Connected application
if there be any, also stands disposed of.
29. There is no order as to cost.
30. Let the copy of this judgment be sent to the learned trial court as well as
the police station concerned for necessary information and compliance.
31. All parties shall act on the server copy of this judgment duly downloaded
from the official website of this court.
(Ananya Bandyopadhyay, J.)
