Gujarat High Court

Ess Kay Fincorp Limited Through ... vs State Of Gujarat on 9 April, 2021

Bench: B.N. Karia

        R/SCR.A/681/2021                                         ORDER




      IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

     R/SPECIAL CRIMINAL APPLICATION NO. 681 of 2021

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ESS KAY FINCORP LIMITED THROUGH BHALABHAI AJUBHAI MAKWANA
                           Versus
                     STATE OF GUJARAT
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Appearance:
CHETANKUMAR V DARJI(9309) for the Applicant(s) No. 1
MR. MANAN MEHTA, APP for the Respondent(s) No. 1 and 2
RULE SERVED(64) for the Respondent(s) No. 3
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 CORAM: HONOURABLE MR. JUSTICE B.N. KARIA


                           Date : 09/04/2021


                            ORAL ORDER

1. As per endorsement made in the cause-list, the

respondent No.3 is duly served with the notice. But, no body

was remained present to contest this petition, when the matter

is called out.

2. Report dated Deesa South Police Station is submitted by

the learned APP, which is taken on record.

3. By way of this application, the applicant has prayed to

issue a writ, order or direction, directing the respondent No.2

to release/handover the custody of seized muddamal "Maruti

Suzuki Eeco car", bearing registration No. GJ-02-BP-7651 which

came to be seized by the Investigating Officer in connection

with FIR, being CR No. III-308 of 2018 registered with Deesa

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South Police Station, Banaskantha to the applicant, on

appropriate conditions, as deemed fit by this Hon'ble High

Court, in the interest of justice and also to allow the sale of

muddamal "Maruti Suzuki Eeco car", bearing registration No.

GJ-02-BP-7651 which came to be seized by the Investigating

Officer in connection with FIR, being CR No. III-308 of 2018

registered with Deesa South Police Station, Banaskantha on

appropriate terms and conditions, as may be deemed fit by

this Hon'ble Court in the interest of justice.

4. Heard learned advocate for the applicant and learned

APP Mr. Manan Mehta for the respondent-State.

5. In support of his arguments, learned advocate for the

applicant has relied upon orders passed by this Court in

Special Criminal Application Nos. 2538 of 2014; 2283 of 2016

and 2300 of 2016.

6. This Court had passed the following order in Special

Criminal Application No. 2538 of 2014, which read as under :-

"16. In such circumstances, I am of the view that the vehicle should be handed over to the finance company and the company should be permitted to sell the vehicle subject to certain terms and conditions. In this context may quote with profit a decision of the Supreme Court in the case of General Assurance Counsel and others v.

State of A.P. And others, 2010 AIR SCW 2967. The Supreme Court has made the following observations in

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paragraph Nos. 14 and 15 which reads as under:-

"14. In our considered opinion, the aforesaid information is required to be utilised and followed scrupulously and has to be given positively as and when asked for by the Insurer. We also feel, it is necessary that in addition to the directions issued by this Court in Sunderbhai Ambalal Desai (Supra) considering the mandate of Section 451 read with Section 457 of the Code, the following further directions with regard to seized vehicles are required to be given with Section 457 of the Code, the following further directions with regard to seized vehicles are required to be given.

"(A) Insurer may be permitted to move a separate application for release of the recovered vehicle as soon as it is informed of such recovery before the Jurisdicitonal Court. Ordinarily, release shall be made within a period of 30 days from the date of the application. The necessary photographs may be taken duly authenticated and certified, and a detailed panchamama may be prepared before such release.

(B) The photographs so taken may be used as secondary evidence during trial. Hence, physical production of the vehicle may be dispensed with.

(C) Insurer would submit an undertaking/ guarantee to remit the proceeds from the sale/auction of the vehicle conducted by the Insurance Company in the event that the Magistrate finally adjudicates that the rightful ownership of the vehicle, pursuant to the application for release of the recovered vehicle. Insistence on personal bonds may be dispensed with looking to the corporate structure of the insurer."

15. It is a matter of common knowledge that as and when vehicles are seized and kept in various police stations, not only they occupy substantial space of the police stations but upon being kept in open, are also prone to fast natural decay on account of weather conditions. Even a good

R/SCR.A/681/2021 ORDER

maintained vehicle loses its road worthiness if it is kept stationary in the police station for more than fifteen days. Apart from the above, it is also a matter of common knowledge that several valuable and costly parts of the said vehicles are either stolen or are cannibalised so that the vehicles become unworthy of being driven on road. To avoid all this, apart from the aforesaid directions issued hereinabove, we direct that all the State Governments/Union Territories/Director Generals of Police shall ensure macro implementation of the statutory provisions and further direct that the activities of each and every police stations especially with regard to disposal of the seized vehicles be taken care of by the Inspector General of Police of the concerned Division/Commissioner of Police of the concerned cities/Superintendent of Police of the concerned district."

17. The respondent No.2 has not yet become the absolute owner of the property as he is obliged to pay the loan amount. Even as per the RTO records, the ostensible ownership is with the applicant company."

7. Learned advocate for the applicant submits that the

respondent No.3 approached the applicant-Bank to avail loan

for purchasing a vehicle i.e. "Maruti Suzuki Eco car", bearing

registration No. GJ-02-BP-7651. That, the applicant-Company,

after due verification of the documents submitted along with

the loan application and after following due process,

sanctioned loan of Rs. 2,60,000/- to the respondent No.3 vide

loan agreement ID No.5330705 for purchase of the vehicle.

That, as per the terms of loan, the respondent No.3 has to

repay entire loan amount in 36 monthly equal installments of

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Rs. 10,340/- each and the applicant-Company got executed

Hypothecation Agreement from the respondent No.3 and the

same is reflected in vehicle registration certificate issued by

the RTO concerned. That, as per the terms of loan agreement,

the vehicle shall remain as security towards loan facility in the

name of applicant-Company. That, if the respondent No.3

become defaulter in repayment of the loan or breach any

terms of the loan agreement, the applicant- Company shall be

entitled to get back the custody of vehicle and the respondent

No.3 has no right, interest or title whatsoever in the nature on

vehicle. That, in such a condition, the applicant-Company shall

be entitled to recover outstanding loan amount by selling the

vehicle in question. That, the respondent No.3 failed to pay the

remaining loan installments, he has been declared as defaulter

by the applicant-Company. That, now the respondent No.3

became defaulter, the applicant-Company shall be entitled to

get custody of the said vehicle and recover outstanding loan

amount by selling the said vehicle. That, the applicant on

04.12.2020 issued a foreclosure of loan account to the

respondent No.3.

8. Learned APP Mr. Manan Mehta has opposed this

application and has submitted that by virtue of statutory

provisions, detention of the vehicle is thoroughly justified. It

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has been submitted that by virtue of provisions of the Gujarat

Prohibition Act, whenever such kind of vehicles are detained,

as muddamal, in connection with the offences where the

quantity of liquor is found to be 10 litres or more, the

detained vehicles are not to be released. He has

further relied upon a decision of this Court in case of

Pareshkumar Jaykarbhai Brahmbhatt vs. State of

Gujarat decided on 15.12.2017 in support of his

contention. As regards decisions of the Coordinate Benches

exercising jurisdiction under Article 226 for releasing vehicles,

learned APP is not able to offer any justifiable reason as to why

benefit, as extended by Coordinate Benches of this Court to

the applicants therein, should not be made available to the

applicant herein.

9. Having heard learned advocates appearing for the parties

and having gone through the material on record, it

prima facie appears that there is no dispute with regard

to the ownership of the vehicle in question. It also does not

appear that the vehicle concerned had been seized/detained in

connection with any offence including any offence under

the Prohibition Act prior to present seizure/detention.

10. That the vehicle in question was detained as

muddamal in connection with captioned referred FIR which

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is registered for offences punishable under the Prohibition Act.

Though the provisions of the Gujarat Prohibition Act, 1949,

imposes a restriction upon release, however, this Court is

of the view that no fruitful purpose would be achieved by not

releasing the vehicle in question. Further, this Court is of

the opinion that by imposing appropriate conditions to

achieve a balance between the rights of the parties,

the vehicle in question can be released. For the purpose of

arriving at this conclusion, this Court has taken assistance of

decisions of the Coordinate Benches, to which there is no

distinguishable view of this Court. Since decisions of

Coordinate Benches have been considered by this Court, few

relevant observations contained in one of the decisions i.e.

from a judgment dated 12.6.2019 passed in Special

Criminal Application No. 7631 of 2019 of a Coordinate

Bench are aptly quoted herein below :

"9. On thus hearing both the sides, without determining the other issues raised by the petitioner, in reference to Sections 98 and 99 and other provisions of the said Act and reserving that to be determined in future, in an appropriate proceedings being a contentious issue, this Court choses not to enter into that arena in the present matter and instead exercise the powers under Articles 226 and 227 of the Constitution.

10. This Court (Coram: J.B. Pardiwala, J.) however in the case of in 'ANILKUMAR RAMLAL @

R/SCR.A/681/2021 ORDER

RAMANLALJI MEHTA VS. STATE OF GUJARAT' (Supra) in Special Criminal Application No. 2185 of 2018, Dated: 05.04.2018, has also returned the vehicle recently under Articles 226 and 227 of the Constitution, exercising its powers to do that even at an initial stage.

10.1 It would be worthwhile to refer profitably at this stage to the observations made by the Apex Court in 'SUNDERBHAI AMBALAL DESAI VS. STATE OF GUJARAT' (Supra), which read as under:

"15. Learned senior counsel Mr. Dholakia, appearing for the State of Gujarat further submitted that at present in the police station premises, number of vehicles are kept unattended and vehicles become junk day by day. It is his contention that appropriate directions should be given to the Magistrates who are dealing with such questions to hand over such vehicles to its owner or to the person from whom the said vehicles are seized by taking appropriate bond and the guarantee for the return of the said vehicles if required by the Court at any point of time.

16. However, the learned counsel appearing for the petitioners submitted that this question of handing over vehicles to the person from whom it is seized or to its true owner is always a matter of litigation and a lot of arguments are advanced by the concerned persons.

17. In our view, whatever be the situation, it is of no use to keep such seized vehicles at the police stations for a long period. It is for the Magistrate to pass appropriate orders immediately by taking appropriate bond and guarantee as well as security for return of the said vehicles, if required at any point of time. This can be done pending hearing of applications for return of such vehicles."

10.2 The Apex Court has, thus, directed that within a period of six months from the date of production of the vehicle before the Court concerned, needful be done. It even went to the extent of directing that where the

R/SCR.A/681/2021 ORDER

vehicle is not claimed by the accused, owner, or the insurance company or by third person, then such vehicle may be ordered to be auctioned by the Court. If the said vehicle is insured with the insurance company then insurance company be informed by the Court to take possession of the vehicle which is not claimed by the owner or a third person. If Insurance company fails to take possession, the vehicles may be sold as per the direction of the Court. The Court would pass such order within a period of six months from the date of production of the said vehicle before the Court. It also directed that before handing over possession of such vehicles, appropriate photographs of the said vehicle should be taken and a detailed panchnama should also be prepared. The Apex Court also held and specifically directed hat concerned Magistrate would take immediate action for seeing that powers under Section 451 of the Code are properly and promptly exercised and articles are not kept for a long time at the police station, in any case, for not more than fifteen days to one month. It, therefore, directed that this object can also be achieved if there is proper supervision by the Registry of the concerned High Court in seeing that the rules framed by the High Court with regard to such articles are implemented properly. "

11. In view of the aforesaid observations, this Court is

inclined to consider the request made by the applicant-

Company.

12. In the result, this application is allowed. The concerned

Police Station shall handover possession of the vehicle to the

applicant at the earliest. It shall be open for the applicant-

Company to sell "Maruti Suzuki Eeco car", bearing

registration No. GJ-02-BP-7651, after executing a bond in the

sum of the amount of sale consideration before the trial Court.

The applicant is at liberty to dispose of the vehicle in question

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after following necessary procedure prescribed in the law for