The main legal point established in the judgment is that the true nature of a transaction can be determined from the terms of the agreement and the intention of the parties, and that a party is bound by the terms and conditions of the agreement they enter into.

1. Revision petitioner is the petitioner-plaintiff in I.A. 4117/85 in O. S.1017/85 of the II Additional Munsiff Court, Ernakulam. The suit has been filed for declaration that defendants 1 to 3 have no right, title or authority to take possession of the bus bearing Registration No. K. E. E. 4998 from the plaintiff and for permanent injunction restraining them from taking possession of the bus from him.

2. From the 4th defendant, plaintiff purchased the bus over which the former had entered into hire purchase agreement with the first defendant. According to the plaintiff, the principal amount due from the 4th defendant to the 1st defendant was Rs. 1,84,982.40. Plaintiff purchased the bus on 3rd May 1983 undertaking to pay the amount due to the 1st defendant. It is the case of the plaintiff that Rs. 2,30,784 has been paid towards the loan and the balance amount due from him to the 1st defendant is only Rs. 64,630. Contention of the plaintiff is that the transaction between defendants 1 and 4 though described as hire purchase agreement is only a loan transaction, that defendants 1 to 3 have no right to seize the bus from his possession and that at any rate they should not be allowed to take law into their own hands and forcibly take possession of the bus even if amount is due from him. The learned II Additional Munsiff did not grant injunction. Plaintiff filed C.M.A. 99/1985 and the I Additional District Judge, Ernakulam after hearing both sides refused to interfere with the order of the learned Munsiff.

3. Main contention of the revision petitioner (plaintiff) is that even if the transaction between defendants 1 and 4 is construed as hire purchase agreement, 1st defendant cannot seize the vehicle as the forfeiture clause in Ext. B-1 agreement is penal in nature and under S.74 of the Contract Act reasonable compensation as determined by the Court alone can be allowed. Counsel for the 1st defendant contended that the agreement is between 1st defendant and 4th defendant and therefore plaintiff has no locus-standi to challenge any terms in it. Another contention is that plaintiff alone is not competent to file the suit. It is pointed out that Ext. A-2 agreement shows that plaintiff and another person have purchased the bus from the 4th defendant and as that person does not figure as a plaintiff the suit is not maintainable.

4. In Ext. A-2 agreement executed between plaintiff and 4th defendant it is mentioned that the bus is subject to hire purchase agreement, that Rs. 2,07,416 remains to be paid to the 1st defendant and that the plaintiff and the co-executant should pay the same to the 1st defendant in monthly instalments. It is further recited that when the hire purchase amount and other liabilities mentioned in Ext. A-2 are fully discharged the registration certificate of the bus would be transferred by the 4th defendant to the plaintiff and the other contracting party. As plaintiff himself has admitted in Ext. A-2 that the transaction entered into between the 1st defendant and the 4th defendant is hire purchase agreement, he cannot now contend that the document evidences only a loan transaction. Counsel contended that assuming that Ext. B-1 evidences hire purchase agreement even then 1st defendant cannot seize the vehicle as the plaintiff and 4th defendant have paid lion's share of the amount as per Ext. B-1 and only a small portion of the amount remains due to the 1st defendant. Counsel contends that the recitals in Ext. B-1 entitling the 1st defendant to seize the vehicle is totally opposed to the reasonable compensation that could be awarded by the court and as the above clause is highly penal it cannot be enforced and only reasonable compensation within the meaning of S.74 of the Contract Act could be awarded.

5. There cannot be any doubt that Ext. B-1 is a hire purchase agreement. Clause V of Ext. B-1 provides that the hirer (4th defendant) shall duly perform and observe all the terms and conditions of the agreement a