Right of respondent company extinguished by payment of loan amount due under agreement.

(This Company Application praying this Court to declare that the transaction between the Respondent’s company and Kunhammad in connection with the Vehicle No.KL 11 D 9390 is only a loan transaction and not one of lease of the vehicle.)

Chitra Venkataraman, J.

These applications are filed by one C.T. Faisal. The prayer in these petitions is to declare the transaction between the respondent company, the company in liquidation and Kunhammad in connection with the vehicle KL 11 D 9390 as a loan transaction and not one of lease of the vehicle (C.A.No.749 of 2003); to declare that the respondent company was not entitled to claim or get anything more than a sum of Rs.4,00,000/- advanced as a loan with interest 15.5% per annum (C.A.No.750 of 2003); to direct the respondents to issue H.P. Termination form to the applicant in respect of the vehicle KL 11 D 9390 (C.A.No.751 of 2003); and to direct the respondents to refund to the applicant the sum of Rs.50,683/- with subsequent interest at 15.5% per annum till payment (C.A.No.752 of 2003).

2. The contentions in these applications is as follows:

The applicant herein is the owner of Ashok Leyland but with Chassis No.MYGO31224 and Engine No.MYE233584 bearing Registration No.KL 11 D 9390. He had purchased the same from M. Kunhammad, Kozhikode District, paying a sum of Rs.3,60,000/- to him. It is stated that the applicant is running a public transport service in the Kariyad – Kannur route.

3. It is stated by the applicant that the original owner Kunhammad paid a sum of Rs.25,000/- to T.V. Sundaram Iyengar & Sons Ltd., Madurai, as advance and made a booking for a chassis with Customer Code 2234135 as early as 21.11.1994. The said Kunhammad approached the respondent company, now in liquidation, for a loan amount of Rs.4,00,000/-, since the cost of the vehicle was more than Rs.4,56,474/-. The said Kunhammad was provided with a loan amount of Rs.4,00,000/- with interest at 15.5% per annum, repayable in four years.

4. It is stated that the price of the chassis was Rs.4,56,474/-. After deducting an advance of Rs.25,000/- paid already on 21.11.1994, the balance consideration payable was Rs.4,31,474/-. It is stated that since the loan sought for was Rs.4,00,000/- only, the balance of the amount of consideration of Rs.31,474/- was collected by the respondent company from Mr. Kunhammad on 9.9.1995 and paid the said amount of Rs.4,31,474/- on 18.9.1995 to the dealer. It is stated by the applicant herein that the agreement between Kunhammad and the financier, the company in liquidation, was one of loan agreement pure and simple, although the same was called a lease agreement. In respect of the loan taken, the vehicle was given as a security. It is also stated that registration certificate was issued in the name of Kunhammad with an entry that it was hypothecated to the respondent company as security for the repayment of the loan amount. The loan liability is evidenced by agreement dated 31.1.1996.

5. It is stated that as required by the local agent of the respondent company, several forms and few sheets of blank papers were signed and given by the said Kunhammad. The applicant had also obtained the road permit. The insurance was taken in the name of Kunhammad.

6. It is stated by the applicant herein, the subsequent purchaser from Kunhammad, that he had paid a sum of Rs.3,25,200/- towards the loan amount taken. The respondent had also issued official receipts for the same. However, the vehicle was seized on 16.11.1997, alleging default in the repayment. The applicant was compelled to make a payment of Rs.53,000/- to get the bus released on 29.11.1997, only to be seized again by the respondent from 22.6.1998. Once again, on payment of a further sum of Rs.1,10,592/-, the applicant got back the vehicle. Thereafter, a further sum of Rs.29,600/- was paid. Thus, a total amount of Rs.5,33,352/- was paid. The applicant further states that the respondent threatened to seize the vehicle unless a further sum of