IMPORTANT POINT
Recovery of possession of vehicle by Financee-owner as per terms of the hire purchase agreement, does not amount to a criminal offence.

By the Court—This petition has been filed for quashing the recovery to be made by the respondent Bank vide letter dated 26.10.2005 and to issue a direction to release and hand over the four-wheeler seized by the said respondent in arbitrary manner.

2. The writ petition is not maintainable as the respondent-Bank is not a scheduled Bank and it is not amenable to writ jurisdiction. Even otherwise, it is a case of higher purchase agreement wherein the status of the petitioner is merely a bailee and not the owner of the vehicle. It has been pointed out by the learned Standing Counsel that in such a situation, the Bank remains the owner of the vehicles unless the installments are duly paid by the bailee.

3. In Trilok Singh & Ors. v. Satya Deo Tripathi, AIR 1979 SC 850, the Hon’ble Supreme Court examined the similar case wherein the truck had been taken in possession by the Financer 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 Financer under Sections 395, 468, 465, 471, 12-B/34, I.P.C. This Court refused to exercise its power under Section 482, Cr.P.C. and did not quash the criminal proceedings on the ground that the Financer had committed an offence. However, reversing the said judgment, the Apex 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 Financer 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.

4. In K.A. Mathai alias Babu & Anr. v. Kora Bibbikutty & Anr., 1996 (7) SCC 212, the Hon’ble Apex Court had taken a similar view holding that in case of default to make payment of instalments, Financer 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 Financer 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 Financer had resumed the possession of the vehicle with a guilty intention.

5. In Jagdish Chandra Nijhawan v. S.K. Saraf, (1999) 1 SCC 119, the Hon’ble Supreme Court dealt with a case wherein the company had provided an accommodation to its employee and after termination of his services, he did not vacate the said accommodation and a criminal case was lodged against him under Sections 406, 408, 409, I.P.C. also taking the assistance of Section 630 of the Companies Act, 1956. The Hon’ble Apex Court held that as the accused had been granted a rent free accommodation as a part of the conditions of employment, the agreement provided for civil rights and in such a matter, complaint was held to be not maintainable.

6. In Charanjit Singh Chadha & Ors. v. Sudhir Mehra, (2001) 7 SCC 417, again the Hon’ble Apex Court held that recovery of possession of the vehicle by Financer-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 Financer, 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 Apex