Orissa High Court
Ph. Arunachalam vs State Of Orissa And Anr. on 31 October, 1988
Equivalent citations: 1989CRILJ739
Author: G.B. Patnaik
Bench: G.B. Patnaik
ORDER G.B. Patnaik, J.
1. The order of the Sub-Divisional Judicial Magistrate, Angul rejecting the petitioners prayer to hand over the Seized truck in his custody during the pendency of the criminal case is being challenged in this revision.
2. Petitioner's case briefly stated is that he is the representative of Coromandel Finance Company Limited, who has the hire purchase business. Pursuant to a hire purchase agreement between the said finance company and opposite party No. 2, a sum of Rs. 2,35,900/- was advanced to opposite party No. 2 for purchase of the vehicle C.R.D. 7801. The amount in question was to be repaid in thirty five instalments as contained in the agreement itself, The vehicle was purchased from one Ramdas Motor Transport Company and though in the register of Book, opposite party No 2 was described as a registered owner, but in the insurance policy as well as in the registration book, it was specifically mentioned that the financing company would continue to be the owner of the vehicle until the entire amount under loan is paid up. The hire purchase agreement further contains a stipulation that in the event the borrower fails to pay the instalments in time, then the financing company can take possession of the vehicle and can sue the borrower for damages. Opposite party No. 2 having failed to pay the instalment dues even in spite of demands made by the petitioner, on 8-9-87 the petitioner took over possession of the vehicle in accordance with the terms of the agreement contained in the hire purchase agreement and the vehicle was kept in the premises of the petitioner's office at Bhubaneswar. The petitioner also immediately wrote a letter to opposite party . No. 1 intimating that the vehicle has been seized in accordance with the stipulation contained in the agreement and requested opposite party No. 2 to pay the balance instalment dus so that the vehicle could be released, Opposite party No. 2 thereupon approached the petitioner and agreed to pay the instalments, but without paying the same lodged an F.I.R. On 15-10-87 alleging offence against the petitioner under Sections 448/449/ 379/506/34 I.P.C. Pursuant to the said F.I.R. a G.R. case was registered and then Angul police seized the vehicle from the custody of the petitioner on 18-10-87. On 20-10-87, the petitioner moved an application in the court of the Sub-Divisional Judicial Magistrate, Angul for getting custody of the vehicle in question. By the impugned order the Sub-Divisional Judicial Magistrate rejected the petitioner's application and directed that the vehicle be given to the custody of opposite party No. 2. It is this order of the learned Magistrate which is being assailed in this revision.
3. Mr. Murty, the learned Counsel for the petitioner contends that in view of the hire purchase agreement between the parties and the terms contained therein and in view of the admitted fact that opposite party No. 2 defaulted in payment of the instalment dues, in eye of law, the petitioner as the representative of the financing company continues to be the owner of the vehicle and, therefore, is entitled to have the custody of the vehicle under Section 457 of the Code of Criminal Procedure and the learned Magistrate committed gross error in refusing the petitioner's prayer to have the custody of the vehicle in question.
Mr. Misra, the learned Counsel for opposite party No. 2, on the other hand, contends (hat Section 457 of the Code of Criminal Procedure confers discretion on the Magistrate to make such order as he thinks fit in respect of delivery of the property in question and the said discretion having been exercised in favour of opposite party No. 2, the High Court should not interfere with the said order in revision. The correctness of the rival submissions depend upon an interpretation of Section 457 of the Code of Criminal Procedure.
4. Under Section 457 of the Code of Criminal Procedure, three courses are open to a Magistrate, namely,-
(i) to make such order as he thinks fit respecting disposal of the property, or
(ii) the delivery of such property to the person entitled to the possession thereof, or
(iii) if such person cannot be ascertained, to pass an order respecting the custody and production of such property.
No doubt, the provisions of Section 457 confer discretion on the Magistrate to decide the question as to who is the person entitled to possession, which in other words should mean a lawful or rightful title to hold the property. But the said discretion is a judicial discretion and has to be exercised after applying mind to all relevant materials on record and after coming to a conclusion as to who would be entitled to possess the same. If the Magistrate fails to decide the title to the property in favour of any person, then it would be appropriate for him to direct delivery of the property in possession of the person from whom the vehicle was seized. The question of release of the property has to be decided on its own merits in each case and the discretion of the Magistrate has to be exercised after due consideration of the interests of justice including the prospective necessity of production of the seized property at the time of the trial. If the High Court comes to the conclusion that the Magistrate has exercised his discretion judicially after applying his mind to the materials placed before him, then it will not interfere with the order in exercise of its revisional jurisdiction. But where the High Court comes to the conclusion that the Magistrate has not judicially exercised his discretion and has come to a conclusion without applying his mind to the relevant materials on record, then it will interfere with such an order of the Magistrate.
5. Mr. Murty, the learned Counsel for the petitioner placed reliance on a decision of the Karnataka High Court reported in 1978 Cri LJ 1546 (Jagadeesan v. State of Karnataka) wherein the High Court had held that the financier under the Hire purchase agreement was entitled to have the custody of the vehicle in view of the provisions contained in the hire purchase agreement The learned Judge of the Karnataka High Court very much relied upon the decisions of the Supreme Court in the case of K.L. Johar & Co. v. Commercial Tax Officer and in the case of Sundaram Finance Ltd. v. State of Kerala . In K. L, Johar and Co.'s case, the Supreme Court brought out a distinction between a "hire purchase agreement" and a "sale" and held:
...Thus the intending purchaser is known as the hirer so long as the option to purchase is not exercised and the essence of a hire purchase agreement properly so called is that the property in the goods does not pass at the time of the agreement but remains in the intending seller and only passes later when the option is exercised by the intending purchaser. The distinguishing feature of a hire purchase agreement is that the property does not pass when the agreement is made but only passes when the option is finally exercised after complying with all the terms of the agreement.
(Emphasis given) The learned Judge of the Karnataka High Court also took into consideration the distinction of the term "owner" in Section 2(19) of the Motor Vehicles Act and held that in view of the terms of the hire purchase agreement and the ratio of the two decisions of the Supreme Court in the two cases referred to supra, the financier is the real owner of the vehicle purchased under a hire purchase agreement until and unless all the instalments are paid by the borrower and, therefore, was entitled to take the custody of the vehicle from the Magistrate. Mr. Murty. the learned Counsel for the petitioner also placed reliance on another decision of the Supreme Court in the case of Trilock Singh v. Satya Deo Tripathi which only dealt with the question as to whether where a financier seized the vehicle on default by the purchaser and the purchaser instituted a criminal prosecution against the financier, it is appropriate to allow the criminal prosecution to continue or not. I am not concerned with that problem in the present case for the time being. But the Karnataka decision relied upon by Mr. Murty supports his contention to a great extent and in view of the law laid down by the Supreme Court in K. L. Johar and Co.'s case as well as Sundaram Finance Ltd.'s case there is no manner of doubt that it is the petitioner who should have been given possession of the vehicle in question in exercise of the discretion conferred on the Magistrate under Section 457 of the Code of Criminal Procedure, particularly when the vehicle was purchased from the petitioner under hire purchase agreement and opposite party No. 2 has defaulted in paying the instalments in question. Consequently I would set aside the order of the learned Magistrate dated 20-10-87 and direct that the truck bearing registration No. ORD 7801 be given delivery to the petitioner to have the custody of the same on his executing the gimanama that he will produce whenever the vehicle is required.
6. This criminal revision is accordingly allowed.