Madras High Court
T.Sivasubramaniam vs The State Of Tamilnadu on 28 August, 2020
Author: G.K.Ilanthiraiyan
Bench: G.K.Ilanthiraiyan
CRL.O.P.No.2023 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 28.08.2020
CORAM:
THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN
CRL.O.P.No.2023 of 2020
T.Sivasubramaniam,
Branch Incharge rep. on behalf of
M/s.Tata Motors Finance Limited,
Perundurai Road, Erode,
Tamil Nadu - 638 011. ... Petitioner
Vs.
1. The State of Tamilnadu
Rep. by the Superintendent of Police,
District Crime Branch Police,
Erode.
(Crime No.14 of 2017)
2. Ashok Kumar
3. D.Govindasamy
4. D.Eswaramoorthy ... Respondents
PRAYER: Criminal Original Petition filed under Section 482 of Cr.P.C.
praying to call for the records and set aside the order dated 14.08.2019 passed
in C.M.P.No.1942 of 2019 on the file of the learned Judicial Magistrate-II,
Erode.
For Petitioners : Mr.M.Ajmal Azzath
For Respondents
For R1 : Mr.S.Karthikeyan
Additional Public Prosecutor
For R2 : Mr.T.R.Udhayakumar
For R3&R4 : No appearance
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CRL.O.P.No.2023 of 2020
ORDER
This petition has been filed challenging the order passed in C.M.P.No.1942 of 2019, on the file of the learned Judicial Magistrate No.II, Erode, thereby allowing the petition filed by the second respondent herein for return of vehicle filed under Section 451 of Cr.P.C.
2. The learned counsel appearing for the petitioner would submit that the petitioner is a non-banking financial institution providing financial facilities. The respondents 3 and 4 borrowed loan by executing loan cum hypothecation agreement for the purchase of 23 vehicles. The petitioner also provided loan for complete necessary body building and accordingly they executed 38 loan cum hypothecation cum guarantee agreements in favour of the petitioner herein. While being so, the third respondent committed default from paying instalments. Thereafter, the petitioner came to understand that the respondents 3 and 4 along with others committed fraud by selling hypothecated vehicles to third party. On verification of various Regional Transport Offices at Coimbatore, Madurai, Erode, etc., they also came to understand that the vehicles, which were hypothecated to the petitioner had been transferred fraudulently to the third party by forging the petitioner's http://www.judis.nic.in Page 2 of 16 CRL.O.P.No.2023 of 2020 company's letter heads, rubber stamp etc., as if all the loan were cleared and hypothecation endorsement were removed from the R.C.Book. Therefore, the petitioner lodged complaint and the same was registered in Crime No.14 of 2017 as against the respondents 3 & 4.
2.1. While the respondents 3 & 4 approached this Court for anticipatory bail in Crl.O.P.Nos.6079 of 2018 and 13914 of 2018, this Court by an orders dated 12.04.2018 and 09.08.2018 was pleased to dismiss the above petitions. Thereafter, they were arrested and remanded to judicial custody. On suppressing the above facts, they obtained bail and released on bail. Therefore, the petitioner filed a petition for cancellation of bail before this Court, and this Court by an order dated 27.11.2018 in Crl.O.P.No.25029 of 2018, cancelled the bail granted to the third respondent herein. Thereafter the third respondent was arrested and remanded to judicial custody on 29.12.2018.
2.2. Pursuant to the order passed by this Court, the first respondent seized 13 vehicles and one of which is the subject matter of this petition. Unfortunately all the vehicles were parked with the first respondent police station and all have lost its value without returning to the petitioner. Therefore, http://www.judis.nic.in Page 3 of 16 CRL.O.P.No.2023 of 2020 the petitioner filed a petition for return of vehicle in C.M.P.No.2405 of 2019 before the Judicial Magistrate No.II, Erode, and the second respondent herein being the purchaser of vehicle also filed a petition in C.M.P.No.1942 of 2019 for return of vehicle before the same Court. Both the petitions have been taken for consideration and the learned Magistrate dismissed the petition filed by the petitioner in C.M.P.No.2405 of 2019 and allowed the petition filed by the second respondent in C.M.P.No.1942 of 2019. Therefore he prayed to set aside the order dated 14.08.2019, passed in C.M.P.No.1942 of 2019.
3. The learned Additional Public Prosecutor submitted that on the complaint lodged by the petitioner, a case has been registered as against the respondents 3 & 4 and their bail orders were also cancelled by this Court for the reason that they obtained bail by suppressing the entire facts before the learned Principal District and Session Judge, Erode. Further they also did not comply the conditions imposed on them and as such this Court cancelled the bail granted on the third respondent by an order dated 27.11.2018 in Crl.O.P.No.25029 of 2018. Thereafter, he was arrested and remanded to judicial custody. He further submitted that in respect of return of vehicle, the second respondent is being the purchaser of the vehicle, his petition was http://www.judis.nic.in Page 4 of 16 CRL.O.P.No.2023 of 2020 allowed and directed the first respondent to return the vehicle to the second respondent. Therefore, there is no illegality in the order passed by the trial Court and prayed for dismissal of this petition.
4. Heard Mr.M.Ajmal Azzath, learned counsel appearing for the petitioner, Mr.T.R.Udhaya Kumar, learned counsel appearing for the second respondent and Mr.S.Karthikeyan, learned Additional Public Prosecutor appearing for the first respondent.
5. The petitioner is the complainant in Crime No.14 of 2017. The crux of the allegations is that the third and fourth respondent borrowed loan for purchasing vehicle on execution of Hypothecation-cum-guarantee agreement in favour of the petitioner herein. Thereafter they committed default and the petitioner came to understand that all the hypothecation endorsement in the registration certificate were cancelled by the Regional Transport Officers as if the loans amount were repaid to the petitioner by forging the signature, seal etc., by the petitioner herein.
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6. In fact, the third and fourth respondents were granted bail by the learned Principal District and Session Court, Erode in Crl.M.P.No.1521 of 2018 and the same was cancelled by this Court in Crl.O.P.No.25029 of 2018 by an order dated 27.11.2019 and the relevant portion of the order is extracted hereunder :-
"11. On perusal of the records, the case of the prosecution is that the first respondent has availed loan from the defacto complainant bank, for the purchase of 23 bus chassis and 38 body building under hypothecation, to the tune of Rs.2 crores. Thereafter, he forged the signature and seal of the defacto complainant and created forged No Objection Certificate and Form 35 and also submitted the same before the concerned Regional Transport Office. The Regional Transport Officer cancelled the hypothecation endorsement in the registration certificate of the concerned vehicles, and then the first respondent sold out all the vehicles to the third parties and also cheated the defacto complainant.
12. Thereafter the first respondent filed anticipatory bail before this Court on two occasions in Crl.O.P.6079 of 2018 and 13914 of http://www.judis.nic.in Page 6 of 16 CRL.O.P.No.2023 of 2020 2018 and this Court dismissed the same for the reason that the investigation is at the initial stage and the documents have to be recovered and the vehicles have to be seized and also the custodial interrogation of the petitioner is very much required.
13. It is also seen that as directed by this Court in Crl.O.P.21958 of 2018 by an order dated 11.09.2018, the first accused was arrested and remanded to judicial custody on 24.09.2018. It is also seen that in the bail petition, he falsely stated that he stood as only guarantor and he did not committed an offence as alleged by the prosecution. He further stated in the bail petition that the second accused was enlarged on bail. But the real fact is that the first respondent is the main accused and he is the borrower of the loan amount to the tune of Rs.2 crores for the purchase of 23 chassis and 38 body building. The second accused only stood as guarantor for the loan borrowed by the first accused. Further the second accused was enlarged on statutory bail under Section 167(2) of Cr.P.C.
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14. It is also seen that the allegations are very serious in nature, since he forged the signature and seal of the defacto complainant and fabricated Form 35 as if the entire loan installments have been repaid by the first accused and produced the same before the concerned Regional Transport Officer. After receipt of the same, the Motor Vehicle Inspector cancelled the hypothecation endorsement in the registration certificate and on cancellation of the said hypothecation endorsement, the first respondent sold out all the vehicles to the various persons and looted the entire amount. Further the first respondent did not comply with the condition imposed on him, while granting bail by the learned Principal District and Sessions Judge, Erode by an order dated 05.10.2018 in Crl.M.P.No.1521 of 2018, that the first respondent shall appear before the second respondent police daily twice at 10.00 a.m., and 5.00 p.m., until further orders and also did not co-operate for interrogation. As such, the second respondent is unable to complete the investigation and file the final report. Therefore, the first respondent suppressed the entire fact and also on false statement before the learned Principal District and Sessions Judge, Erode http://www.judis.nic.in Page 8 of 16 CRL.O.P.No.2023 of 2020 obtained bail. Further he did not comply the condition imposed on him while granting bail and also absconded. Considering the above facts and circumstances, this Court is inclined to cancel the bail granted to the first respondent."
7. The third respondent forged the signature and seal of the petitioner and fabricated the Form-35 as if the entire loan installments have been repaid by them and produced the same before the Regional Transport Office and cancelled the Hypothecation endorsement. Thereafter, the third respondent sold out the vehicles in which the second respondent is one of the purchaser of the said vehicle. When it being so, the learned Magistrate without verifying those records simply held that the vehicle has to be returned to the second respondent for the reason that the RC book stands in the name of the second respondent and though the petitioner is the financier, he is not entitled to seek custody or interim custody of the vehicle. The learned Magistrate further observed that the endorsement stands in the hypothecation agreement has not been reflected in Registration Certificate. When this Court passed detailed order while cancelling the bail granted to the third respondent herein, the learned Magistrate ought not to have return the vehicle to the subsequent purchaser viz., the second respondent herein.
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8. In this regard the learned counsel appearing for the petitioner relied upon the judgment reported in (2013) 1 SCC 400 in the case of Anup Sarmah vs. Bhola Nath Sharma & Ors., in which the Hon'ble Supreme Court of India held as follows :-
"5. In K.A. Mathai v. Kora Bibbikutty [(1996) 7 SCC 212 : 1996 SCC (Cri) 281] this Court had taken a similar view holding that in case of default to make payment of instalments the financier had a right to resume possession even if the hire-purchase agreement doesnot 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 financier had committed an offence of theft and that too, with the requisite mens rea and requisite dishonest intention. The assertion 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 the financier had resumed the possession of the vehicle with a guilty intention.
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6. In Charanjit Singh Chadha v. Sudhir Mehra [(2001) 7 SCC 417 : 2001 SCC (Cri) 1557] this Court held that recovery of possession of the vehicle by the financier 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 financier, 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 Court elaborately dealt with the nature of the hire-purchase agreement observing that in a case of mere contract of hiring, it is a contract of bailment which does not create a title in the bailee. However, there may be variations in the terms and conditions of the agreement as created between the parties and the rights of the parties have to be determined on the basis of the said agreement. The Court further held that in such a contract, element of bailment and element of sale are involved in the sense that it contemplates an eventual sale.
http://www.judis.nic.in Page 11 of 16 CRL.O.P.No.2023 of 2020 “8. … The element of sale fructifies when the option is exercised by the intending purchaser after fulfilling the terms of the agreement. When all the terms of the agreement are satisfied and the option is exercised a sale takes place of the goods which till then had been hired.” (Charanjit Singh Chadha case [(2001) 7 SCC 417 : 2001 SCC (Cri) 1557] , SCC p. 422, para 8) While deciding the said case, this Court placed reliance upon its earlier judgments in Damodar Valley Corpn. v. State of Bihar [AIR 1961 SC 440] Instalment Supply (P) Ltd. v. Union of India [AIR 1962 SC 53] (SCC p. 744, para 8), K.L. Johar & Co. v. CTO [AIR 1965 SC 1082] , (AIR p. 1090, para 17) and Sundaram Finance Ltd. v. State of Kerala [AIR 1966 SC 1178] .
7. In view of the above, the law can be summarised that in an agreement of hire purchase, the purchaser remains merely a trustee/bailee on behalf of the financier/financial institution and ownership remains with the latter. Thus, in case the vehicle is seized by the financier, no criminal action can be taken against him as he is repossessing the goods owned by him.
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8. If the case is examined in the light of the aforesaid settled legal proposition, we do not see any cogent reason to interfere with the impugned judgment and order. The petition lacks merit and, accordingly, dismissed."
The Hon'ble Supreme Court of India held that in vehicle seized cases, the purchaser remains merely a trustee or bailee on behalf of the financier and ownership remains with the latter and no criminal action can be taken against him as he is repossessing the goods owned by him. Therefore, the above case squarely applicable to the present case. In the present case, the petitioner being the financier, he is the owner of the vehicle and the purchaser is merely the trustee on behalf of the financier.
9. In view of the above discussion, this Criminal Original petition is allowed and the order dated 14.08.2019 passed in C.M.P.No.1942 of 2019 on the file of the learned Judicial Magistrate-II, Erode, is hereby set aside. The first respondent is directed to return all the vehicles, which were seized in pursuant to the Crime No.14 of 2017, to the petitioner herein on the following conditions:-
i) the petitioner shall execute a bond for Rs.10,000/- (Rupees ten http://www.judis.nic.in Page 13 of 16 CRL.O.P.No.2023 of 2020 thousand only) along with two sureties for the like sum towards each of the vehicles.
ii) The necessary photograph may be taken in four dimension duly authenticated and certified and detailed Punchanama may be prepared before such release of vehicle, the Head clerk and the same shall be duly attested by the investigation officer.
iii) The photograph is directed to be annexed with the case records and the same may be used as secondary evidence during trial and hence physical production may be dispensed with
iv) The case properties shall not be altered, auctioned, mortgaged, encumbered or otherwise disposed of by the person taking interim custody till the disposal of the case subject to the findings of the Court.
v) The properties shall be produced before this Court as and when required by the Court without fail.
28.08.2020 Internet : Yes / No Index : Yes / No Speaking / Non Speaking order rts http://www.judis.nic.in Page 14 of 16 CRL.O.P.No.2023 of 2020 To
1. The Judicial Magistrate-II, Erode.
2. The Superintendent of Police, District Crime Branch Police, Erode.
3. The Public Prosecutor, Madras High Court, Chennai.
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rts CRL.O.P.No.2023 of 2020 28.08.2020 http://www.judis.nic.in Page 16 of 16