Indian Kanoon - Search engine for Indian Law

2. The contentions in these applications is as follows:

The applicant herein is the owner of Ashok Leyland bus with Chassis No. MYG031224 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 trans port 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 lyengar & Sons Ltd. Mudurai, 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.

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 Rs. 85,448,26 was paid, and they issued a letter demanding a sum of Rs. 3,70,000/-. The applicant states that this was followed by yet another notice, giving a different amount as outstanding liability. This led to the filing of a suit by the applicant herein in the District Munsif Court, Kozhikode-II A as O.S. No. 932 of 1998. The prayer for temporary injunction made against seizure of the vehicle was granted, however, subject to the condition that the applicant deposited the amount on the dates specified. The appeal preferred was however dismissed on 10.8.1999 and the bus was seized by the respondent on 18.9.1999. The applicant preferred C.R.P. No. 1702 of 1999 in the Kerala High Court, which ordered the release of the vehicle on execution of the bond and directed the trial Court to determine the rights of the parties. The vehicle was released on 8.11.1999. It is stated that C.P. No. 48 of 2000 was filed before this Court and the Official Liquidator was appointed as the Provisional Liquidator, and in the application in C.A. No. 310 of 2001, the suit pending before the District Munsif Court, Kozhikode, was transferred to this Court and hence, this present proceedings.

17. A perusal of the documents filed before this Court show that on 21.11.1994, the original purchaser Kunhammad paid a sum of Rs. 25,000/- for purchase of Ashok Leyland 6,651/17210" WB. This was placed with T.V. Sundaram Iyengar and Sons Ltd., Calicut. The purchaser was given a Customer Code of 2234135. This is marked as Ex. P1. The receipt dated 21.9.1995 referring to the sales customer code indicates the total receipt of a sum of Rs. 4,31,474/- being the sale price of the vehicle. This is marked as Ex. P2 found at page 2 of the paper book. There afterwards, again on 9.9.1995, the company in liquidation had issued a receipt for a sum of Rs. 31,474/-, the same being received from the original purchaser Kunhammad. A perusal of the application by Kunhammad to the company in liquidation shows that interest was calculated on Rs. 4 lakhs and the balance of the sale consideration was paid by the purchaser himself (copy filed by the respondent as Ex. R1). Copy of the R.C. Book shows the registered owner's name is Kunhammad and subject to lease agreement with company in liquidation. The agreement between Kunhammad and the present purchaser, namely, Faisal, the applicant herein, is at page 9 of the paper book filed by the applicant and the receipts for payment of the same are enclosed therein.

21. Applying the principle laid down in the decision, if we look at the document which is styled as application for purchase of motor vehicles/machinery under lease scheme format and the lease agreement, the terms clearly establish the fact that the transaction is one of simple loan facility. The finance required was treated as Rs. 4,00,000/-. This clearly has no connection whatsoever to the value of the vehicle purchased but rests purely on the extent of requirement of borrower. The cost of the vehicle is stated as Rs. 4,56,474/-. The working on the back of the term sheet also shows that interest itself was calculated only on the amount borrowed, viz. Rs. 4 lakhs. If that be so, the standard format adopted having relevance to a hire purchase scheme cannot nullify the substance of the transaction, namely, a simple loan transaction, The said finding is further established by the fact that the insurance stood in the name of the insured, namely. the purchaser Kunhammad, paid by the purchaser Kunhammad. The deliver) was taken by Kunhammad. A customer code is also allotted to the vehicle ordered on payment of the advance and in all the correspondence, the customer code is maintained. This is evidence in the receipt for advance and the receipt for purchase. The motor vehicle certificate of registration also clearly spells out the owner's name as Kunhammed. The insurance policies are all in the name of the purchaser and the subsequent purchaser, the applicant herein. On the basis of all these documents, the true nature of the transaction is nothing but a simple loan transaction. The repayment had not been worked out with reference to the value of the vehicle purchased, but with reference to the loan amount required by the purchaser Kunhammad.