2012 (10) TMI 1168 - SC - Indian Laws

Agreement of Hire Purchase - On Default of Loan Instalments Forcibly taken away the Vehicle from Lawful Possession - HC power in quashing of criminal proceeding - The respondent financers had forcibly taken away the vehicle financed by them and illegally deprived the petitioner from its lawful possession and thus, committed a crime. HELD 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. Therefore, The HC has rightly quashed the proceedings and no interference is required.

Summary

Issues involved:
1. Quashing of criminal proceedings against respondents for allegedly taking custody of a vehicle purchased on hire-purchase.
2. Interpretation of hire-purchase agreement terms regarding ownership and possession of the vehicle.
3. Determining whether possession taken by the financier for non-payment of instalments constitutes an offence.

Analysis:
1. The petition challenged the High Court's decision to quash criminal proceedings against the respondents for allegedly taking custody of a vehicle purchased on hire-purchase. The petitioner claimed that the respondents forcibly took the vehicle, depriving them of lawful possession, constituting a crime. The High Court upheld the respondents' possession based on the hire-purchase agreement terms, where the financier retains ownership until full payment. The petitioner argued that the possession taken by the financier was unlawful, while the respondents contended it was within their rights under the agreement.

2. Referring to legal precedents, the Supreme Court analyzed similar cases to interpret hire-purchase agreements. In Sardar Trilok Singh v. Satya Deo Tripathi, the Court emphasized that disputes under such agreements are civil in nature, even if the complainant's allegations are correct. The Court in K.A Mathai v. Kora Bibbikutty reiterated that financiers have the right to repossess in case of default, without criminal intent. Additionally, in Charanjit Singh Chadha v. Sudhir Mehra, the Court clarified that possession recovery by the financier does not amount to a criminal offense, as the agreement terms dictate the parties' rights and obligations.

3. The Court summarized that in a hire-purchase agreement, the purchaser acts as a trustee on behalf of the financier, who retains ownership. Therefore, if the financier repossesses the vehicle, no criminal action can be taken as they are reclaiming their property. Applying the settled legal principles, the Court found no reason to interfere with the High Court's decision, dismissing the petition for lacking merit. The judgment reaffirmed that possession retaken by the financier under a hire-purchase agreement does not constitute an offence, aligning with established legal interpretations in similar cases.