2011 (1) TMI 330 - HC - Customs

Canfisication of goods - hire-purchase agreement - The petitioner is a Finance Company - In view of the judgment of the Supreme Court in Ganga Hire Purchase Pvt. Ltd. Vs. State of Punjab (1999 -TMI - 45502 - SUPREME COURT OF INDIA), Since the department is yet to pass a final order on the confiscation, they are unable to concede the request of the petitioner - the relief claimed by the petitioner for release of goods denied.

Summary

Issues:
Petitioner seeking release of vehicle under hire purchase agreement | Customs Department's seizure of vehicle for illegal transportation | Interpretation of ownership in hire purchase agreements

Analysis:
The petitioner, a Finance Company, filed a writ petition seeking the release of a vehicle under a hire purchase agreement. The petitioner claimed that the vehicle was purchased by the second respondent with a loan from the petitioner and was hypothecated to them. The second respondent defaulted on payments and did not surrender the vehicle, which was later seized by the Customs Department for illegal transportation. The petitioner requested the release of the vehicle based on their first charge over it. However, the Customs Department claimed that the vehicle was involved in smuggling red sanders wooden logs and issued a show cause notice for confiscation under the Customs Act. They argued that the second respondent, also the owner of the vehicle, was involved in the illegal export scheme. The Department highlighted provisions for provisional release of seized vehicles and defined the term "owner" under the Motor Vehicles Act, stating that only the registered owner can apply for provisional release, which the second respondent had not done.

The petitioner relied on Supreme Court judgments to argue that as a financier in a hire purchase agreement, they cannot be considered the owner of the vehicle. They cited cases emphasizing that possession, not financing, determines ownership in such agreements. On the other hand, the Customs Department referred to a Supreme Court judgment to support the view that for the purpose of deterrence under the law, the "owner" should be considered the registered owner of the vehicle. Since the Customs Department had not finalized the confiscation order, they could not grant the petitioner's request for release. Consequently, the court dismissed the writ petition, stating that the relief sought by the petitioner could not be granted, with no costs imposed on either party.