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TMI Blog2003 (9) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into a supplementary agreement on 28-3-1997 to honour the terms and conditions of the hire purchase agreement. By a Memorandum of Understanding dated 1-4-1998, the applicant has transferred the assets and liabilities to M/s. Harita Finance Limited under the Deed of Assignment dated 23-7-1998 entered into between the applicant and M/s. Harita Finance Limited. The respondent also had executed a demand promissory note dated 23-7-1998 in favour of the applicant, agreeing to pay the amounts mentioned therein on demand. Under a Scheme of Amalgamation, the company and M/s. Harita Finance Limited came to be known as M/s. Harita Srinivasa Finance Private Limited and the same was approved by this court by order dated 31-7-1998 in CP.No. 142 of 1998 and later, the name of M/s. Harita Srinivasa Finance Limited was changed to M/s. Harita Finance Limited and now presently it is known as M/s. TVS Finance and Services Limited, the applicant herein. The respondent has failed to pay the hire charges as agreed and as on 10-1-2003, the respondent is liable to pay a sum of Rs. 1,99,51,681.29. As per clause 7 of the hire purchase agreement read with clauses 10 and 29 of the Deed of Assignment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner of the machineries and the respondent is the hirer. The applicant also drawn the attention of this court to the hire purchase agreement, which is available at page 7 of the typed set of papers filed by the applicant, wherein, it is stated that the applicant is the owner and the respondent is the hirer. It is further argued that the respondent having accepted the applicant as the owner of the machineries, he is estopped from claiming that he is the owner of the machinery and not the applicant. 7. Now let us consider as to whether the agreement between the applicant and the respondent is the hire purchase agreement or the agreement of refinance. 8. The respondent filed the invoices of the machineries and all those invoices do stand in the name of the respondent and the same is also not in dispute and as such, it is made out that the respondent is the owner of all the machineries. But, however, the respondent had entered into an agreement with the applicant and the said agreement is titled as hire purchase agreement and the applicant is shown as the owner and the respondent is shown as the hirer. It is argued on behalf of respondent that though the agreement was christe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the purchase of Plant and Machinery, set out in Schedule-A hereunder, you applied for Hire Purchase finance facility as set out in Schedule-B thereunder against the personal guarantee given by Mr. Meyappan, Managing Director. You have entered into an hire purchase agreement on 1-6-1997". [Emphasis supplied] Even at that time, the respondent has not chosen to question the validity of the hire purchase agreement. It is not the case of the respondent that the agreement is illegal or against the public policy. Nor it is the case of the respondent that the said agreement was obtained by misrepresentation, fraud and undue influence. That in the absence of these basic elements to vitiate the agreement, it is not open to the respondent to question the validity of the agreement. Though the respondent had claimed ownership by filing the invoices of the machineries, which stand in the name of the respondent, the respondent consciously, willingly and deliberately entered into an agreement with the applicant, treating the applicant as a owner. The intention between the parties is that it should be construed only a hire purchase agreement and the same is evident in more than one pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer, and the financier obtains a hire purchase agreement from the customer under which, the latter becomes the owner of the goods on payment of all the instalments of the stipulated hire and exercising his option to purchase the goods on payment of a nominal price. The decision of this Court in K.L. Johar Co. v. Dy. CTO AIR 1965 SC 1082 dealt with a transaction of this character. (2) In the other form of transactions, goods are purchased by the customer, who in consideration of executing a hire purchase agreement and allied documents remains in possession of the goods, subject to liability to pay the amount paid by the financier on his behalf to the owner or dealer, and the financier obtains a hire purchase agreement which gives him a licence to seize the goods in the event of failure by the customer to abide by the conditions of the hire purchase agreement - Sundaram Finance Ltd. v. State of Kerala AIR 1966 SC 1178. 14. In our case also, the applicant was treated as the owner, who hired the machinery to the respondent as an hirer and further agrees that the hirer shall have an option to purchase the machinery when he has paid the hire amount. That apart, the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending circumstances, one could easily come to the conclusion that the agreement between the applicant and the respondent is only a hire purchase agreement and not a loan transaction. 18. The next question that has been raised by the respondent is that the respondent/company has been declared as a Sick Industry and the proceedings are pending before BIFR and therefore, the applicant cannot repossess the property and to bring the same for sale. This question has been answered by the Division Bench of this court in the case of Ananta Udyog (P.) Ltd. v. Cholamandalam Investment Finance Co. Ltd. [1995] 83 Comp. Cas. 498. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, was considered and the pendency of the application by the sick industry before BIFR was also considered and it was ultimately held that the machinerFies covered by the hire purchase agreement do not belong to the industrial company and the property set out thereunder shall remain the absolute property of the company until the payments mentioned therein were made completely. As the applicant is the owner of the machinery and the respondent is only a hirer, the ownership of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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