IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI THURSDAY, THE 13TH MARCH 2008 / 23RD PHALGUNA 1929 WP(C).No. 27527 of 2006(B) -------------------------- PETITIONER: ------------ K.P.SUHRA, AGED 43 YEARS, W/O.K.T.ASHRAF, `SUHARAS', PAYANCHERRY, IRRITTY P.O., KANNUR DISTRICT. BY ADV. SRI.ESM.KABEER SRI.POOVAMULLE PARAMBIL ABDULKAREEM RESPONDENTS: ------------- 1. THE BRANCH MANAGER, KERALA FINANCIAL CORPORATION, BRANCH OFFICE, HASSAN ARCADE, OPP.R.T.OFFICE, KANNUR-2. 2. THE DEPUTY TAHSILDAR (RR), KERALA FINANCIAL CORPORATION, KANNUR BRANCH OFFICE, KANNUR. 3. P.P.RAMAKRISHNAN, PUTHIYAPURAYIL, KUZHICHAN, NEAR SNAKE PARK, PARASSINIKADAVU, KANNUR DISTRICT. 4. KERALA FINANCIAL CORPORATION, HEAD OFFICE, VELLAYAMBALAM, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI.MATHEW GEORGE VADAKKEL SRI.V.B.UNNIRAJ, SC, KFC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: V.GIRI,J. ------------------------- W.P ( C) No. 27527 of 2006 -------------------------- Dated this the 13th March, 2008 J U D G M E N T The petitioner purchased a vehicle bearing Registration No.KL-13C-7965, 1997 Model bus under a hire purchase agreement from the Kerala Financial Corporation. According to the petitioner , the vehicle was thereafter sold to 3rd respondent on 9.3.2002. The 3rd respondent had undertaken all liabilities including repayment of the amounts due to the KFC. Apparently, the 3rd respondent defaulted payment of the instalments and the vehicle was repossessed by the 1st respondent on 8.10.2003. Thereafter, the vehicle was put to auction as per notification dated 6.11.2004. The auction did not take place. Going by Exhibit P5, the auction took place on 8.9.2006 at the premises of the KFC and the highest bidder was one by C.M.Balakrishnan for an amount of Rs.1,45,000. Apparently, the vehicle was therefore sold to the highest bidder. The sale that took place on 8.9.2006 was not independently challenged by the petitioner nor were proceedings which led to the same as such separately challenged by the petitioner. W.P ( C) No. 27527 of 2006 2 2. Exhibit P1 will show that on 25.9.2004. a notice under Section 12 of the Revenue Recovery Act was issued showing the amount which was due at that point of time from the hirer under the hire purchase agreement. Obviously this was before the sale of the vehicle, though after repossession. It seems that the person who had purchased the vehicle from the petitioner (that is during the currency of the hire purchase agreement), the 3rd respondent herein had approached this Court in W.P(C) NO.22344 of 2005. It further seems that for some reason, the balance liability in relation to the said vehicle at that point of time was submitted to be only Rs.1.85 lakhs. Apparently, taking note of the submission, the writ petition was disposed of directing the petitioner therein to clear the liability and if he clears it, a direction was issued to the respondent to release the vehicle. Sri.V.B.Unniraj, learned counsel for the KFC submits that the amount of Rs.1.85 lakhs shown as balance liability as on the date of judgment dated 27.7.2005 is a mistake. Exhibit P2 will show that the amount was much higher at that point of time. W.P ( C) No. 27527 of 2006 3 3. As noted above, the vehicle was auctioned on 8.9.2006 Exhibit P4 notice of auction was also served on the petitioner. The actual proceedings in auction have not been independently challenged and as noted above, the highest bid for the vehicle was Rs.1.45 lakhs. The same was accepted. Sale was confirmed. Transfer has been effected in favour of the purchaser. Subsequently, steps have been taken by the Financial Corporation for recovery of the balance amount due from the petitioner under the agreement. Exhibit P2 is the notice issued in this regard. The writ petition has been filed challenging Exhibit P2 (followed by Exhibit P6) and also seeking a declaration that the petitioner is not liable to pay the amount demanded under Exhibit P2 and that the 3rd respondent is the actual defaulter who is liable to pay the balance amount due to the KFC. 4. On instructions, it is submitted on behalf of the KFC that the agreement executed by the petitioner with KFC is a loan agreement and not a hire purchase agreement. There was default in repayment of loan and therefore steps were taken W.P ( C) No. 27527 of 2006 4 against the vehicle as permitted under the agreement. The vehicle was under the custody of the Corporation for more than three years. Though auction was attempted on several occasions, it could not be done. Ultimately, it was auctioned on 8.9.2006. Petitioner was aware of the auction. The Corporation is not bound by the sale effected by the petitioner in favour of the 3rd respondent during the currency of the loan agreement. Steps have been taken only to realise the balance amount due to the KFC. It is open to the corporation to resort to the provisions of Revenue Recovery Act. 5. I heard learned counsel for the petitioner and learned standing counsel for the KFC and the learned Government Pleader also. Learned counsel for the petitioner relying on the decision of this Court in Sudha Beevi Vs.State of Kerala [2004 (2) KLT 746] submits that once the vehicle forming the subject matter of agreement is repossessed, the entire liability of the hirer ceases. I am unable to accept this contention. This court did not lay down any such principle in Sudha Beevi. W.P ( C) No. 27527 of 2006 5 6. In Sudha Beevi Vs.State of Kerala, this Court was concerned with the prosecution under Section 138 of the N.I. Act. After repossession of the vehicle, there is no termination of the agreement as such and the Corporation is only seeking to recover the balance amount due under the agreement. There is even a dispute as to whether the agreement in the present case is a hire purchase agreement or loan agreement. Even assuming that it is a hire purchase agreement, this Court in paragraph 25 of Sudha Beevi Vs. State of Kerala, only held that the Corporation would be entitled to realize the balance amount due from the loanee. Repossession of the vehicle does not by itself entail termination of the mutual rights and liabilities under the agreement. 7. Learned counsel for the petitioner then referred to the judgment of this Court in Shriram Engineering Construction Co. Ltd Vs. K.S.I.D.C. [2007 (2) KLT 388] and contended that only fixed dues can be recovered by resort to the provisions of Revenue Recovery Act. The principle made out is correct. But the ratio in Shriram Engineering Construction Co. Ltd W.P ( C) No. 27527 of 2006 6 Vs. K.S.I.D.C. does not apply to the facts of this case. The Division Bench in Shriram Engineering Construction Co. Ltd Vs. K.S.I.D.C. was concerned with proceedings under the Revenue Recovery Act taken for recovery of damages arising out of the alleged breach of contract, the legality of the termination of which contract was the subject matter of challenge before the Civil Court. The proceedings under the Revenue Recovery Act initiated in the present case is only for recovery of the balance amount due under the loan agreement (the petitioner would describe it as hire purchase agreement),. These are not steps for recovery of damages. Being an instrumentality of the State and statutory authority under Article 12 of the Constitution, Kerala Financial Corporation is entitled to invoke the provisions of Revenue Recovery Act for recovery of amounts due under the loan agreement (hire purchase agreement). There is no lack of jurisdiction in this respect. For all reasons, I do not find my way to grant the reliefs prayed for in this writ petition. But nevertheless, if the petitioner approaches the Financial Corporation with a request W.P ( C) No. 27527 of 2006 7 for One Time Settlement, which is currently in force upto 31.3.2008, her application in that behalf shall be considered in accordance with the scheme. She shall be permitted to effect settlement of dues under the One Time Settlement Scheme. The Corporation shall also keep in mind the fact that either by an act of indiscretion or by an unwise decision, petitioner had sold the vehicle. The purchaser also had defaulted repayment of the amounts due under the said loan account. Ultimately, the petitioner also unfortunately lost the vehicle, but liability under the agreement continues. I therefore deem it appropriate to direct the Corporation to keep in abeyance all further proceedings pursuant to Exhibit P6 for a period of two months from today, provided the petitioner approaches the Corporation on or before 28.3.2008 for settlement of the dues under the One Time Settlement Scheme. The writ petition is disposed of as above. (V.GIRI, JUDGE) ma W.P ( C) No. 27527 of 2006 8 W.P ( C) No. 27527 of 2006 9 K.THANKAPPAN,J CRL.A. NO.92 OF 1999 ORDER W.P ( C) No. 27527 of 2006 10 25th May, 2007 Common issues are raised for consideration in all these writ petitions. Reference is made to the facts in Writ Petition No.4562/2008 for the sake of convenience.