IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04.01.2011 CORAM: THE HONOURABLE MS.JUSTICE K.B.K.VASUKI Crl.R.C.No.413 of 2006 M/s Sampathraj Jain Finance rep. by power agent Suresh Kumar ...Petitioner/Owner Vs 1.State – represented by Inspector of Police, Central crime Branch, St.Thomas Mount Chennai – 600 016. ..1st Respondent/Complainant 2.Mrs.Beryl Samuel ...2nd Respondent/1st Accused 3. Prayer:- The Criminal Revision Petition filed under Sections 397 and 401 of the code of Criminal Procedure against the order dated 16.02.2006 made in C.M.P.No.695 of 2006 in Crime No.72 of 2005 on the file of Judicial Magistrate No.1, Poonamallee. For Petitioner : Mr.John Sathyan For Respondents : Mr.I.Paul Nouble Devakumar Government Advocate (Crl.Side) O R D E R The Criminal Revision is filed by 3rd party petitioner against the order dated 16.02.2006 made in C.M.P.No.695 of 2006 in Crime No.72 of 2005 on the file of Judicial Magistrate No.I, Poonamallee thereby dismissing the petition filed under Section 451 of the Code of Criminal Procedure for the interim custody of the vehicle in question. 2.The facts that the vehicle in question was purchased by one Beryl Samuel, w/o Samuel Logam and the Registration Certificate was transferred in her name with effect from 30.03.2004 and thereafter she obtained financial assistance from the petitioner herein on 18.05.2004 and while the hire purchase agreement with the petitioner herein is in force, Beryl Samuel, who is the holder of the Registration Certificate of the vehicle in question is implicated as one of the accused in Crime Number No.72 of 2005 filed for the offence punishable under Section 420 IPC and the vehicle in question is seized by the Investigating Officer as if https://hcservices.ecourts.gov.in/hcservices/ the same is allegedly invovled in the commission of the offence, are not denied. 3.The petitioner/financier has come forward with C.M.P. No.695 of 2006 on the ground that he is the legal owner of the vehicle in question and the vehicle is not involved in any of the offence directly or indirectly and he as the hire purchase agreement holder, is entitled to get interim custody of the vehicle in question. 4.The trial court dismissed the petition on the ground that as the accused is charged for the offence of cheating the defacto complainant by utilising the amount due to be paid to him for the purchase of the vehicle, the petitioner is not entitled to claim the vehicle. 5.The short question that arises for consideration herein is as to whether interim custody of the vehicle seized in the ciminal case could be handed over to the financier who is third party to the criminal proceedings and who claims his right under independent hire purchase agreement which the criminal court could take cognizance of and enforce. 6.It is not in dispute that Hire Purchase Agreement between the petitioner and the accused is much after the purchase of the vehicle and after the Registration Certificate was transferred in the name of the accused. The accused is admittedly the Registration Certificate holder of the vehicle and the petitioner's name is only endorsed as financier under Hire Purchase Agreement in the Regitration Certificate. That being so, the financier cannot be treated as the legal owner of the vehicle and he is also in no way connected with the criminal proceedings. 7.Our Apex court in the judgments reported in AIR 1979 SC 859 in Trilok Singh v. Saya Deo Tripathi and (2007) 15 SCC 126 in Ramesh Chand Jain v. State of Haryana and another and our High court in the judgements reported in (i) 1992 LW (Crl) 47 in P.Sekar v. State by Inspector of Police, Kovilpatti East Police Station VOC District and another and (ii) 2000 (2) LW (Crl) 955 in Sunitha Mehata and another v. State, Sub Inspector of Police, Moontradappu, Tirunelveli District had occasion to deal with the question as to whether the financier who is third party to criminal proceeding is entitled to have interim custody of the vehicle seized in connection with the commission of offence. The Supreme Court in the judgement reported in AIR 1979 SC 859 in Trilok Singh v. Saya Deo Tripathi quashed a private complaint registered against the financier, who seized the vehicle by enforcing the right available to him under the hire purchase agreement for alleged act of decoity and the Supreme Court while doing so, is pleased to observe that "the exeution of the agrement, as well as the liability were all disputed and the dispute was purely of a civil nature and the disputed questions could be properly and adequately decided only in a civil court". https://hcservices.ecourts.gov.in/hcservices/ 8.Our High Court has in the judgements referred to above observed that the financier is only a third party in the criminal proceedings and the powers of the police to seize the vehicle could only be gathered from the provisions of Criminal Procedure Code and neither the financier nor his hire purchase agreement can in any manner come in the picture and even if there has been a breach of contract and the financier has a right to seize the vehicle without any notice to the hirer these rights flowing from the contract between the financier and the hirer, have to be worked out only in forums meant for it namely the civil court and such right cannot be enforced through criminal court and when the criminal court cannot adjudicate upon the disptue regarding the liability and extent of liability of the hirer to the fianncier, neither S.451 Cr.P.C nor Sec. 452 nor S.457 can be used by the party to a civil contract to short circuit civil remedies, foreclose adjudication on the alleged violation of contract and get possesison of the vehicle through the criminal court. Our High Court has in the judgement reported in 1992 LW (Crl) 47 following the observation of the Apex Court in AIR 1979 SC 859 in Trilok Singh Case, observed in para 12 of its judgment that "the financier has to approach the civil court, establish breach of hire purcahse agreement and his right to seize the vehicle and work out his remedies as per the terms of the agreement, only in the civil forum and those considerations are totally extraneous to the criminal court while ordering interim custody under S. 451 Cr.P.C." and set aside the order directing interim custody of the vehicle to the financier. The same view is expressed by the Apex Court in the latest judgement (2007) 15 SCC 126 in Ramesh Chand Jain v. State of Haryana and another and our High Court in the subsequent judgment reported in 2000 (2) LW (Crl) 955 in Sunitha Mehata and another v. State, Sub Inspector of Police, Moontradappu, Tirunelveli District. The facts of the case reported in (2007) 15 SCC 126 are that the petitioner therein is the owner of the vehicle seized by the police and the second respondent therein is one of the guarantors for repayment of loan taken by the petitioner from the bank for purchase of the truck. When the petitioner approached the Magistrate court for interim custody of the vehicle as the owner of the same, the Judicial Magistrate passed an order directing to release the truck in favour of the guarantor and the petitioner hence approached the Sessions Court who modified the order of the Judicial Magistrate by directing to release the truck to the registered owner on condition that he would first get the guarantor and his wife exonerated from the guarantee furnished by them to the bank and when the order of the District Court was challenged before the High court, the High Court rejected the petition and the registered owner further approached the Supreme Court, wherein the Supreme Court has observed that inter se civil liabilities of the registered owner of the truck, the bank as financier and the guarantors who furnished the guarantee bond for repayment of the loan, was not the subject matter relevant for granting interim custody of the seized vehicle and set aside the condition imposed by the District Court https://hcservices.ecourts.gov.in/hcservices/ to exonerate the guarantee and directed the release of the vehicle to the registered owner. 9.The learned counsel for the petitioner has cited the authorities of the Supreme Court reported in 2008 (2) MLJ (Crl) 631 (SC) in Bharath Metha v. State by Inspector of Police, Chennai, AIR 2001 SC 3721 in Charanjit Singh Chadha and others vs. Sudhir Mehra, AIR 1965 SC 1082 in K.L.Johar and Co., Vs. The Deputy Commercial Tax Officer, Coimbatore III and AIR 1961 SC 440 in M/s Damodar Valley Corporation V. The State of Bihar in support of his contention that the financier or hire purchase agreement holder is the owner of the vehicle and is entitled to interim custody of the vehicle. In my considered view, the authorities above cited on the side of the petitioner/financier are factually distinguishable and are not applicable to the facts of the present case for the reasons discussed below. 10.The Supreme Court has in AIR 1961 SC 440 and AIR 1965 SC 1082 only explained the difference between Hire Purchase Agreement and sale and the question whether the financier is entitled to get the interim custody did not arise for consideration in the above case. In AIR 2001 SC 3721 case, the criminal proceedings are initiated against the financier for the alleged offence of theft of vehicle and the financier sought for discharge from the charges on the ground that as per the terms of the agreement, the financier continued to be the owner till instalments are paid and there was default in payment of instalments by the hirer and the financier in exercise of his right of repossession of the vehicle under the agreement took back the custody of the vehicle and the same does not constitute any offence punishable under Indian Penal Code and the Apex Court has no occassion to deal with any issue identical to that of the one involved herein. 11.In the authority of the Supreme Court reported in 2008 (2) MLJ (Crl) 631 (SC) in Bharath metha v. State by Inspector of Police, Chennai, the appellant before the Supreme Court provided financial assistance to the second respondent therein to purchase a lorry on hire purchase agreement and as per the terms of the agreement, the second respondent/hirer was required to pay 32 monthly instalments of Rs.14,875/- and after paying the entire amount due, the hirer can become the owner of the vehicle by exercising his option to purchase the same and till such time, the financier is the owner of the vehicle and the financier is also entitled to get possession of the vehicle and the financier and the borrower are described as the owner and hirer respectively in the agreement. The vehicle was seized by the police, for the alleged transport of prohibited spirit, and the financier approached the concerned Magistrate court with the petition under Sections 451 and 457 Cr.P.C for release of the lorry, and the petition was dismissed. Against which the criminal revision was filed and the criminal revision was also dismissed by confirming the order of the Magistrate and when the order of the revisional authority is https://hcservices.ecourts.gov.in/hcservices/ challenged before the Supreme Court, the Supreme Court has, having found that the factum that the vehicle was subject to such a hire purchase agreement was also noted and the financier is described as owner in the agreement and having found that the earlier conditional order for interim custody of the vehicle made in favour of the second respondent/hirer who was described as the registered owner in the registration certificate was not complied with and having found that the vehicle is lying with the seizing authority for nearly 8 years, directed the release of the vehicle in favour of the financier subject to fulfillment of the conditions which were stipulated for the second respondent / hirer. In my opinion, the Supreme Court has passed the order directing the release of the vehicle not on the ground that the petitioner is as the financier of the vehicle, entitled to get interim custody of the vehicle, but by taking into account various factors referred to above. The Supreme Court has not specifically observed that the financier who renders financial assistance for the purchase of the vehicle, is entitled to get interim custody of the vehicle under Section 451 Cr.P.C. That being so, the observation made in the above case is not helpful to the petitioner to canvass the correctness of the order passed by the trial court. 12.The legal ratio laid down in the above authorities cited on both sides, would reveal that there is difference between the hire purchase agreement holder having been registered as registered owner of the vehicle in the registration certificate and the individual is shown as the registered owner and the name of the financier under the hire purchase agreement is just mentioned in the registration certificate. In the cases falling under the first case, the financier under the hire purchase agreement in his capacity as the holder of the registration certificate is entitled to get the interim custody of the vehicle. In the latter case, he is only a financier rendering financial assistance to the owner of the vehicle for the purchase of the vehicle and is not entitled to seek interim custody of the vehicle by enforcing the right of repossessing the vehicle under the financial arrangement between the two. That is why, the Supreme Court in the other set of judgments referred to in the foregoing para 7, is pleased to hold that interse civil liability between the registered owner of the vehicle and the financier bank or financial institution as the case may be, with or without guarantor is outside the scope of criminal proceedings and the same cannot be taken cognizance and be enforced through criminal process of law. In so far as the present case is concerned, as the accused is recorded as the registered owner of the vehicle, the petitioner/financier who is third party to the criminal proceedings, is not entitled to seek interim custody of the vehicle under Section 451 Cr.P.C and the interim custody sought for in the petition under revision is rightly negatived by the trial court and this court finds no manifest error in law or procedure in the order passed by the trial court which calls for any interference by this Court. 13.In the result, the Criminal revision is dismissed, however with direction issued to the Judicial Magistrate No.I, Poonamallee https://hcservices.ecourts.gov.in/hcservices/ to dispose of the case in C.C.No.128 of 2006 as expeditiously as possible, preferrably not later than two months from the date of receipt of the copy of this order. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar ssd/rk To 1.Inspector of Police, Central crime Branch, St.Thomas Mount Chennai – 600 016. 2.The Judicial Magistrate No.1, Poonamallee. 3.The Public Prosecutor, High Court, Madras.104. Crl.R.C.No.413 of 2006 KJ(CO) RVL 08.04.2011 https://hcservices.ecourts.gov.in/hcservices/