Case: Charanjit Singh Chadha Vs. Sudhir Mehra

to the hirer under the hire-purchase agreement will not amount to theft as the vital element of `dishonest intention is lacking. The element of `dishonest intention which is an essential element of constitute the offence of theft cannot be attributed to a person exercising his right under an agreement entered into between the parties as he may not have an intention of causing wrongful gain or to cause wrongful loss to the hirer. It is appropriate to note that the term `dishonestly is defined under Section 24 of the IPC as follows : "Dishonestly" ---- Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing "dishonestly". 14. It is also to be noticed that learned author R.M. Goode, in his book Hire Purchase Law and Practice (Second Edn.) has observed as follows at page 846 :- "It would seem that so long as the hirer is in possession of the goods they belong to him for the purpose of the Act [The Theft Act, 1968] even though his possession is unlawful, e.g. because the hire-purchase agreement has come to an end. If the owner has an enforceable right to possession then he will not be guilty of theft in seizing the goods if he knew of his legal rights since he will not be acting dishonestly but will have taken the goods in the well founded belief that he has a right to resume possession." 15. This Court also had occasion to consider this question. One of the earlier decisions is Sardar Trilok Singh and Ors. v. Satya Deo Tripathi, [1979] 4 SCC 396. In that case, the parties had entered into a hire-purchase agreement. The complainant alleged that the accused, in a high handed manner during his absence came to his house and forcibly removed the truck and thereby committed the offence of a dacoity. The police investigated the case and filed a final report. The accused filed his objection before the Magistrate, but the objection was not considered. The accused filed a revision before the sessions court which was dismissed. Thereafter the accused filed a petition under Section 482 Cr.P.C to quash the proceedings. That was summarily dismissed by the High Court to quash the proceedings. That was summarily dismissed by the High Court and the matter reached up to this Court at the instance of the accused. In paragraph 5 of the judgment, this Court observed : "We are clearly of the view that it was not a case where any processes ought to have been directed to be issued against any of the accused. On the well-settled principles of law it was a very suitable case where the criminal proceeding ought to have been quashed by the High Court in exercise of its inherent power. The dispute raised by the respondent was purely of a civil nature even assuming the facts stated by him to be substantially correct. Money must have been advanced to him and his partner by the financier on the basis of some terms settled between the parties ............................................................................ Even assuming that the appellants either by themselves or in the company of some others went and seized the truck on July 30, 1973 from the house of the respondent they could and did claim to have done so in exercise of their bona fide right seizing the truck on the respondents failure to pay the third monthly instalment in time. It was, therefore, a bona fide civil dispute which led to the seizure of the truck". 16. In K.A. Mathai and Anr. v. Kora Bibbikutty and Anr., [1996] 7 SCC 212 , the bus was obtained by the complainant on a hire-purchase agreement. The complainant paid only part of the consideration and defaulted in paying the instalments and the vehicle was taken possession of by the financier and at that time, both the first accused who had driven away the bus from the possession of the complainant and the second accused were present in the bus. They were prosecuted for the offence punishable under Section 379 read with Section 114 IPC. This Court holding that the bus was taken away at the instance of the financier and the accused had not committed any offence observed as under : "Though we do not have the advantage of reading the hire-purchase agreement, but as normally drawn it would have contained the clause that in the event of the failure to make payment of instalment/s the financier had the right to resume possession of the vehicle. Since the financiers agreement with A-2 contained that clause of resumption of possession, that has to be read, if not specifically provided in the agreement, as part of the sale agreement between A-2 and the complainant. It is in these circumstances, the financier took possession of the bus from the complainant with the aid of the appellants. It cannot thus be said that the appellants, in any way, had committed the offence of theft and that too, with the requisite mens rea and requisite dishonest intention." 17. The hire-purchase agreement in law is an executory contract of sale and confers no right in rem on hirer until the conditions for transfer of the property to him have been fulfilled. Therefore, the re-possession of goods as per the term of the agreement may not amount to any criminal offence. The agreement [Annexure P-1] specifically gave authority to the appellants to re-possess the vehicle and their agents have been given the right to enter any property or building wherein the motor vehicle was likely to be kept. Under the hire-purchase agreement, the appellants have continued to be the owners of the vehicle and even if the entire allegations against them are taken as true, no offence was made out against them. The learned Single Judge seriously flawed in his decision and failed to exercise jurisdiction vested in him by not quashing the proceedings initiated against the appellants.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]13. But in the instant case, the ownerthe vehicle delivered to the hirer under theagreement will not amount to theft as the vital element of `dishonest intention is lacking. The element of `dishonest intention which is an essential element of constitute the offence of theft cannot be attributed to a person exercising his right under an agreement entered into between the parties as he may not have an intention of causing wrongful gain or to cause wrongful loss to the hirer.In K.A. Mathai and Anr. v. Kora Bibbikutty and Anr., [1996] 7 SCC 212 , the bus was obtained by the complainant on aagreement. The complainant paid only part of the consideration and defaulted in paying the instalments and the vehicle was taken possession of by the financier and at that time, both the first accused who had driven away the bus from the possession of the complainant and the second accused were present in the bus. They were prosecuted for the offence punishable under Section 379 read with Section 114 IPC.se agreement in law is an executory contract of sale and confers no right in rem on hirer until the conditions for transfer of the property to him have been fulfilled. Therefore, theof goods as per the term of the agreement may not amount to any criminal offence. The agreement [Annexurespecifically gave authority to the appellants torepossess the vehicle andtheir agents have been given the right to enter any property or building wherein the motor vehicle was likely to be kept. Under theagreement, the appellants have continued to be the owners of the vehicle and even if the entire allegations against them are taken as true, no offence was made out against them. The learned Single Judge seriously flawed in his decision and failed to exercise jurisdiction vested in him by not quashing the proceedings initiated against the appellants.