Allowed

Vineet Chandra v. State of U.P. and Others

Allahabad HC24 Jul 2018A482/2430/2002

Case brief

AI extract

What is this about?

The court considered an application to quash criminal complaints under Sections 406 and 409 IPC arising from the repossession of a truck by a financier under a hire-purchase agreement. Relying on precedents that treat such matters as civil disputes, the court held the prosecution was vexatious.

What did the court decide?

The complaints under Sections 406/409/420 IPC and the summoning order dated 30 March 2001 were quashed.

Vineet Chandra Vs State of U.P. and Others — Contract and Commercial Disputes | Allahabad HC (2018)

¶1

Court No. - 2

¶2

Case :- APPLICATION U/S 482 No. - 2430 of 2002

¶3

Applicant :- Vineet Chandra Opposite Party :- State Of U.P. & Others Counsel for Applicant :- R.K. Gupta,Prabodh Gaur Counsel for Opposite Party :- Govt. Advocate

¶4

Hon'ble Yashwant Varma,J.

¶5

Heard learned counsel for the applicant and the learned A.G.A.

¶6

This application seeks quashing of Complaint No. 276 of 2000 and the summoning order dated 30 March 2001, in terms of which the applicant has been summoned for commission of offences under Section 406/409 I.P.C. From the facts which are undisputed it appears that the complainant entered into a Hire Purchase agreement with Tata Finance Limited in respect of a truck. Since, it is alleged that the truck met with mechanical failure, the same was sent for repair to one M/s Kailash Motors. Although, the applicant has urged that he was not an employee or partner of Kailash Motors, this issue need not be gone into by this Court for the purposes of disposal of the instant application.

¶7

From the record, it further appears that the complainant defaulted in the payment of installments leading to Tata Motors issuing a notice dated 9 January 1998 commanding Kailash Motors to hand over the physical possession of the truck. Pursuant to this notice, possession of the truck was in fact taken

¶8

on 9 January 1998. It is this act of repossession which led to the institution of the complaint in question.

¶9

From a perusal of the allegations made in the complaint it appears that the complainant was of the view that the truck from its very inception suffered from inherent mechanical defects and that it had faced technical problems right from the time that it was taken on Hire Purchase. The allegation further is that although the truck had been handed over to Kailash Motors, the same was transferred to Tata Finance and that the same has resulted in the commission of the offence referred to above.

¶10

The Court however notes that the act of repossession by Tata Finance is not disputed. Even in the Counter Affidavit filed in these proceedings, it is not disputed that the applicant had handed over the truck in question to Tata Motors. All that is alleged is that the truck was not returned after replacement of the engine as was desired. In response to the assertion of the applicant that he is not the proprietor or a partner in Kailash Motors, all that is alleged that he was the whole sole in charge of the shop. The Court may usefully refer to the following principles as laid down by the Supreme Court in Anup Sarmah

¶11

v. Bhola Nath Sharma , (2013) 1 SCC 400:

¶12

"4. In Sardar Trilok Singh v. Satya Deo Tripathi [(1979) 4 SCC 396 : 1979 SCC (Cri) 987 : AIR 1979 SC 850] this Court examined a similar case

¶13

wherein the truck had been taken in possession by the financier in terms of hire-purchase agreement, as there was a default in making the payment of instalments. A criminal case had been lodged against the financier under Sections 395, 468, 465, 471, 120-B/34 IPC. The Court refused to exercise its power under Section 482 CrPC and did not quash the criminal proceedings on the ground that the financier had committed an offence. However, reversing the said judgment, this Court held that proceedings initiated were clearly an abuse of process of the court. The dispute involved was purely of civil nature, even if the allegations made by the complainant were substantially correct. Under the hire-purchase agreement, the financier had made the payment of huge money and he was in fact the owner of the vehicle. The terms and conditions incorporated in the agreement gave rise in case of dispute only to civil rights and in such a case, the civil court must decide as to what was the meaning of those terms and conditions.

¶14

6. In Charanjit Singh Chadha v. Sudhir Mehra [(2001) 7 SCC 417 : 2001 SCC (Cri) 1557] this Court held that recovery of possession of the vehicle by the financier owner as per terms of the hire-purchase agreement, does not amount to a criminal offence. Such an agreement is an executory contract of sale conferring no right in rem on the hirer until the transfer of the property to him has been fulfilled and in case the default is committed by the hirer and possession of the vehicle is resumed by the financier, it does not constitute any offence for the reason that such a case/dispute is required to be resolved on the basis of terms incorporated in the agreement. The Court elaborately dealt with the nature of the hirepurchase agreement observing that in a case of mere contract of hiring, it is a contract of bailment which does not create a title in the bailee. However, there may be variations in the terms and conditions of the agreement as created between the parties and the rights of the parties have to be determined on the basis of the said agreement. The Court further held that in such a contract, element of bailment and element of sale are involved in the sense that it contemplates an eventual sale.

¶15

" 8. … The element of sale fructifies when the option is exercised by the intending purchaser after fulfilling the terms of the agreement. When all the terms of the agreement are satisfied and the option is exercised a sale takes place of the goods which till then had been hired." ( Charanjit Singh Chadha case [(2001) 7 SCC 417 : 2001 SCC (Cri) 1557] , SCC p. 422, para 8)

¶16

While deciding the said case, this Court placed reliance upon its earlier judgments in Damodar Valley Corpn. v. State of Bihar [AIR 1961 SC 440] , Instalment Supply (P) Ltd. v. Union of India [AIR 1962 SC 53] (SCC p. 744, para 8), K.L. Johar & Co. v. CTO [AIR 1965 SC 1082] , (AIR p. 1090, para 17) and Sundaram Finance Ltd. v. State of Kerala [AIR 1966 SC 1178] .

¶17

7. In view of the above, the law can be summarised that in an agreement of hire purchase, the purchaser remains merely a trustee/bailee on behalf of the financier/financial institution and ownership remains with the latter. Thus, in case the vehicle is seized by the financier, no criminal action can be taken against him as he is repossessing the goods owned by him."

¶18

From a bare perusal of the allegations made in the complaint,

¶19

this Court comes to conclude that the allegations even prima facie do not establish the commission of the offence contemplated under Section 406 I.P.C. The fact of repossession has also not been denied.

¶20

On an overall conspectus of the aforesaid facts, this Court is of the considered view that the continuance of the criminal prosecution would be clearly vexatious.

¶21

Accordingly, this application is allowed . All proceedings related to Complaint No. 276 of 2000 dated 17 May 2000 filed by Smt. Luxmi Devi against the applicant for the offences under Section 406/409 and 420 I.P.C. along with summoning order under Section 406 I.P.C. dated 30 March 2001 passed by M.M. IIIrd, Kanpur Nagar, shall stand quashed.

¶22

Order Date :- 24.7.2018 Arun K. Singh

¶23

(Yashwant Varma, J.)

Vineet Chandra v. State of U.P. and Others

Case brief

What is this about?

What did the court decide?

Vineet Chandra v. State of U.P. and Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Smt Sunita Devi Vs State of Up and 4 Others

Samar Pal Singh Vs State of U.P. and Another

Deepak Medical and General Store Vs State of Up and Another

A.P.N. Giri and Others Vs State of U.P.

Satya Pal Singh Vs State of U.P. and Another

Suresh Kumar Gupta Vs Inspector P.S. R.P.F. N.E. Railway and Another