High Court Criminal Bench allowed application under Section 482 CrPC to quash FIR alleging Section 406 IPC offences against bank officials. Court held that possession of hypothecated vehicle under loan agreement clauses lacking dishonesty ingredients.
FIR registered as C.R.No.218 of 2005 at Kalachowki Police Station, Mumbai, is quashed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPLICATION NO.546 OF 2006
Mr.Yashpal Thakur i/b M/s.Paras Kuhad & Associates for the Applicants.
Mrs.M.H.Mhatre, APP for Repondents Nos.1 & 2.
Mr.S.P.Kadam with Mr.Kalpesh Patil for the Respondent No.3.
CORAM : A.S.OKA &
A.A. SAYED, JJ.
DATED : 9 JUNE 2016
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ORAL JUDGMENT: ( Per A.S.Oka, J.)
The Applicants who were at the relevant time employees of HDFC Bank Ltd. (for short “the said Bank”) have filed this Application under Section 482 of the Code of Criminal Procedure, 1973 for quashing the First Information Report (Cr.No.218 of 2005) registered at Kalachowki Police Station at the instance of the third Respondent.
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vehicle. The allegation is that the said two persons namely Shri Joseph Jitendra Singh and Shri Rajesh Menon (Applicants), who were working in the said Bank committed the theft of the said vehicle by acting in conspiracy with the owner of the Service Center. An offence was registered under Section 406 read with Sections 34 and 120B of the Indian Penal Code.
He also invited our attention to the paragraph 6 of the Application. He invited our attention to Clauses 11 to 14 of the Loan Agreement. He pointed out that as the information given by the borrower in the Application for grant
of loan was found to be misleading and incorrect and as the third Respondent failed to perform his obligation and committed breaches, the Bank decided to exercise its authority under sub-clause (i) of Clause 14.2 of the Agreement. He submitted that the Applicant alongwith one Shri Joseph Singh, who were the officers of the said Bank took the custody of the
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vehicle by exercising the powers under the Loan Agreement. He relied upon the decision of the Apex Court in the case of Charanjit Singh
Chadha and ors, v/s. Sudhir Mehra1 .
“ 14.1: If the Borrower fails to perform any of the obligations herein and the same (if capable or remedy) is not remedied to the satisfaction of the Bank within the period to be specified by the Bank: or
1 (2001) 7 SCC 417
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14.2: any of the “Event or Default” pursuant to the terms of clause 11 arise (whether demand for repayment is actually made or not) then and in such case and at any time thereafter, the Bank through its officers, agents or nominees shall have the right (without prejudice to the right the clause 7) to take any one or more than one of the following actions without the specific intervention of a Court or any Court Order:
(i) without any notice and assigning any reason and at the risk and expense of the Borrower and if necessary as Attorney for and in the name of the Borrower take charge and/or possession of, seize, recover, appoint receiver of and remove the Hypothecated Vehicle. The Bank will be within its rights to use Tow-Van to carry away the vehicle/and/or.
(ii)enter into or upon any place or premises where the Hypothecated Vehicle may be kept or stored and inspect, value or insure the same at the costs and expenses of the Borrower, and/or,
(iii) sell by auction or any private contract or tender, dispatch or consign for realization or otherwise dispose of or deal with the Hypothecated Vehicle in the manner the Bank may think fit.”
The Loan Agreement itself records that the vehicle in question was
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hypothecated with the said Bank. The Clause 14.2 of the Agreement confers powers on the said Bank to take possession or charge of the hypothecated vehicle without notice to the borrower and without assigning any reason in the event of any default in terms of Clause 11.
“17. The hire-purchase agreement in law is an executory contract of sale and confers no right in rem on the hirer until the conditions for transfer of the property to him have been fulfilled. Therefore, the repossession 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 repossess 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
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Single Judge seriously flawed in his decision and failed to exercise jurisdiction vested in him by not quashing the proceedings initiated against the appellants. We, therefore, allow appeal and set aside the impugned judgment. The complaint and any other proceedings initiated pursuant to such complaint are quashed.”
was that the vehicle was illegally possessed by the Finance Company. It is true that the Apex Court was dealing with the hire-purchase agreement. However, in the present case, the fact that the loan agreement was executed by the third Respondent is not in dispute. The loan agreement gives powers to the said Bank to possess the vehicle in case of default.
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the First Informant on the basis of which First Information Report was registered as correct, the offence of criminal breach of trust is not at all made out. If according to the case of the borrower, if the Bank acted in violation of the terms and conditions of the loan agreement, civil remedies will always be available to the third Respondent.
ORDER
(i) Rule is made absolute in terms of prayer clause (a), reads thus:
“(a) that this Hon'ble Court may be pleased to quash and set aside the First Information Report (FIR) under C.R.No.218 of 2005 in the Kalachowki Police Station, Mumbai, by the Respondent No.2 herein.”
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(ii) However, we make it clear that we have made no adjudication on the legality and the validity of the action of the said Bank of possessing the vehicle. We clarify that the adjudication made by us is confined only to the question whether an offence has made out against the Applicants;
(A.A. SAYED, J.)
(A.S.OKA, J.)
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2 issues framed by the court
Whether taking possession of a hypothecated vehicle under contractual clauses constitutes criminal breach of trust.
Whether the element of dishonesty required for an offence under Section 405 of the Indian Penal Code exists when action is taken pursuant to loan agreement clauses.
Colour shows how this judgement treated each authority
Charanjit Singh Chadha and ors, v/s. Sudhir MehraApplied¶54
((2001) 7 SCC 417) Charanjit Singh Chadha and ors, v/s. Sudhir Mehra · Who else cites this
4 provisions across 3 enactments
HDFC Bank Ltd (Ramajesh Menon and Jitendra Singh)
State of Maharashtra
Senior Inspector of Police, Kalachowki
Gurjit Tarlochan Singh Bindra
A.S.Oka
A.A.Sayed
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
