Allowed

Shivaji Nagari Sahakari Bank Ltd., through Head of Loan Department, Sudhakar Jijarao Shinde v. the State of Maharashtra and Another

Bombay HC2 Sept 2021WP/1357/2020

Case brief

AI extract

What is this about?

The High Court allowed a writ petition challenging an order denying possession of a hypothicated vehicle. The court held that the bank, having taken legal action by setting criminal law in motion to seize the vehicle due to loan default, was entitled to custody over the respondent-borrower and ordered the vehicle's return.

What did the court decide?

The impugned order dismissing the bank's claim is set aside, and the seized Toyota Innova car is ordered to be returned to the petitioner bank on depositing a bond of Rs. 15,00,000/-.

Shivaji Nagari Sahakari Bank Ltd., through… — Contract and Commercial Disputes | Bombay HC (2021)

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IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD

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CRIMINAL WRIT PETITION NO. 1357 OF 2020

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Shivaji Nagari Sahakari Bank Ltd., Paithan, Tal. Paithan. District Aurangabad, Through its Head of Loan Department, Sudhakar S/o Jijarao Shinde, Age; 52 years, Occ; Service as Loan Section Incharge, Paithan, District Aurangabad. ...Petitioner

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VERSIS

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The State of Maharashtra, Through Police Inspector, Police Station, Satara, Satara Parisar, Aurangabad Tal. & Dist. Aurangabad.

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Sanjay S/o Bhikaji Salve, Age; 48 years, Occ; Business, R/o; Plot No. 20, Peshve Nagar, Aai Niwas, Gut No. 92, Satara Parisar, Beed Bye Pass, Aurangabad, Dist; Aurangabad. ...Respondents

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Advocate for Petitioner : Mr. S.S.Thombre h/f Mr. M.S.Karad APP for Respondent No. 1-State : Mrs. R.P. Gaur Advocate for Respondent No. 2 : Mr. D.G. Nagode

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CORAM : SURENDRA P.TAVADE , J.

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DATE : 2^nd September, 2021.

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ORAL JUDGMENT :

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Rule. Rule made returnable forthwith. By consent of

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learned counsel for both the parties, heard finally at the admission stage.

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The petitioner is challenging the order passed by the Judicial Magistrate First Class (Court No. 2), Aurangabad in Criminal Misc. Application No. 1293 of 2020, whereby, the custody of the vehicle i.e. Toyato Innova Car bearing No. MH-20-DJ-5847 was given to respondent No. 2.

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Facts giving rise to the present petition are summarized as under :

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The petitioner bank had given loan of Rs. 11,89,030/- to respondent No. 2 for purchasing vehicle. Accordingly, respondent No. 2 purchased Toyota Innova Car bearing No. MH-20-DJ-5847 on 25.04.2015. Respondent No. 2 executed a deed of hypothication in favour of the petitioner bank. Respondent No. 2 has also executed number of documents in favour of the petitioner bank. Respondent No. 2 did not pay installments as per the schedule given by him. The petitioner-bank came to know that respondent No. 2 has sold the hypothicated vehicle to one Mukesh Pushkaraj Wasnik, R/o Bhandara by agreement. The petitioner bank also came to know that respondent No. 2 has parted with the possession of the vehicle to Mukesh Pushkaraj Wasnik. The petitioner-bank also came to know that respondent No. 2 had lodged a complaint against said Mukesh

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for illegally transfer of vehicle in his own name, but police did not take any action, hence the petitioner-bank lodged complaint with police for seizure of vehicle, but no steps were taken by police, therefore, the petitioner-bank had filed Criminal Writ Petition No. 985 of 2019, wherein, this Court directed police to take action, on the complaint of the petitioner-bank. Accordingly, crime was registered and the vehicle was seized. The petitioner-bank as well as respondent No. 2 preferred an application for the return of vehicle. The trial Court passed the impugned order and rejected the prayer of the petitioner-bank for the possession of the hypothicated vehicle. The trial Court directed to the police to return the hypothicated vehicle to respondent No. 2, hence the present petition came to be filed.

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Heard the learned counsel for the petitioner-bank, learned APP for the respondent No. 1 and learned counsel for respondent No. 2.

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Learned counsel for the petitioner-bank took me through the application for loan, surety bond, mortgage deed, hypothication deed and the documents in respect of the said vehicle executed by respondent No. 2 and his surety.

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Admittedly, respondent No. 2 purchased the vehicle in question by borrowing loan from the petitioner-bank. It is also an

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admitted fact that respondent No. 2 committed breach of agreement as he did not repay the installments as agreed by him. He was in default of payment of installments.

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On this count, the learned counsel for the respondent No. 2 submits that respondent No. 2 had to make financial arrangement. So he executed a deed in favour of Mukesh Vasnik and raised funds, but said Mukesh took dis-advantage of the agreement and tried to transfer the vehicle in his name. Therefore, respondent No. 2 lodged the complaint against him with police but police did not take any action against him. So it is crystal clear that inspite of hypothication deed and other loan documents, respondent No. 2 executed an agreement to sale of the vehicle in favour of Mukesh. On perusal of the agreement between respondent No. 2 and Mukesh, it appears that Mukesh Wasnik had agreed to repay the loan installments but he did not pay it. So it can be said that there is breach of agreement. Loan amount was not paid as per agreement executed by respondent No.2.

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Admittedly, petitioner-bank lodged complaint with police

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for the seizure of hypothicated vehicle. Accordingly, vehicle was seized, so it can be said that the petitioner-bank has taken action as per the law and set the criminal law in motion for the seizure of the vehicle in dafault of payment of loan. Now the question arises as to

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whether who is entitled for the custody of the vehicle. In view of the hypothication deed the ownership lies with the petitioner-bank. Respondent No. 2 was allowed to ply the vehicle till he pays installments as per the agreement. If, he commits default in payment of loan, petitioner-bank has further remedy to take possession of the hypothicated vehicle. The petitioner-bank has taken the recourse of law by setting the criminal law in motion and got the vehicle seized.

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On perusal of the impugned order, it appears that the trial Court has relied only on the ratio laid down in the case of M/s Sampatjraj Jain Finance Vs. State and held that the petitioner-bank has not taken any legal action for the recovery of outstanding amount, therefore the petitioner-bank is not entitled to claim the vehicle, but in the present case, it appears that respondent No. 2 was defaulter. Similarly he has executed agreement to sale of the vehicle in favour of third party and parted with the possession of the vehicle which was hypothicated in favour of the petitioner-bank. So it can be said that respondent No. 2 committed breach of deed of hypothication and other loan documents. The petitioner bank has set the law in motion, therefore, it cannot be said that the bank has not taken any legal action for the recovery of outstanding loan amount. In case of default payment of loan amount, the bank can auction the hypothicated vehicle and realize its money. Therefore, the observation

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of the trial Court that the petitioner-bank has not taken legal action has no base. The huge amount of Rs. 18,00,000/- is outstanding from respondent No. 2. The vehicle was purchased in the year 2015, therefore, it can be said that respondent No. 2 had sufficient opportunities to repay the loan amount in time, but instead of payment, respondent No. 2 committed breach of payment of loan. Therefore, the trial Court should have returned the vehicle to bank because as it was hypothicated with the petitioner-bank. Trial Court has not considered the contents of the hypothication deed and other loan documents and simply held that bank has not taken any legal action for the recovery of loan amount. In fact, at the instance of petitioner the vehicle was seized, therefore, the seized vehicle should have been given to the petitioner-bank for the realization of outstanding loan amount, therefore, the impugned order is required to be set aside. Hence I pass following order :

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ORDER

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The petition is allowed.

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The impugned common order passed by the Trial Court in Criminal Misc. Application No. 1293 of 2020 and Criminal Misc. Application No. 1321 of 2020 dated 22.09.2020 is hereby set aside.

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The seized Innova Car bearing No. MH-20DJ-5847, Chassis No. MBJ11JV4007525961

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and Engine No. 2KDS517424 be returned to the petitioner-Bank on bond of Rs. 15,00,000/- (Rs. Fifteen Lakhs).

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Rule is made absolute.

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( SURENDRA P.TAVADE ) JUDGE

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mahajansb/

Shivaji Nagari Sahakari Bank Ltd., through Head of Loan Department, Sudhakar Jijarao Shinde v. the State of Maharashtra and Another

Case brief

What is this about?

What did the court decide?

Shivaji Nagari Sahakari Bank Ltd., through Head of Loan Department, Sudhakar Jijarao Shinde v. the State of Maharashtra and Another

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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