Dismissed

Sri N Prasannakumar v. the Manager Siddaganga Urban Co-Op Bank Ltd.

Karnataka HC1 Oct 2013RSA/380/2009

Case brief

AI extract

What is this about?

In this regular second appeal, the High Court of Karnataka dismissed the appellant's challenge to the seizure of a vehicle by the respondent bank. The Court held that the Hire Purchase Act, 1972 was repealed, and the seizure was valid pursuant to the hypothecation and default clauses in the Hire Purchase Agreement entered between the parties.

What did the court decide?

The appeal is dismissed; the interim injunction does not survive, and the I.A. is rejected.

Sri N Prasannakumar Vs the Manager… — Contract and Commercial Disputes | Karnataka HC (2013)

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RSA 380/09

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IN THE HIGH COURT OF KARNATAKA AT BANGALORE

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DATED THIS THE 01^ST DAY OF OCTOBER, 2013

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BEFORE:

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THE HON’BLE MR. JUSTICE A.S.PACHHAPURE

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REGULAR SECOND APPEAL No.380 OF 2009

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BETWEEN:

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N. Prasannakumar, S/o. Narasimhaiah, Aged about 51 years, R/at Channabasaveshwara Nagar, Upparahalli Main Road, Tumkur-570 102. ... APPELLANT/S [By Sri. M.S. Rajendra Prasad, Adv.]

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AND:

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The Manager, Siddaganga Urban Co-op. Bank Ltd., S.H.S. Building, B.H. Road, Tumkur-570 101. ... RESPONDENT/S [By Sri. S.V. Narasimhan, Adv. for C/R.] ***

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This RSA is filed u/Section 100 r/w. Order XLII Rule 1 of CPC against the Judgment & Decree dated:

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RSA 380/09

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27.1.2009 passed in R.A. No.188/2007 on the file of the Addl. Civil Judge (Sr.Dn.), Tumkur, dismissing the appeal filed against the Judgment and Decree dated: 31.10.2007 passed in O.S. No.155/2006 on the file of the III Addl. Civil Judge (Jr.Dn.) & JMFC, Tumkur.

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This RSA coming on for Hearing on I.A. this day, the Court delivered the following:

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JUDGMENT

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Though the matter is posted for hearing on I.A., with the consent of learned counsel for the

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parties, taken up for final hearing.

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The unsuccessful plaintiff has approached

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this Court in appeal challenging dismissal of his suit instituted seeking the relief of declaration, mandatory injunction and to restore possession of the vehicle mentioned in the schedule to the plaint.

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The facts reveal that the appellant who is the plaintiff before the trial Court had availed a loan in a sum of Rs.4,75,000-00 on 06.11.2004 from the defendant for purchase of Ashok Leyland bus

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bearing reg. No.KA 06-D 1899 described in the schedule to the plaint. The parties entered into a Hypothecation Agreement and ultimately, on 19.01.2006 the defendant is said to have seized the plaintiff’s vehicle forcibly and in the circumstances, he approached the trial Court seeking a declaration that the seizure is illegal and for mandatory injunction to restore possession of the aforesaid vehicle.

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The defendant appeared in the trial Court and filed its written statement. It was its contention that the plaintiff had availed a loan of Rs.4,75,000-00 by offering surety and this amount was to be paid in periodical instalments. The vehicle which was purchased was pledged to the bank and as on the date of its seizure, the plaintiff was a defaulter and under the terms of the Agreement the

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defendant had every right and in exercise of the said right, the vehicle is said to have been seized.

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Therefore, the defendant contended that there was no forcible seizure and it is in accordance with the terms of the agreement.

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On the basis of the pleadings, the trial Court framed the following issues:

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1. Whether the plaintiff is entitled to the relief sought for?

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1. What order or decree?

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During the trial, the plaintiff was examined as P.W.1 and a witness P.W.2 and in their evidence, documents Exs.P1 to 6 were marked. The defendant examined its in-charge Manager D.W.1 and in his evidence, documents Exs.D1 to 40 were marked.

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The trial Court after hearing learned counsel for the parties and on appreciation of the evidence

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on record, dismissed the suit holding that the seizure was valid as there was default on the part

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of the plaintiff and therefore, refused to grant the relief sought for. Aggrieved by the Judgment and Decree of the trial Court, the plaintiff preferred an appeal in R.A. No.188/2007 and the said appeal also came to be dismissed on merits. Aggrieved by the concurrent findings of the Courts below, the present appeal is filed.

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At the time of the admission, this Court

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raised the following substantial question of law for consideration:

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Was the transaction between the

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parties described as Hire Purchase Agreement valid as on the date it was entered into?

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Was the defendant-Bank entitled to seize the vehicle on its own in terms of the Hire Purchase Agreement without recourse to judiciary proceedings in view of the Govt. Notification No.GSR 402(E) dated 30^th August 1973 rescinding all earlier notifications regarding

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coming into force of Hire Purchase Act 1972 and the Rules made thereunder?

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I have heard learned counsel for both the

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parties.

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Learned counsel for the appellant would

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contend that the Hire Purchase Act, 1972 came to be repealed on the date of seizure of the vehicle by Act No.31 of 2005 with effect from 23^rd June, 2005.

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He submits that the Hire Purchase Agreement at Ex.D11 does not give an authority to the defendant bank as the contract that has been entered was under the aforesaid Act. It is also his submission that

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the trial Court has not framed proper issues and hence he would contend that the Courts below have committed a wrong in dismissal of the suit of the appellant.

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On the other hand, learned counsel for the respondent has supported the Judgments and Decrees

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of the Courts below and contended that as the Act was repealed, the question of having recourse to the Notification No.402(E) dated 30.08.1973 does not arise for consideration at all and the seizure is under the contract that has been entered into between the parties.

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There is no dispute that the Hire Purchase

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Act, 1972 came to be repealed vide Act No.31 of 2005 with effect from 23^rd June, 2005. When the Act itself is repealed, the question of having recourse to the Notification No.402(E) dated 30.08.1973 does

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not arise for consideration at all. Hence, the substantial question of law which has been raised at Sl. No.2 does not arise for consideration as the parties are depending upon the contract that has been entered into.

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The perusal of the evidence of the

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defendant and the documents produced would clearly indicate that under Ex.D11, the plaintiff pledged

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the motor vehicle which was purchased by him by availing the loan facilities executed on 16.11.2004 and this is a contract which has been entered into between the parties and though there is a mention of hypothecation of the motor vehicle, it is not under the provisions of the Hire Purchase Act, 1972 and it is a contract entered into between the parties under the Indian Contract Act. Clause 10 of the Agreement reveals that in case if the borrower commits any default in payment of the instalment or the arrears of loan as agreed upon by him, the bank has been liberty to sell or otherwise dispose of the vehicle which was pledged under this Agreement. The clause

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also provides that the bank is entitled to at any time as it is the absolute owner and without notice to the borrower enter and remain at any place where the pledged vehicle is kept and take possession of the vehicle. The appellant has also agreed that it shall be lawful to the bank forthwith to seize the vehicle without notice and without prejudice to the

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rights of the bank to recover the dues dehors the security offered by the parties and to sell the vehicle in a public action or under a private contract. So, in terms of this Agreement which has

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been entered into between the parties, the bank is at liberty to seize the vehicle and it is not in dispute that the plaintiff was a defaulter on the date when the vehicle was seized. He has to pay not less than Rs.5 lakhs prior to the date of seizure. In such circumstances, as the contract entered into

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between the parties was valid and legal, the question of illegal seizure does not arise for consideration.

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On this aspect of the matter, learned counsel

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for the respondent has placed reliance on the decisions of the Apex Court reported in (2001)7 Supreme Court Cases 417 [Charanjit Sing Chadha and others Vs. Sudhir Mehra] and (2013)1 Supreme Court Cases 400 [Anup Sarmah Vs. Bhola Nath Sharma and

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others]; wherein the Apex Court has observed “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”. The Apex Court held that the seizure of the vehicle under Hire Purchase Agreement is not an offence. Anyhow, the perusal of the material placed on record in the context of the principle laid-down in the decisions aforesaid, I do not find that there was any act on the part of the defendant in taking the vehicle forcibly from the plaintiff and as the contract authorizes the defendant to take possession of the vehicle as he was a defaulter, the seizure which is made in pursuance of the contract entered into between the parties is valid.

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Learned counsel for the appellant has

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placed reliance on the decision of the Apex Court reported in AIR 2007 Supreme Court 1349 [Manager,

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ICICI Bank Ltd. Vs. Prakash Kaur & Ors.]; wherein the Apex Court has deprecated and discouraged the seizure of vehicle by the bank by employing goondas to take possession by force. In fact the principle does not apply to the facts on hand as the seizure of the vehicle is under the contract that has been entered into between the parties. Ex.D11 indicates that even much earlier the seizure in question, the vehicle was once taken possession by the bank and on the request of the plaintiff the vehicle was handed over and as he did not repay the dues and was still a chronic defaulter, the bank has seized the vehicle. In the circumstances as the seizure is in pursuance of the contract entered into between the parties, I do not find any illegality in the seizure.

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It is submitted by the counsel that there

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was a temporary injunction granted by the trial Court during the pendency of the suit. The suit was

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dismissed and thereafter the plaintiff had preferred an appeal. There was no interim order during the pendency of the appeal and so also no stay order was granted by this Court. From the material placed on record, it reveals that though the vehicle was seized in the year 2006, the respondent was prohibited from selling the seized vehicle till conclusion of the suit in the trial Court. As there was no interim Order during the pendency of the appeal before the first appellate Court and also before this Court, I think much loss has been occasioned to the appellant. But, this would be a separate cause of action to the appellant to approach the Court for compensation/damages and a request for compensation or damages cannot be considered in this appeal. The appellant is at liberty to approach the Court for compensation/ damages.

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In the result, the other substantial question

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of law raised at Sl.No.1 is answered in affirmative.

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Consequently the appeal fails and it is accordingly dismissed.

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In view of dismissal of the appeal, I.A.

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