Dismissed

P.Eswaran v. Indo Asian Finance Ltd.

Madras HC20 Sept 2011OSA/101/2009

Case brief

AI extract

What is this about?

This High Court dismissed an original side appeal filed by a vehicle purchaser challenging the seizure of a tipper lorry under Section 9 of the Arbitration and Conciliation Act. Holding the engine and trailer to be an integrated unit, the court found the appellant failed to prove bona fide purchase given the financier's possession of the original RC.

What did the court decide?

The original side appeal was dismissed; the appellant may proceed against his vendor Pandian.

P.Eswaran Vs Indo Asian Finance Ltd. — Contract and Commercial Disputes | Madras HC (2011)

¶1

IN THE HIGH COURT OF JUDICATURE AT MADRAS

¶2

DATED: 20.09.2011

¶3

CORAM

¶4

THE HON'BLE MRS. JUSTICE R.BANUMATHI and

¶5

THE HON'BLE MR. JUSTICE B.RAJENDRAN

¶6

O.S.A.NO.101 OF 2009

¶7

AND M.P.NOS.1 AND 2 OF 2009

¶8

P.Eswaran ... Appellant
Vs.
1.Indo Asian Finance limited,
Repd. By its Marketing Executive
S.Ravi Narayanan,
No.15, New Giri Road,
T.Nagar,
Chennai – 17.
2.A.Ravi
3.G.Balachandar ... Respondents

¶9

Original Side Appeal is filed under Order XXXVI Rule 9 of the Original Side Rules read with Clause 15 of the Letters Patent against the order of this Court dated 16.12.2008 made in Application No.5176 of 2008 in Application No.3253 of 2008.

¶10

For Appellant : Mr.P.Gopalan

¶11

For Respondents: No Appearance for RR1 and 3 Given up – R.2 JUDGMENT

¶12

(Judgment of the Court was made by R.BANUMATHI,J.)

¶13

Being aggrieved by the dismissal of application – A.No.5176 of 2008 in A.No.3253 of 2008 and declining to re-deliver the vehicle bearing Registration No.TN 29 AZ 6638, the appellant/3^rd party has preferred this appeal.

¶14

The 2^nd respondent – A.Ravi approached the 1^st respondent – Indo Asian Finance Limited for financial assistance for purchase of Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638. The 1st respondent sanctioned a sum of Rs.12 lakhs, being the finance amount and a sum

¶15

https://hcservices.ecourts.gov.in/hcservices/

¶16

of Rs.3,60,000/- being the finance charges, in all aggregating to a sum of Rs.15,60,000/-. The 1st respondent entered into hire purchase agreement with the 2^nd respondent on 22.06.2007 in HPO.No.014156 as per which the 2^nd respondent has to pay a sum of Rs.52,250/- per month for the first ten months commencing from 21.5.2008 ending on 21.5.1990. According to the 1st respondent, the loan was financed for the jeep i.e., engine/propeller as well as for the truck. The 3rd respondent and one S.Pandian stood as guarantors for the due repayment of the amount. Since the 2nd respondent/hirer did not pay the schedule payments, the 1st respondent filed an application under Section 9 of the Arbitration and Conciliation Act in A.No.3253 of 2008 to seize the Tata Tipper lorry bearing Engine No.478568, Chassis No.155002. By the Order dated 21.7.2008, the learned single Judge appointed Advocate Commissioner to seize the vehicle – Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638. The vehicle was accordingly seized through the Advocate Commissioner.

¶17

The appellant/3rd party has filed A.No.5176 of 2008 seeking for return of the vehicle. In the application, the appellant has averred that the vehicle – Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 was purchased by him from one R.Pandian on 13.12.2007 for a consideration of Rs.7,70,000/-. According to appellant, the said Tata Tipper lorry was covered by H.P.agreement executed by R.Pandian in favour of Tata Motor Limited, having Office at D.G.P.House, Fourth Floor, Old Prabavadi Road, Worli, Mumbai- 400 001 and after the payment to Tata Motors Limited, H.P.Endorsement has been cancelled and necessary endorsement of cancellation of H.P. agreement in R.C.book has also been effected. Further case of appellant is that after purchase, the ownership of the vehicle was transferred in his name and the same has also been endorsed in the R.C.book and that he had also raised financial assistance to the tune of Rs.8,46,000/from G.E.Capital Transportation Financial Services Limited, Nungambakkam, Chennai and necessary H.P.endorsement has also been made in the R.C.book on 11.06.2008 and that he has been paying the monthly instalments to the said financing company. The appellant has averred that when he was away from Salem for business purposes, the Advocate commissioner appointed by the Court has seized the vehicle on 24.10.2008 by serving notice on his staff. The case of appellant is that tipper lorry bearing Regn.No.TN 29 AZ 6638 was not the subject matter in the loan agreement and that only the Trailer alone is the subject matter of the loan agreement and that he is the bonafide purchaser for valuable consideration and he is the absolute owner of the vehicle Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 and he is in possession of the vehicle as absolute owner and prayed for impleading himself as a respondent in A.No.3253 of 2008 and also prayed for direction to re-deliver vehicle Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 to the appellant.

¶18

The 1st respondent resisted the application stating that while rendering financial assistance to 2nd respondent - A.Ravi, the

¶19

https://hcservices.ecourts.gov.in/hcservices/

¶20

amount of Rs.12 lakhs was paid to Tata Motors Limited and the said Pandian appears to have paid a cheque for Rs.1 lakh to Tata Motor Limited and clandestinely retrieved the relevant vehicle papers from Tata Motor Limited and therefore the appellant is not a bonafide purchaser for the value.

¶21

On direction by the learned single Judge, original R.C.book of Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 was produced by the 1st respondent finance Company. Upon perusal of the original R.C.book, the learned single Judge held that the appellant has not convincingly explained as to how he got the duplicate R.C.book. The learned Judge further observed as to how the duplicate R.C.book has been issued on the mere statement that the original R.C.book was lost and directed the Registering authority to look into the registration of Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 for which duplicate R.C.book had been issued and to take necessary action.

¶22

Challenging the impugned order, Mr.P.Gopalan, learned counsel for appellant contended that the appellant is a bonafide purchaser of the vehicle viz., Tata lorry bearing Regn.No.TN 29 AZ 6638 for a valuable consideration, which was not the subject matter of H.P.agreement. It was further submitted that appellant is neither an agent of the 2^nd respondent nor his representative and the appellant, being a bonafide purchaser of the vehicle, the learned single Judge ought to have impleaded the appellant as a party in the Section 9 application. The learned counsel would further submit that even in the R.C.book produced by the 1st respondent, there was no H.P.endorsement in the name of the 1st respondent and the learned judge should have dismissed the application filed by the 1st respondent as the 1st respondent is not entitled to invoke the provisions of Arbitration and Conciliation Act.

¶23

Though respondents No.1 and 3 viz., S.Ravinarayanan, Marketing Executive, Indo Asian Finance Limited, T.Nagar, Chennai-17 and G.Balachandar were served on 5.6.2009 and 25.9.2009 respectively and their names were also printed in the cause list, they neither appeared before the Court nor there is any representation on their behalf. Respondent No.2 was given up. Therefore, this Court considered the matter on merits.

¶24

Case of appellant is that he purchased Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 from R.Pandian, who in turn, purchased the vehicle by taking financial assistance from Tata Motors Limited. Further case of appellant is that on requisite payment to Tata Motor Limited, H.P.endorsement has been cancelled and thereafter the said R.Pandian has sold the vehicle to the appellant. The appellant is also said to have raised financial assistance by taking loan to the tune of Rs.8,40,000/- from G.E.Capital Transportation Services Limited, Nungambakkam and necessary endorsement has also been made in the R.C.book. By perusal of the R.C.Book produced by the appellant,

¶25

https://hcservices.ecourts.gov.in/hcservices/

¶26

it is seen that earlier the vehicle was under hire purchase with Tata Motor Limited, D.G.P.House, Fourth Floor, Old Prabavadi Road, Worli, Mumbai-400 001, which was cancelled and necessary endorsement of cancellation of H.P.agreement was also made in the R.C.Book. H.P.Endorsement in the name of Tata Motor Limited and the cancellation has been explained in the counter affidavit filed by the 1st respondent – Finance Company. It is stated that when the 2^nd respondent – Ravi had approached the 1st respondent for financial assistance, he had identified the said vehicle – Tata Tipper bearing Regn.No.TN 29 AZ 6638 with the said Pandian, who had a pre-existing H.P.agreement with Tata Motor Limited. The request of 2^nd respondent to purchase the vehicle from Pandian was accepted by the 1st respondent and 1st respondent paid the dues of the said Pandian, which was under H.P.agreement with Tata Motor Limited by directly effecting payment of sum of Rs.12 lakhs to Tata Motor Limited. In the counter affidavit filed by the 1st respondent, it is clearly averred that the funds were transferred through their franchiser viz., Sriram Transport Finance Corporation Limited by Cheque No.270132 dated 22.6.2007 drawn on UTI Bank Limited, T.Nagar Branch for a sum of Rs.12,00,000/- which was duly encashed by the aid Tata Motor Limited. Since the hire purchase termination papers/transfer papers were not handed over to the 1st respondent, by Tata Motor Limited, the 1st respondent addressed a letter dated 22.1.2008 asking Tata Motor Limited to hand over the original papers to them. The 1st respondent further averred that the said Pandian had paid the balance of Rs.1 lakh to Tata Motor Limited and had fraudulently retrieved the vehicle papers from them. Pursuant to the financial assistance to the 2^nd respondent, the 1st respondent held the original Registration Certificate of the subject vehicle for which the said Balachandar and Pandian stood as guarantors for the due repayment of the amount. The financial assistance taken by the 2^nd respondent was thus paid to Tata Motor Limited, which had H.P.agreement of the said vehicle – Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638. On payment of the amount, physical possession of the said vehicle was handed over to the 2^nd respondent. Event though there was no endorsement of the financier1st respondent, the fact remains that pursuant to their financial assistance to 2nd respondent, the 1st respondent holds the Registration Certificate of the vehicle. When the 1st respondent transferred the funds to Tata Motor Limited, by Cheque payment, the appellant cannot take advantage of the H.P.endorsement Tata Motor Limited made in the R.C.Book.

¶27

The learned counsel for the appellant mainly contended that Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 was not the subject matter of the loan agreement executed by the respondents 2 and 3 in favour of the 1st respondent. In this regard, the learned counsel has drawn our attention to the loan agreement dated 22.06.2007 under which the 2nd respondent has taken the financial assistance for purchase of 'Tata LPS 3516 Trailer'. Laying emphasis upon the word "Trailer", the learned counsel for appellant mainly contended that

¶28

https://hcservices.ecourts.gov.in/hcservices/

¶29

the subject matter of the loan agreement was only the "trailer" and the Tata Tipper lorry was not at all the subject matter in the loan agreement and while so seizure of the Tata Tipper lorry/propeller through Advocate Commissioner is unjustified.

¶30

We are not impressed with the argument that the engine of the Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638 and the trailer are two different units. In our considered view, both the Engine/Propeller and the trailer constitute integral unit. By perusal of the duplicate R.C.book produced by the appellant, the description of the vehicle is stated as "Chassis No.415207GTZ216155 and Engine No.6OE62475568. In the loan agreement, it is stated that the financial assistance is given to the 2^nd respondent for purchase of Tata LPS 3516 TC Trailer. The original R.C.Book was produced before the learned single Judge by the 1st respondent. The learned single Judge observed that the original R.C.Book of the vehicle is available with the 1st respondent – finance company. The description of the vehicle in R.C.book would clearly show that the financial assistance was taken by the 2^nd respondent for the vehicle – Tata LPS 3516 TC Trailer along with Chassis and Engine indicating that the engine/propeller and the trailer is one integrated unit.

¶31

That the Engine and the trailer are one integrated unit is also fortified by the materials on record. The appellant has produced number of trip sheets and consignment notes. By perusal of the consignment notes and trip sheets, it is seen the vehicle transported the consignment of fly ash dry - 22 M.Ts to Mettur Thermal Power Station. The Tipper is a sophisticated one with truck chassis with a dumper body between the frames and the back of the bed is hinged at the back to the truck. The tailgate can be configured to swing on hinges, wherein pneumatic rams lift the gate open and up above the dump body. Normally, such tipper lorries are used to carry the consignment such as fly ash dry, etc., The trip sheet and consignment note would clearly show that the vehicle was operated along with the trailer. Therefore, in our considered view, the appellant is not right in contending that only trailer was the subject matter of loan agreement and not the engine/propeller of the Tata Tipper lorry bearing Regn.No.TN 29 AZ 6638.

¶32

Coming to the contention that the appellant is a bonafide purchaser for value, as pointed out earlier, the 1st respondent has paid the amount to Tata Motor Limited and got the H.P.endorsment cancelled. The 1st respondent is in possession of the original R.C.book. When the possession of the vehicle, which is the subject matter, was handed over to Ravi - the 2^nd respondent, it has not been explained as to how the vehicle was handed over to Pandian. As rightly pointed by the learned single Judge, when the original R.C.book was with the 1st respondent, it is not known how the said Pandian and the appellant have managed to get the Registration Certificate. No convincing explanation is forthcoming as to how the

¶33

https://hcservices.ecourts.gov.in/hcservices/

¶34

appellant was able to get a duplicate Registration Certificate. The appellant had not explained as to why he did not insist for original R.C.book. No convincing explanation is forthcoming as to how the said Pandian and the appellant managed to get duplicate R.C.book on the mere statement that the original R.C.book was lost. Even though the learned single Judge dismissed the application – A.No.5176 of 2008declining to implead him in the application – A.NO.3253 of 2008, the learned single Judge had given liberty to the appellant that if the appellant is having any right over the vehicle it is open to him to establish the same in accordance with law. The scope of the enquiry under Section 9 of the Arbitration and Conciliation Act being limited, on being satisfied with the prima facie case and balance of convenience in favour of the 1st respondent, the learned single Judge rightly directed the seizure of the vehicle bearing Regn.No.TN 29 AZ 6638. When the appellant has not satisfactorily established that he is a bonafide purchaser for value, we do not find any reason warranting interference with the impugned order.

¶35

In the result, the Original Side Appeal is dismissed. As directed by the learned single Judge, if the appellant has any right over the subject vehicle, it is open to him to proceed against his vendor Pandian in accordance with law. However, there is no order as to costs. Consequently, the connected miscellaneous petitions are also dismissed.

¶36

Sd/Deputy Registrar //true copy// Sub Asst.Registrar To

¶37

The Sub Assistant Registrar, Original Side, High Court, Madras.

¶38

1 cc to Mr.P.Gopalan, Advocate, Sr.No.58307

¶39

JUDGMENT IN O.S.A.NO.101/2009

¶40

KSK {CO} TP/30.9.2011.

¶41

https://hcservices.ecourts.gov.in/hcservices/

P.Eswaran v. Indo Asian Finance Ltd.

Case brief

What is this about?

What did the court decide?

P.Eswaran v. Indo Asian Finance Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Southern Explosives Vs Gulf Oil Corporation

M/S Sheela Rani Textiles Ltd. Vs Sri Anjaneya Cotton Mills

Kalaichezhiyan Srinivasan Vs Nirmala

Ivrcl Infrastructure and Vs Befesa Agua Sau

Tirunelveli Vs M/S Sri Pathy Associates

M/S Indian Oil Corporation Vs Lakshmi Subrahmanyam