“In Charanjit Singh Chadha & Ors. Vs. Sudhir Mehra, (2001) 7 SCC 417, this Court held that recovery of possession of the vehicle by 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 the terms incorporated in the agreement. The Court elaborately dealt with the nature of the hire purchase 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. The element of sale fructifies when the option is exercised by the intending purchaser after fulfilling the terms of the agreement. When all he terms of the agreement are satisfied and option is exercised a sale takes place of the goods which till then had been hired. While deciding the said case, this Court placed reliance upon its earlier judgments in M/s Damodar Valley Corporation v. The State of Bihar, AIR 1961SC 440; Installment Supply (Private) Ltd. & Anr. V. Union of India & Ors. , AIR 1962 SC 53; K.L.Johar & Co. v. The Deputy Commercial Tax Officer, Coimbtore III, AIR 1965 SC 1082; and Sundaram Finance Ltd. v., State of Kerala & Anr., AIR 1966 SC 1178.”
