THE RECOVERY OF
VEHICLES BY THE FINANCIER NOT AN OFFENCE
--Supreme Court.
The Supreme Court
has ruled that the financier cannot be prosecuted for forcible 'recovery' of
the vehicle till the buyer has repaid the entire loan.
The decision comes
as a major relief to banks and financial institutions. They will not face any
criminal action for taking away a vehicle anytime before it is transferred in
the buyer's name after he has made full payment.
A
bench comprising Justice B.S. Chauhan and Justice FAI Kalifulla said it was a
settled proposition of law that the financier retained the ownership during the
subsistence of the hire-purchase agreement. The purchaser remains the trustee/bailee
on behalf of the financier or the financial institution, it added.
"Thus, in
case the vehicle is seized by the financier, no criminal action can be taken
against him as he is repossessing the goods owned by him," the bench said.
The order came on
a petition filed by Anup Sarmah, who had initiated criminal proceedings against
Bhola Nath Sharma and others after they took possession of his Maruti Zen
financed by them. A judicial magistrate in Guwahati directed the financiers to
return the vehicle to the buyer.
They filed an
appeal before the Gauhati High Court in June 2009, which quashed the criminal
proceedings against them. Sarmah then approached the Supreme Court.
But it accepted
the contention of the financiers that they remained the owner of the vehicle
under the hire-purchase agreement and, therefore, the possession taken by them
could not be held to be an offence.
The bench pointed
out that the Supreme Court had, in a number of judgments in the past, quashed
criminal proceedings against financiers in such cases.
In the Trilok
Singh case in 1979, the SC had quashed the criminal case against the financier
who had taken away a truck from a buyer after there was a default in the
payment of loan.
In 1996, the apex
court went a step further and held in the K.A. Mathai case that the financier
had a right to resume possession "even if the hire-purchase agreement does
not contain a clause of resumption of possession".
2/11/12
Reference
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