Full Judgment Text
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CASE NO.:
Appeal (civil) 1070 of 2006
PETITIONER:
The Managing Director, Orix Auto Finance (India) Ltd
RESPONDENT:
Shri Jagmander Singh & Anr
DATE OF JUDGMENT: 10/02/2006
BENCH:
ARIJIT PASAYAT & S.H. KAPADIA
JUDGMENT:
J U D G M E N T
(Arising Out of S.L.P. (C) No.22535 of 2004)
ARIJIT PASAYAT, J.
Leave granted.
Challenge in this appeal is to the order passed by a
learned Single Judge of the Punjab and Haryana High Court
dismissing the Civil Revision filed under Section 115 of the
Code of Civil Procedure, 1908 (in short the ’Code’).
The background facts in a nutshell are as follows:
Under a Hire Purchase Agreement executed between the
appellant (hereinafter referred to as the ’Financier’) and the
respondent no.1 (hereinafter referred to as ’Hirer’) possession
of truck No.HR-46-C-3689 was handed over to the hirer
subject to compliance of the terms and conditions of the
agreement. As per the terms and conditions stipulated in the
agreement, the hirer was to repay the total financed amount of
Rs.9,24,000/- in 33 monthly instalments of Rs.28,000/- each.
As per the agreement the first instalment was payable on
25.10.2000 and the last instalment was payable on 25.6.2003.
In case of default in making payment of the monthly
instalment the hirer was liable to pay delay charges. Clause
10 of the agreement which is relevant for this purpose of this
appeal reads as follows:
"10. In case the Hirer shall during the
continuance of this Agreement do or suffer any
of the following acts or things, viz. either:
a. fail to pay any of the hiring (rent)
instalments or any such monies which has
fallen due within the provisions of this
agreement, within or at the stipulated time,
whether demanded or not;
b. die, become insolvent, or compound with
its creditors;
c. the Hirer, being a Limited Company, shall
pass a resolution for voluntary winding up or
shall have a petition for winding up presented
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against it or if a Receiver shall be appointed of
its undertaking;
d. pledge or sell or hypothecate or charge or
mortgage or let or assign or attempt to pledge
or sell or assign or part with possession of or
otherwise alienate or transfer the vehicle;
e. do or suffer any act or thing whereby or
in consequence of which the said vehicle may
be distrained or taken in execution under legal
process or by legal process or by any public
authority;
f. fail to keep or cause the vehicle
comprehensively insured during the period of
the Agreement;
g. fail to indemnify the Owner, the
Insurance premium paid by the Owner,
resulting from the Hirer’s failure to keep the
insurance effective at any point of time during
the currency of this Hire Agreement.
h. fail to pay to the Government or any
public authority any tax or surcharge or other
levies due in respect of the vehicle;
i. remove the vehicle to another State and
get it re-registered there;
j. break or fail to perform or observe any of
the conditions on its part herein contained.
Then, on the occurrence of any such event, the
right of the Hirer under this Agreement shall
forthwith stand determined ipso facto without
any notice to the Hirer and all the instalments
previously paid by the Hirer shall be absolutely
forfeited by the Owner who shall thereupon be
entitled to enter into any house or place where
the said vehicle may then be, remove and
retake possession of the same and to sue for
all the instalments due and for damage for
breach of the Agreement and for all the costs
of retaking possession of the said vehicle and
all costs occasioned by the Hirer’s default."
(Underlined for emphasis)
According to the financier there was default in making
payment of the monthly instalments and the hirer was
requested to clear the amounts due by several letters. In spite
of several requests/demands the hirer did not pay the amount
due and as on 27.8.2002 he was in arrears of Rs.1,34,000/-
on account of monthly instalments due excluding other
charges payable on account of delay in making payment.
Accordingly, the appellant repossessed the vehicle on
27.8.2002. According to the financier in view of the violation
of the terms by the hirer the agreement stood terminated.
Therefore, by registered letter dated 27.8.2002 the financier
called upon the hirer to pay a sum of Rs.4,27,485/- which was
the amount due. The notice stipulated that the amount was to
be paid within 10 days from the date of the receipt of the
letter. The hirer did not make any payment and on the other
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hand made a false complaint to the Reserve Bank of India (in
short ’RBI’), and filed a civil suit in the Court of Civil Judge,
Senior Division, Sonepat for declaration with consequential
reliefs and permanent injunction along with mandatory
injunction. In the said civil suit the hirer also filed application
under Order XXXIX Rules 1 & 2 read with Section 151 of the
Code praying for interim relief. On receipt of the summons,
written statement was filed by the appellant. The matter was
taken up 13.9.2002. A prayer was made for an adjournment
of the date as learned counsel for the appellant had met with
an accident. The matter was adjourned for arguments on the
said application on 27.9.2002. But at the same time learned
Civil Judge directed the appellant to release the vehicle subject
to deposit of the balance of instalments along with interest
amounting to Rs.1,61,504/-. The said order was the subject-
matter of challenge in Civil Revision No.4680/2002. Initially
the High Court had granted stay of the operation of the order.
The hirer filed an application for vacation of the order of stay.
By the impugned order the High Court dismissed the Civil
Revision upholding the order passed by the Trial Court.
According to learned counsel for the appellant the order
passed is clearly unsustainable. The suit filed was not
maintainable. While passing order for release, the trial Court
did not take note of the fact that according to the appellant the
arrears were much higher than the defaulted instalments. It
was not considered by the Trial Court as to how the appellant
would recover its dues if the suit was ultimately dismissed.
Learned counsel for the respondent on the other hand
submitted that the re-possession as taken by the appellant
was clearly contrary to law. Merely because the hirer had
signed the agreement which permitted re-possession that
would not give arbitrary power to the financier to take
possession of the vehicle. It was pointed out that in several
cases different High Courts have deprecated the practices of
the financers taking possession of the financed vehicles.
By order dated 16.11.2004 while issuing notice interim
stay was granted subject to the opposite party-respondent
depositing Rs.2,50,000/- with the Registry of this Court within
four weeks without prejudice to the claims involved.
Admittedly the amount has been deposited.
So far as the question of re-possession is concerned, it is
clearly permissible in terms of Clause 10 of the Hire purchase
agreement referred to above. What ultimately is to be decided
by the Trial Court in the suit is the amount to which the
appellant is entitled to. Learned counsel for the appellant has
submitted that without taking note of the defaulted amount
which according to him is in the neighbourhood of Rs.10
lakhs, the vehicle was directed to be released on payment of
the defaulted instalments. The said amount has also been
deposited. But at the same time it was imperative for the High
Court to ensure that in the event the suit is dismissed, and
the hirer is liable to pay the amount, how the same is secured.
It is not disputed that the vehicle if not used would lose its
value. In the peculiar circumstances of the case we direct that
in case the respondent no.1-hirer pays the appellant a sum of
Rs.1,50,000/- in addition to the amount already deposited
within 10 days from today, the vehicle shall be released. The
respondents shall file an undertaking before the Trial Court
that in the event of non-success the vehicle shall be returned
to the financier, unless the Trial Court fixes some other terms.
It is made clear that we have not expressed any opinion on the
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merits of the case which shall be decided in accordance with
law.
Before we part with the case, it is relevant to take note of
submission of learned counsel for the Hirer that in several
cases different High Courts have passed orders regarding the
right to re-possess where the High Courts have entertained
writ petitions including writ petitions styled as PIL on the
question of right of financiers to take possession of the vehicle
in terms of the agreement. It is stated that directions have
been given to the RBI for framing guidelines in this regard. If it
is really so, the orders prima facie have no legal foundation, as
virtually while dealing with writ petitions subsisting contracts
are being re-written. It is still more surprising that petitions
styled as PIL are being entertained in this regard. Essentially
these are matters of contract and unless the party succeeds in
showing that the contract is unconscionable or opposed to
public policy the scope of interference in writ petitions in such
contractual matters is practically non-existence. If agreements
permit the financier to take possession of the financed
vehicles, there is no legal impediment on such possession
being taken. Of course, the hirer can avail such statutory
remedy as may be available. But mere fact that possession has
been taken cannot be a ground to contend that the hirer is
prejudiced. Stand of learned counsel for the respondent that
convenience of the hirer cannot be overlooked and improper
seizure cannot be made. There cannot be any generalization in
such matters. It would depend upon facts of each case. It
would not be therefore proper for the High Courts to lay down
any guideline which would in essence amount to variation of
the agreed terms of the agreement. If any such order has been
passed effect of the same shall be considered by the concerned
High Court in the light of this judgment and appropriate
orders shall be passed.
The appeal is allowed to the aforesaid extent. No orders
as to costs.