The property shall be under the ownership of such person who has paid for it: SC

SREI Equipment Finance Ltd. V. Ramjan Ali & Others

Criminal Appeal No. 6 of 2021 (Arising out of SLP No. 3893/2020)

Decided on January 5, 2021

A three-judge bench of Supreme Court consisting of Justice Ashok Bhushan, Justice R. Subhash Reddy, and Justice M.R. Shah held that vehicle no. UP 51 AT 5709 be released in favour of the appellant and CJM, Sitapur shall ensure that vehicle is received back from Respondent No. 1 and released in favour of appellant.

This appeal has been filed challenging the judgement dated 28.01.2020 of High Court of Judicature at Allahabad, Lucknow bench allowing the application under Section 482 of CrPC filed by Respondent No. 1. By impugned judgement, High Court has directed for release of vehicle JCB No. UP 51 AT 5709 in favour of the Respondent No. 1. The appellant, who was Respondent No. 3 before the High Court aggrieved by the judgement has come up in this appeal. (Para 2)

Original owner of the vehicle Mr. Amarnath Yadav has purchased a JCB machine and entered into a finance agreement with the appellant for amount of Rs. 19,83,360/- on 22.10.2016 and Registration Certificate was issued by RTO, Basti in which the entry was made that the vehicle was hypothecated. Later, the owner failed to pay any instalments of the loan to the appellant. On the failure of the payment, the appellant referred the dispute to an arbitrator where arbitrator gave an award in favour of the appellant for the payment of amount of Rs. 25,97,053/- with interest @ 10% p.a. The original owner made an application to RTO, Basti for the cancellation of the entry of appellant as financer in RC after which RTO, Basti issued a fresh RC in favour of Amarnath Yadav as its original owner. On the basis of fresh RC, Amarnath Yadav sold the vehicle to Respondent No. 1 in other registration authority, Sitapur. A new RC along with the entry of hypothecation in favour of Magma Fincorp Limited has been issued by RTO, Sitapur in the name of Ramzan Ali as its original owner. On 09.01.2019, the vehicle was taken in possession by the appellant. The CJM after observing a dispute over ownership refused to release the vehicle in favour of any of the parties.

The Respondent No. 1 filed an application in the High Court for release of the vehicle challenging the order of CJM. The High Court in its judgement directed the release of vehicle in favour of Respondent No. 1. (Para 3.8)

The court issuing the notice passed an order, ‘We further direct that the vehicle bearing no. UP 51 AT 5709 in question shall not be further transferred by the respondent no. 1.’ (Para 4)

The learned counsel for the appellant submitted that as vehicle being hypothecated to appellant and there being award against original owner, the vehicle can neither be transferred to respondent no. 1 nor there is any right in respondent no. 1 to claim the vehicle. (Para 7)

The learned counsel for respondent no. 1 submitted that respondent no. 1 is the bonafide purchaser who had paid amount of Rs. 7,50,000/- to the original owner and the vehicle having been forcibly taken possession on 09.01.2019, the same has rightly been released to the respondent no. 1. (Para 8)

The learned counsel for the state submits that the original owner of the vehicle died of cancer on 08.07.2019 and all the necessary facts of the case have been mentioned in the counter affidavit. (Para 9)

With regard to this, the High Court in its order has relied on judgement of this court in the matter of Manoj and others Vs. Shriram Tpt. Finance Co. Ltd. and others, JT 2002(1) SC 293 observed that vehicle having been released in favour of the registered owner through it was open for the financier to approach in the civil court for proper relief. (Para 18)

The court observed,

The statutory authority while cancelling the RC of the vehicle issued by RTO, Basti in Form 23 has recorded his conclusion that entry of the appellant as a person in whose favour the vehicle was hypothecated, which was there in the original RC has been fraudulently deleted. The respondent no. 1 although claimed that he is a bonafide purchaser but fact remains that he is beneficiary of fraud. (Para 20)

The High Court has committed error in directing the release of the vehicle in favour of respondent no. 1 in whose name vehicle was registered at RTO, Sitapur. The order of the High Court is unsustainable and is hereby set aside. The court allowed the appeal accordingly and held that vehicle no. UP 51 AT 5709 be released in favour of the appellant. CJM, Sitapur shall ensure that vehicle is received back from respondent no. 1 and released in favour of appellant on such terms and conditions as may be deemed fit and proper, which exercise shall be completed within a period of four weeks from the date of judgement.

View/Download Judgement: SREI Equipment Finance Ltd. V. Ramjan Ali & Others

Shagun Vats DSK