Central Motor Vehicles Rules, 1989: r.61 – Termination of hire purchase agreement – Hire purchase agreement entered into by appellant financier with the original owner/purchaser of vehicle – While registering the vehicle, an entry regarding hypothecation was made in the registration certificate – Failure on part of original owner to pay instalment of loan – Appellant referred dispute to arbitrator who passed award in favour of appellant for an amount of Rs.25,97,053/- – Subsequently, original owner filed application before the Regional Transport Office (RTO), Basti for cancellation of entry of appellant as person with whom vehicle was hypothecated – Resultantly, entry of appellant’s name in the registration certificate of the vehicle was cancelled and fresh registration certificate in Form 23 was issued in the name of original owner without any entry of hypothecation – Clearance certificate was also issued by RTO, Basti for transfer of the vehicle to Respondent No. 1 within the jurisdiction of registering authority, Sitapur – On 9.1.2019, when vehicle was taken into possession by four persons, respondent no.1 lodged FIR under ss.364 and 392 IPC – The vehicle was seized by police – Chief Judicial Magistrate in his order while rejecting the application of respondent No.1 for release noticed the claim of the appellant, who had filed objection to the release application – The award was also placed before the Magistrate – The Magistrate noticed the case of the appellant that original owner and the second owner had manufactured fraudulent documents and in collusion with the officials of RTO, Basti managed to get the clearance certificate – Magistrate rejected the application for release – Meanwhile, appellant had filed an application before RTO, Basti claiming that cancellation of entry of hypothecation in favour of the appellant in the registration certificate was based on forged documents – RTO, Basti passed order dated 29.06.2019 setting aside order of cancellation of finance agreement – Respondent no.1 filed application u/s.482 Cr.P.C. challenging order rejecting his application for release of vehicle – High Court allowed the application and directed release of vehicle in favour of respondent no.1 – On appeal, held: Order dated 29.06.2019 was passed in exercise of the statutory power of the registration authority under s.55(5) of the Act, the legal consequence of the said order was that registration certificate issued in Form 23 by RTO, Basti showing the name of only the original owner with no entry of appellant has been treated to be null and void – In consequence of that, all subsequent acts including registration certificate issued in the name of respondent No.1 by RTO, Sitapur became non est – Respondent No.1 although claimed that he was a bonafide purchaser but fact remained that he was beneficiary of fraud – High Court committed error in directing the release of vehicle in favour of respondent No.1 – Order of the High Court, thus, is unsustainable – Order passed for release of vehicle in favour of the appellant – Motor Vehicles Act, 1988 – s.55(5).
Allowing the appeal, the Court
HELD : The High Court observed that registration certificate obtained from the office of Regional Transport Office, Basti, was in the name of Amarnath Yadav as registered owner with no endorsement of hypothecation, which fact was relied by the High Court in the impugned order. The High Court failed to notice that entry of hypothecation of the vehicle in favour of the appellant was very much there in the original registration certificate, which entry was got deleted by submitting a forged Form 35 by original owner, which finding has been recorded in the order of Assistant Regional Transport Officer dated 29.06.2019 cancelling the registration certificate on which reliance has been placed by the High Court. The basis of the order of the High Court was the certificate of registration in name of Amarnath Yadav. Without considering the fact that by order dated 29.06.2019, the said certificate stood cancelled and was declared void and non est, the High Court decided in favour of respondent No.1. The High Court committed error in directing the release of the vehicle in favour of respondent No.1 in whose name the vehicle was registered at Regional Transport Office, Sitapur, but in view of order dated 29.06.2019, the registration in favour of Amarnath Yadav and of certificate of clearance dated 16.08.2018 having been set aside, there was no right in respondent No.1 to claim the release of the vehicle. The order of the High Court, thus, is unsustainable. The vehicle is directed to be released in favour of the appellant. [Paras 22, 23][50-A-G] Manoj and Ors. v. Shriram Tpt. Finance Co. Ltd. and Ors. JT 2002 (1) SC 293 – held inapplicable.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.