BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATE: 07/01/2010
CORAM
THE HONOURABLE MR.JUSTICE S.RAJESWARAN
W.P(MD)No.10983 of 2009
and
M.P.(MD) No.1 of 2009
R.Ismath Batcha .. Petitioner
Vs
1.The Superintending Engineer,
Thanjavur District.
2.The Inspector of Police,
Ayyampettai Police Station,
Thanjavur.
3.M/s.Indusind Bank Ltd,
2nd Floor, Nallaiya Complex,
No.70, Srinivasan Pillai Road,
Thanjavur.
4.The Manager,
M/s.Ashok Leyland Finance,
Thanjavur. .. Respondents
Prayer
Writ Petition filed under Article 226 of the Constitution of India,
seeking for a Writ of Mandamus, directing the respondents to recover the TATA
ACE G Goods Carrier Engine No.2751D105HRZS4 2567 Chasis No.445051HRZV42582 from
the illegal custody of the third respondent forthwith.
!For Petitioner ... Mr.B.Jameel Arasu
^For Respondents
R1 & R2 ... Mr.S.C.Herold Singh
Government Advocate
R3 ... Mr.B.Prasanna Vinoth
R4 ... No appearance
* * * * *
:ORDER
The writ petition has been filed by the petitioner for Mandamus
directing the respondents to recover the TATA ACE Carrier Engine chassis
No.445051HRZV42582 from the illegal custody of the third respondent forthwith.
2. The case of the petitioner is that he obtained a vehicle loan from the
third respondent through its agent Ashok Leyland Finance at Thanjavur on
22.10.2008 vide loan agreement No.TOAA0034 for Rs.2,32,000/-. The loan was
payable in 47 equal monthly installments. The petitioner has been using the
vehicle on hire purchase basis for carrying loads and remitting the monthly
installments to the third respondent from 22.10.2008 regularly. During the
month of April 2009 because of the recession in the market and the poor business
conditions he was unable to pay one installment in May 2009. While so, on
12.05.2009 for the non-payment of the monthly installment of one month i.e., May
2009, the 4th respondent who is the agent of the third respondent, at the
instance of the third respondent, without any prior notice seized the
petitioner’s vehicle. On account of that illegal seizure the petitioner has
been deprived of the income from the vehicle and consequently he was not able to
pay any amount to the bank. The petitioner was not served with any notice and
all of a sudden few men came and took away the vehicle under threat. Thus the
seizure of the vehicle by the respondents 3 and 4 is illegal and unlawful. The
petitioner’s request to the respondents 3 and 4 to return the vehicle was not
considered by them. Consequent upon the seizure in May 2009, the respondents 3
and 4 are estopped from claiming any amount of installment from the month of
June 2009 from the petitioner. The petitioner’s request to the third respondent
for acceptance of the arrears together with the interest was not acceded to. He
also gave a criminal complaint to respondents 1 and 2 about the illegal seizure
and they have also not chosen to register the complaint. Hence the above writ
petition for the aforesaid prayer.
3. Notice was ordered by this Court on 29.10.2009 and the respondents have
entered appearance through their counsel.
4. I have heard the learned counsel for the petitioner and the learned
Government Advocate appearing for the respondents 1 and 2 and the learned
counsel appearing for the third respondent and fourth respondent. I have also
gone through the documents available on record including the counter affidavit
by the third respondent on behalf of the 4th respondent.
5. The learned counsel appearing for the petitioner would submit that for
the non payment of one installment of the loan amount to the respondent bank,
the respondent bank with the help of the 4th respondent has taken possession of
the vehicle from the petitioner. On account of that the petitioner was not only
deprived of his regular income, but also not able to pay the installments
regularly to the bank. Therefore the default in making further payments cannot
be put against the petitioner as the vehicle is not made available to the
petitioner to earn money. The learned counsel for the petitioner in support of
his submission relied on the judgment of the Hon’ble Supreme Court reported in
2007 (2) CTC 334 (Manager, ICICI Bank Ltd., Vs. Prakash Kaur and others) and
also the unreported judgment of this Court passed on 11.03.2009 in W.P.No.1773
of 2009 (A.Moses Vs. The Branch Manager, ICICI Bank, Tirunelveli) and another
Judgment dated 06.06.2009 made in W.P.No.3026 of 2007 (S.Ovuraj Vs. The Manager,
State Bank of India, Vilathikulam, Tuticorin District and another)
6. Per contra, the learned counsel for the respondents 3 and 4 while
reiterating the averments made in the counter affidavit would submit that the
petitioner has entered into a hypothecation agreement vide contract No.TOOA00374
and agreed to pay the monthly installments at the rate of Rs.7,750/-, commencing
from 27.10.2008 to 21.08.2012 in 47 equal installments, for the loan availed by
him at Rs.2,32,000/-. The petitioner has undertaken to co-operate with the
dealer who sold the vehicle to register the vehicle. But the petitioner did not
co-operate with the dealer for the registration of the vehicle till the vehicle
was surrendered by the petitioner. Further the petitioner was not keen to pay
the installments in time from the commencement of the repayment period. From
the second installment onwards the petitioner defaulted and fell in arrears.
Out of seven installments due till vehicle was surrendered by the petitioner,
the petitioner had paid only four installments that too belatedly. The
reminders sent by the bank were neglected and ignored by the petitioner. On
05.03.2009, the petitioner gave an undertaking that he would remit the pending
installments on or before 11.03.2009 and in default the petitioner would not
stand in the way of taking any steps by the bank as per the terms of the
agreement. As the petitioner did not come forward to repay the installments as
per the agreement and the undertaking given on 12.05.2009, the officials of the
respondents 3 and 4 demanded the petitioner for repayment or handing over the
vehicle to the bank. But the petitioner instead of paying the arrears came
forward and handed over the vehicle to the officials of the bank stating that he
would get it back after clearing all the dues. Thus, the repossession of the
vehicle in question was in terms of the hypothecation agreement entered into
between the petitioner and the Bank. In this case, he adds that the vehicle was
handed over by him. After waiting for more than 1-1/2 months from the date of
surrendering the vehicle, the respondent issued a final reminder notice on
22.06.2009 calling upon the petitioner to clear the entire dues within seven
days from the receipt of the notice or else the bank would be constrained to
take further action by selling the vehicle as per the terms of the agreement.
He submits that there was absolutely no deployment of any rowdy element or
goondas by the respondents to take possession of the vehicle as alleged by the
petitioner. Therefore, the allegations made against the bank by the petitioner
in this regard are baseless. In this case, he adds that the petitioner after
having not complied with the terms of the agreement, and surrendering the
vehicle by himself, has come forward to this Court with totally a false case so
as to mislead the court and get an order. Hence the learned counsel for the
bank prays for dismissal of the writ petition as devoid of merits
7. I have heard the rival submissions carefully with regard to the facts
and citations.
8. The learned counsel for the petitioner submits that repossession of the
vehicle with the help of the rowdy elements by the respondent bank is illegal
and it is contrary to the principle laid down by the Hon’ble Supreme Court and
also by this Court in the above referred judgments. He submits that the bank
has no authority to take possession of the vehicle by force illegally and
without adhering to the norms. Therefore the vehicle must be handed over to the
petitioner forthwith.
9. He adds that engagement of the 4th respondent to repossess the vehicle
is totally contrary to the agreed terms and also to the clear dictum laid down
by the Hon’ble Supreme Court as well as this Court in such matters.
10. I am unable to accept the submissions made on the side of the
petitioner
11. In this connection it is relevant to refer to the hypothecation
agreement entered into by the petitioner with the bank, with particular
reference to Clause 15(2) of the hypothecation agreement which is extracted
below:
“Upon occurrence of an Event of Default, the Borrower shall be bound to return
the Asset of the Lender at such location, as the Lender may designate, in the
sme condition in which it was originally delivered to the Borrower, ordinary
wear and tear excepted. The Borrower shall not prevent or obstruct the Lender
form taking possession of the Asset. For this purpose the Borrower Covenants
and confirms that the Lender’s authorized representation, servants, officers and
agents will have unrestricted rights of entry and shall be entitled to
forthwith, or at anytime without notice to the Borrower, to enter upon the
premises, or garage or godown where the vehicle(s) are lying or kept, and to
take possession or recover and receive the same and if necessary to break open
any such place. The Lender will be well within its right to use tow-van or any
carrier to carry away the Asset. The Borrower shall be liable to pay any towing
charges and other such expenses incurred by the Lender for taking the possession
of the Asset, cost of safe keeping of the Asset and for its sale etc. If the
Lender takes possession of the Hypothecated Asset, the Lender shall not be
responsible for any loss or deterioration of or damage to the Hypothecated Asset
whether by theft, fire, rain, flood, earthquake, lightning, accident or anyother
cause whatsoever”
12. Pursuant to this categorical clause contained in the agreement entered
into by the bank with the petitioner only and on the default committed by the
petitioner, the respondent bank said to have exercised their rights and
repossessed the vehicle. Further, according to the Bank, repossession is being
done only with the help of the 4th respondent who is the agent. But here, the
specific case of the respondent bank is that on the request made by the officers
of the Bank either to clear the arrears or hand over the vehicle the petitioner
voluntarily surrendered the vehicle with an undertaking that he would clear the
arrears and take the vehicle. Thus there was no deployment of any rowdy element
according to the Bank and no force was used and the allegations made in this
regard are false, baseless and misleading.
13. Further, the case of the petitioner is that the 4th respondent who is
the agent of the 3rd respondent seized the vehicle without any notice or
intimation. According to the petitioner, the vehicle was seized with the help
of rowdy elements illegally and unlawfully. Whereas the case of the respondent
Bank is that invoking clause 15(2) of the Hypothecation Agreement, they wanted
to seize the vehicle, but the petitioner himself handed over the vehicle to the
bank officials stating that he would get it back after clearing all dues. Thus,
disputed questions of fact are arising for consideration in the above matter and
it is settled law that this Court cannot go into those disputed facts while
exercising its powers under Article 226 of the Constitution of India.
14. Moreover the judgments referred to by the learned counsel for the
petitioner, in my considered view would not be applicable to the facts of the
present case, particularly in the matter of repossessing the vehicle as per the
terms of the hypothecation agreement. Only collection of money/arrears of loan
amount by the agents/muscle men was deprecated by the Hon’ble Supreme Court. It
cannot be said that repossessing the vehicle under the terms of the
hypothecation agreement would also be covered by the orders passed by the
Hon’ble Supreme Court. As per the agreed terms the petitioner is duty bound to
hand over the vehicle in the event of not being able to pay the installments.
Therefore there is no question of the petitioner having a grievance, more
particularly, after surrendering the vehicle by himself to the respondent bank.
15. In 2007(2) CTC 334 (Manager, I.C.I.C.I Bank, v. Prakash Kaur), the
Honourable Supreme Court while issuing guidelines to the Banks in the manner of
recovery of loan and seizure of vehicles, have clearly observed that employing
recovery agents/Goondas for recovery of loan and seizure of vehicles by using
force and abusive language are deprecated. They further added that recovery
should be done only through legal means by established procedures as per law.
Further, a reading of the judgment in entirety would show that the Hon’ble
Supreme Court has only condemned the seizure of vehicles in public places
deliberately as that would certainly cause embarrassment to the borrower and it
could be done only by licensed recovery agent. They have also suggested that
Banks to employ their own personnel and depute them for recovery of
outstandings. While suggesting the Additional inputs, the Honourable Supreme
Court has reiterated that the persons entrusted with the job of recovery shall
not resort to violence or force when they are in the process of recovery of the
dues. Further, they added that while the fraudulent defaulters can be dealt with
by taking the police help for such action, it is only when law is taken into the
hands of the so called recovery agents, who are appointed on contract basis, the
issue gets aggravated.
16. Therefore, the dictum of the Honourable Supreme Court and the
guidelines issued by the Honourable Supreme Court are very clear that recovery
of loan or seizure of vehicles could be done only through the legal means and
the Banks cannot employ Goondas to take possession by force.
17. Admittedly, in this case, the Bank in terms of the hypothecation
agreement entered into by the petitioner with the Bank, appears to have taken
action for recovery and seizure of vehicle. According to the bank, there was no
deployment of any any rowdy element or illegal force while seizing the vehicle
used. Further, it is stated by Bank that the petitioner herein came forward to
surrender the vehicle by himself on the notice issued for clearing the arrears.
The two unreported judgments of this Court, cited supra, are in line with the
dictum laid down by the Hon’ble Supreme Court in 2007 (2) CTC 345 (Thirivedhi
Channaiah Vs. Gudipudi Venkata Subba Rao (D) By Lrs. and others). Therefore, in
my considered view, the judgments referred to by the learned counsel appearing
for the petitioner are not applicable to the facts of the present case and they
are clearly distinguishable on facts and law.
18. Moreover in this case, it is stated that the respondent bank invoked
the arbitration clause and filed arbitration proceedings in ACP.No.360/09and
nominated one Thiru.D.Saravanan as the arbitrator as per Clause 23.0(a) of the
hypothecation agreement. The notice sent by the said arbitrator to the
petitioner did not evoke any response from the petitioner, which resulted in an
exparte award already passed by the said arbitrator and consequently the
respondent bank has also said to have sold the vehicle to the third parties.
19. Therefore taking into consideration the totality of facts and
circumstances, one would see that this issue in hand is purely a matter in the
realm of contract entered between a private bank and the petitioner, and the
action taken by the bank is only in pursuant to the agreed terms. The
petitioner having not appeared before the arbitrator and allowed the vehicle to
be sold in an auction pursuant to the award passed thereon, cannot maintain this
writ petition at all before this Court.
20. In the result, I do not find any merits in the writ petition and the
same is dismissed as devoid of merits. No costs. Consequently, connected
miscellaneous petition is also closed.
cs
To
1.The Superintending Engineer,
Thanjavur District.
2.The Inspector of Police,
Ayyampettai Police Station,
Thanjavur.
3.M/s.Indusind Bank Ltd,
2nd Floor, Nallaiya Complex,
No.70, Srinivasan Pillai Road,
Thanjavur.
4.The Manager,
M/s.Ashok Leyland Finance,
Thanjavur.