SREI EQUIPMENT FINANCE LTD. versus RAMJAN ALI & ORS.

Citation: [2021] 1 S.C.R. 36 · Decided: 05-01-2021 · Supreme Court of India · Bench: ASHOK BHUSHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 1 S.C.R.
SREI EQUIPMENT FINANCE LTD.
v.
RAMJAN ALI & ORS.
(Criminal Appeal No. 6 of 2021)
JANUARY 05, 2021
[ASHOK BHUSHAN, R. SUBHASH REDDY AND
M. R. SHAH, JJ.]
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
   [2021] 1 S.C.R. 36
36
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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
SREI EQUIPMENT FINANCE LTD. v. RAMJAN AL

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