LexTHE MANAGING DIRECTOR, ORIX AUTO FINANCE (INDIA) LTD. versus SHRI JAGMANDER SINGH AND ANR
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- THE MANAGING DIRECTOR, ORIX AUTO FINANCE (INDIA) LTD. A -"':v V. SHRI JAGMANDER SINGH AND ANR. FEBRUARY IO, 2006 [ARIJIT PASA YAT AND S.H. KAPADIA, JJ.] B "· Hire-Purchase: Hire-Purchase Agreement-Clause ID-Financier taking repossession of financed vehicle in case of default-Suit for declaration and injunction by hirer-Trial Court directing financier to release vehicle on deposit c of balance instalments with interest-Order upheld by High Court-On appeal, held: Repossession of vehicle was permissible in terms of the agreement- However, defaulted amount having been deposited and also vehicle if not used would lose its value, vehicle directed to be released on payment of additional sum. D Constitution of India, I 950-Article 226-Financier taking repossession > of financed vehicle in terms of Hire-Purchase Agreement-Writ petitions styled +- as Public interest litigation-Scope of interference-Held: Such matters are contractual-For interference it is to be shown that the contract is unconscionable or opposed to public policy-Such matters cannot be E generalized to say that repossession is improper-It depends on facts of each case. Appellant-financier and respondent no. I-hirer executed a Hire ?urchase Agreement and possession of a truck was handed over to the hirer. Respondent no. I was to repay financed amount in m<>nthly F .J instalments within stipulated period and in case of default, to pay delay charges. Hirer defaulted in making payment despite several requests and was in arrears. Appellant repossessed the vehicle and called upon respondent no. I to pay the amount due. Hirer did not make the payment and filed suit for declaration with consequential relief, permanent and G mandatory injunction and also interim injun<:tion. Civil Judge directed the appellant to release the vehicle subject to deposit of balance instalment \, with interest. High Court upheld the order of trial court. Hence, the present appeal. 169 H 170 SUPREME COURT REPORTS [2006] 2 S.C.R. A Allowing the appeal, the Court HELD: I. Re-possession of financed vehicle is clearly permissible in terms of Clause IO of the Hire Purchase Agreement. Trial Court is to ultimately decide in the suit the amount to which the appellant is entitled to. The vehicle was directed to be released on payment of the defaulted B instalments which has 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, it is directed that the vehicle C would be released on payment of Rs.l,50,000/- in addition to the amount already deposited. Respondents should file an undertaking before the trial court that in the event o: non-success the vehicle would be returned to the fimrncier, unless the trial court fixes some other terms. (l 74-B-DI 2. The orders regarding right of financiers to take possession of the D vehicle in terms of the agreement 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 E 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 contt!nd that the hirer is prejudiced. F As regards the submission of the hirer 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. Therefore, it would not be proper for the High Courts to lay down any guideline which would in essence amount to variation of the agreed terms G of the agreement. If any such order has been passed effect of the same would be considered by the concerned High Court in the light of this judgment and appropriate orders would be passed.
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