T. Srinivasa Rao vs State of A.P. and Another

A common question of law arises in all these three criminal petitions and hence, they are being disposed of by this common order.

The petitioners in all these criminal petitions purchased motor vehicles with the finance of the second respondent, M/s.Midwest Growth Fund Limited, and they entered into hire purchase agreements promising to pay the said amount in monthly instalments together with interest at 16% per annum and also executed promissory notes in favour of the second respondent. According to the second respondent, the petitioners failed to pay the monthly instalments regularly and thereby defaulted in payments and accordingly the second respondent is entitled to seize the vehicles and he deputed his representative to find out and verify the condition of the vehicles and he found that the vehicles were not available and on enquiry they came to know that the petitioners disposed of the vehicles and thus committed breach of trust and hence, liable for punishment u/s 406 IPC.

The second respondent filed a private complaint against the petitioners for the said offence u/s 406 IPC and requested to refer the complaints to the police for investigation u/s 156(3) Cr.PC and the learned XI Metropolitan Magistrate, Secunderabad, referred the cases to the police and the police registered cases in Cr.Nos.78/ 1997,75/1997 and 89/1997 of Police Station, Begumpet for the offence u/s 406 IPC and issued FIR and took up investigation.

Now the petitioners filed these petitions requesting to quash the proceedings.

The learned Counsel for the petitioners submitted that it is not mentioned in the complaint with regard to the payments made by the petitioners in pursuance of the hire purchase agreements and further submitted that the vehicles were not disposed of but they were intact and if there is any breach of the terms of the hire purchase agreement, it leads to only civil liability and no criminal liability can be fastened and he relied on a decision in Sardar Trilok Singh and Others Vs. Satya Deo Tripathi, .

But the learned Counsel for the respondent No.2 submitted that the facts leading to the decisions, referred to above, relied on by the learned Counsel for the petitioners are different to the facts of the cases on hand. The petitioners failed to pay the instalments and also failed to show the vehicles and the vehicles were entrusted to the hirers, i.e. the petitioners herein, and they are bound to maintain the vehicles in the same condition and the petitioners with a mala fide intention disposed of the vehicles and thus committed criminal breach of trust and liable for punishment.

It is not in dispute that the petitioners purchased the vehicles with the financial assistance of the second respondent any executed hire purchase agreements and according to the complainant, the second respondent herein, the petitioners failed to pay monthly instalments therefore, the complainant is entitled to seize the vehicle and then he deputed his men and came to know that the vehicles were not there.

But the contention of the petitioner is that the vehicles were not disposed of.

The facts leading to the decision Trilok Singh''s case, first referred to above, relied on by the learned Counsel for the petitioner, also relate to the dispute between the parties with regard to the purchase of a truck by the complainant and an hire purchase agreement was entered in between them. There also, the complainant failed to pay the instalments and the men of the finance corporation are said to have seized the vehicle and then the complainant-owner filed the complaint and the case was taken on file and all the accused filed a petition to quash the proceedings and the High Court declined to quash the proceedings and the matter went up before the Supreme Court and Their Lordships observed as follows:

"...The dispute between the parties related to the purchase of a truck by the complainant (respondent). A hire purchase agreement was entered into between the respondent and a Finance Corporation accused (appellants). The loan was payable in monthly installments. According to the agreement, on default of any one installment the financier had the right to terminate hire purchase agreement even without notice and seize the truck. The complainant''s case was that only a blank form was got signed by him. His further case was that on default of the third instalment the truck was forcibly seized and removed by the appellants. The respondent filed a complaint against the appellant in this connection. for certain offences. After enquiry the Magistrate directed the issue of summons. The appellants moved an application u/s 482 Criminal P.C. Their case in the nutshell was that the respondent''s case that they had committed any offence was absolutely false and the proceedings should be quashed:

Held: that the proceedings initiated was clearly an abuse of the process of the Court. It was not a case where any process ought to have been directed to be issued against the accused (appellants). On the well-settled principles of law it was a very suitable case where the criminal proceedings ought to have been quashed by the High Court in exercise of its inherent power. The dispute raised by the respondent was purely of a civil in nature even assuming the facts stated by him to be substantially correct."

The contention of the respondent is that the facts leading to the above decision are different to the facts of the case on hand. The only difference is in that case the person who purchased the vehicle gave complaint and in this case the second respondent, who financed to purchase the vehicle gave complaint and except that purchasing of the vehicle, execution of hire purchase agreement, failure to pay the instalment as agreed under the hire purchase agreement, etc. are the same. Their Lordships held that the specific dispute raised in the case was purely of a civil nature and it is nothing but an abuse of the process of the Court and the court ought not to have issued the process against the accused persons.

The learned Counsel for the petitioners submitted that there are a large number of cases where criminal law and civil law can run side by side. The two remedies are not mutually exclusive but clearly coextensive. Hence there is no bar to proceed against the petitioners and relied upon Supreme Court decision in Pratibha Rani Vs. Suraj Kumar and Another, . The learned Counsel of the petitiojier submitted that the facts leading.to the decisions relied upon by the learned Counsel for the Respondent are different to the facts of the case on hand and their Lordship held that any breach of terms of the hire purchase agreement is purely of civil nature and the second respondent also filed suits for recovery of the amount advanced by him to purchase the vehicles and hence the respondent is not entitled to initiate any criminal proceedings against the petitioners.

It appears that there is a considerable force in the contention of the learned Counsel of the petitioners. The facts leading to the decision relied upon by the learned Counsel for the Respondent are different to the facts of the cases on hand and are not helpful to him. But the facts leading to the case are almost identical to the facts of the case of the Apex Court in Trilok Singh ''s case, first referred to above and the principle laid down herein clearly applies to the facts of these cases. Their Lordships held that the initiation of criminal proceedings for breach of terms of the hire purchase agreement is clearly an abuse of process of the Court. Therefore, the Criminal proceedings initiated against the petitioner are not maintainable and are liable to be quashed in view of the decision of the Apex Court relied upon by the learned Counsel of the petitioner.

In the result, the Criminal Petition No.2607/97 is allowed and the proceedings in Crime No.78 of 1997 on the file of Police Station, Begumpet, Hyderabad are quashed.

Criminal Petition No. 2608/97 is allowed and the proceedings in Crime No.75 of 1997 on "the file of the Police Station Begumpet, Hyderabad, are quashed; and

Criminal Petition No. 2609 of 1997 is allowed and the proceedings in Crime No.89 of 1997 on the file of the Police Station, Begumpet, Hyderabad, are quashed.