Isabella Mariam

The Bombay High Court at Nagpur, Single Bench of Justice M.M. Nerlikar, dismissed a writ petition filed by a finance company challenging lower court orders that granted interim custody of a seized vehicle to its subsequent purchaser. The Court held that allegations of forgery relating to transfer documents cannot be examined at the stage of deciding interim custody. It observed that the primary considerations in such matters are whether the applicant is the registered owner and whether the vehicle was seized from their possession. Finding these conditions met, the Court upheld the custody order in favour of the purchaser.

 
The petitioner, M/s. AU Small Finance Bank Limited, formerly known as M/s. AU Financiers (India) Limited, challenged orders passed by the Judicial Magistrate First Class and the Additional Sessions Judge, Amravati. The dispute revolved around custody of a Bolero pick-up bearing registration number MH 30 BD 0266. The Bank had financed the vehicle purchased by respondent Ravi Pradiprao Dange under a hypothecation agreement. However, the Bank alleged that without repaying the loan, respondent Dange sold the vehicle to Sunil Shrikrishna Nandhe using forged documents, including Form No. 35 and a No Objection Certificate (NOC) purportedly issued by the Bank.

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Based on the Bank’s complaint, the Magistrate directed registration of an offence under Sections 420, 464, 468, and 469 read with Section 34 of the Indian Penal Code against Ravi Dange. The vehicle was subsequently seized from respondent Nandhe. Both the petitioner Bank and respondent Nandhe filed applications under Section 454 of the Code of Criminal Procedure seeking interim custody. The Magistrate, after hearing both sides, allowed Nandhe’s plea and rejected the Bank’s application. The Additional Sessions Judge upheld this decision in revision.

The petitioner argued that forged and fabricated documents were used to transfer ownership and that the Bank retained ownership rights until the loan was repaid. The petitioner referred to the judgment in B.C.L. Financial Services Ltd. v. State of Maharashtra (1999 (3) Mh.L.J. 173) and submitted that it had become a modus operandi for hirers to sell vehicles fraudulently despite defaulting on loans. Counsel for the Bank maintained that the vehicle’s release to the respondent would prejudice the Bank’s financial interest.

The respondent, however, contended that he was a bona fide purchaser who had bought the vehicle for Rs. 5,53,000 by obtaining a loan from Mahindra and Mahindra Finance Company Limited. He argued that the Regional Transport Office (RTO), Amravati, had registered the vehicle in his name after verifying all documents. The respondent had also paid twenty instalments towards his loan. He asserted that his livelihood depended on the vehicle and that refusal of custody would cause irreparable loss. The respondent’s counsel relied on the Supreme Court’s decision in Vaibhav Jain v. Hindustan Motors Pvt. Ltd. [2024] 9 SCR 16, to argue that ownership under Section 2(30) of the Motor Vehicles Act is not confined to the name in the registration certificate and that possession or control determines ownership.

Justice Nerlikar observed that certain facts were undisputed. “It is not in dispute that at the instance of the Bank, police has registered an offence for forgery and allied offences. It is also not in dispute that the vehicle was seized from respondent no.2. It is also not in dispute that the registration certificate was issued in the name of respondent no.2,” the Court recorded.

The Court further recorded that “the transfer of the said vehicle was effected on the basis of Form No.35 and No Objection Certificate. The said No Objection Certificate was issued by the Bank, and it has been mentioned therein that the Bank has no objection to remove ‘HPN’.” This fact was considered significant in establishing the respondent’s claim.

The judgment relied on the precedent in B.C.L. Financial Services Ltd. v. State of Maharashtra, where the Court had applied the ratio of M/s. Damodar Valley Corporation v. State of Bihar (AIR 1961 SC 440), observing that a contract of hire-purchase confers no title on the hirer but gives an option to purchase upon fulfilling certain conditions. The Court also referred to the Karnataka High Court’s decision in M/s. Shriram Transport Finance Co. Ltd. v. R. Khaishiulla Khan (1993 Cri.L.J. 1069), noting that courts should not encourage breaches of solemn agreements.

However, applying the reasoning in Vaibhav Jain v. Hindustan Motors Pvt. Ltd., the Court quoted the Supreme Court’s observations: “Owner of a vehicle is not limited to the categories specified in Section 2(30) of the M.V. Act. If the context so requires, even a person at whose command or control the vehicle is, could be treated as its owner.”

Justice Nerlikar further stated that at the stage of deciding interim custody, the issue of forgery could not be conclusively examined. “For deciding interim custody, firstly it is necessary to see whether the respondent no.2 is the owner and secondly, whether the seizure of the vehicle is from the possession of respondent no.2. These are two important conditions which need consideration.”

Justice Nerlikar observed: “Necessary care was taken by the Magistrate by imposing certain terms and conditions, which takes care of the interest of both the parties.” The Court held that these conditions sufficiently safeguarded the petitioner Bank’s interests while ensuring that the respondent could continue using the vehicle for his livelihood.

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The Court stated, “When facts of this case are considered, the ratio laid down by the Supreme Court in case of Vaibhav Jain (supra) would be applicable, as both factors are in favour of respondent no.2.” It concluded that interim custody was rightly awarded to the respondent as the registered owner and person in possession of the vehicle.

The judgment recorded that depriving respondent no.2 of custody would cause “irreparable loss” and make it difficult for him to repay the loan to the finance company. The Court therefore found “it is not necessary to disturb the said concurrent findings recorded by both the Courts below.” Consequently, the writ petition filed by M/s. AU Small Finance Bank Limited was dismissed, and the rule was discharged.

Advocates Representing the Parties:
For the Petitioner: Mr. A. Tripathi, Advocate, holding for Shri A. Nawab Navi Mohd. Ansari
For the Respondents: Ms. S.V. Kolhe, A.P.P.; Mr. P.R. Agrawal, Advocate

Case Title: M/s. AU Small Finance Bank Ltd. v. State of Maharashtra & Ors.
Neutral Citation: 2025: BHC-NAG:11218
Case Number: Criminal Writ Petition No. 657 of 2024
Bench: Justice M.M. Nerlikar