Hire purchase - owner - hirer - possession - movable property - Abitration - Calcutta High Court

1) SBP and Company vs. Patel Engineering Ltd. reported in AIR 2006 SC 450= (2005) 8 SCC 618

2) Fair Air Engineers (P) Ltd. and another v. N.K. Modi (1996 (6) SCC 385

3) R.M.A.R.A. Adaikappa Chettiar and anr. v. R. Chandrasekhara Thevar (AIR 1948 P.C. 12)

4) Atul Singh and others vs. Sunil Kumar Singh and others reported in (2008) 2 SCC 602

5) India Household and Healthcare Ltd vs. LG Household and Healthcare Ltd. reported in AIR 2007 SC 1376

6) Haryana Telecom Ltd. vs. Sterlite Industries (India) Ltd. reported in AIR 1999 SC 2354

7) Sundaram Finance Ltd. vs. NEPC India Ltd. reported in AIR 1999 SC 565

8) Rame Gowda (D) by L.Rs v. M. Varadappa Naidu reported in AIR 2004 SC 2609

9) Charanjit Singh Chadha vs. Sudhir Mehra- (2001) 7 SCC 417

10) Manipal Finance Ltd. vs. T. Bangarappa - 1994(Supp) 1 SCC 507

11) Sardar Trilok Singh vs. Satvadeo Tripathi - (1979) 4 SCC 396

12) K.A.Mathai vs. Kora Bibbikutti- (1996) 7 SCC 212
13) Orix Finance (India) Ltd. vs. Jagmandar Singh and Another reported in (2006) 2 SCC 598
14) Manager, ICICI Bank Ltd. vs. Prakash Kaur & Ors. reported in 2007(1) Crimes 407(SC)

Kolkata High Court (Appellete Side)

G.E. Capital Transportation ... vs Samir Koley on 31 March, 2009 Author: Bhaskar Bhattacharya Form No. J(2)

On a plain reading of Section 105 of the Code of Civil Procedure, it is clear that the principle laid down in that section can be applied only in an appeal against the decree but there is no scope of application of such provision in an appeal against an order.

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It is also not possible to accept the argument that there is an exclusive conferment of jurisdiction on the arbitral tribunal to decide on the existence or validity of the arbitration agreement. Section 8 of the Act contemplates a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement, on the terms specified therein, to refer the dispute to arbitration. A judicial authority as such is not defined in the Act. It would certainly include the court as defined in Section 2(e) of the Act and would also, in our opinion, include other courts and may even include a special tribunal like the Consumer Forum. When the defendant to an action before a judicial authority raises the plea that there is an arbitration agreement and the subject matter of the claim is covered by the agreement and the plaintiff or the person who has approached the judicial authority for relief, disputes the same, the judicial authority, in the absence of any restriction in the Act, has necessarily to decide whether, in fact, there is in existence a valid arbitration agreement and whether the dispute that is sought to be raised before it, is covered by the arbitration clause.

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19. Section 16 is said to be the recognition of the principle of Kompetenz- Kompetenz. The fact that the arbitral tribunal has the competence to rule on its own jurisdiction and to define the contours of its jurisdiction, only means that when such issues arise before it, the Tribunal can and possibly, ought to decide them. This can happen when the parties have gone to the arbitral tribunal without recourse to Section 8 or 11 of the Act. But where the jurisdictional issues are decided under these Sections, before a reference is made, Section 16 cannot be held to empower the arbitral tribunal to ignore the decision given by the judicial authority or the Chief Justice before the reference to it was made. The competence to decide does not enable the arbitral tribunal to get over the finality conferred on an order passed prior to its entering upon the reference by the very statute that creates it. That is the position arising out of Section 11(7) of the Act read with Section 16 thereof. The finality given to the order of the Chief Justice on the matters within his competence under Section 11 of the Act, are incapable of being reopened before the arbitral tribunal.

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Moreover, it is now settled by the Supreme Court that if a party wants to take a plea that the agreement containing the clause of arbitration was vitiated by fraud such plea can only be decided by a Civil Court and not by the Arbitrator.

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The Supreme Court while deciding the question whether the Arbitrator can decide the question of winding up of a company specifically held that sub-section (1) of S. 8 postulates that what can be referred to the arbitrator is only that dispute or matter which the arbitrator is competent or empowered to decide under the law and the power to order winding up of a company is contained under provisions of Companies Act and is conferred on the Court and as such, an arbitrator, notwithstanding any agreement between the parties would have no jurisdiction to order winding up of a company.

If we accept the contention of the learned counsel for the respondents that even the question whether the purported agreement is vitiated by fraud, coercion etc. should be decided by the Arbitrator, the result would be disastrous as would appear from the following example:

A fraudulently prepares an agreement by forging the signature of B and in that fraudulent agreement makes a provision of appointment of C, a friend of A as arbitrator as if appointment of C is consented by B. B files a civil suit challenging the signature of B as an outcome of fraud and forgery. If we accept the contention of the learned counsel for the respondent that the court should on the application of the Respondent under Section 8 of the Act without deciding the dispute of fraud mechanically refer the dispute to C, in that case, it would be an abuse of process of law to compel B to face the adjudication before C, the man set up by A, of the dispute of forgery.

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When a party applies under Section 9 of the 1996 Act it is implicit that it accepts that there is a final and binding arbitration agreement in existence. It is also implicit that a dispute must have arisen which is referable to the arbitral tribunal.

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The Civil Court will protect only "settled possession" of a trespasser against the lawful owner.

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"It is thus clear that so far as the Indian law is concerned the person in peaceful possession is entitled to retain his possession and in order to protect such possession he may even use reasonable force to keep out a trespasser. A rightful owner who has been wrongfully dispossessed of land may retake possession if he can do so peacefully and without the use of unreasonable force. If the trespasser is in settled possession of the property belonging to the rightful owner, the rightful owner shall have to take recourse to law; he cannot take the law in his own hands and evict the trespasser or interfere with his possession. The law will come to the aid of a person in peaceful and settled possession by injuncting even a rightful owner from using force or taking law in his own hands, and also by restoring him in possession even from the rightful owner (of course subject to the law of limitation), if the latter has dispossessed the prior possessor by use of force. In the absence of proof of better title, possession or prior peaceful settled possession is itself evidence of title. Law presumes the possession to go with the title unless rebutted. The owner of any property may prevent even by using reasonable force a trespasser from an attempted trespass, when it is in the process of being committed, or is of a flimsy character, or recurring, intermittent, stray or casual in nature or has just been committed, while the rightful owner did not have enough time to have recourse to law. In the last of the cases, the possession of the trespasser, just entered into would not be called as one acquiesced to by the true owner." (Emphasis supplied by us)

The aforesaid principle applicable in the case of dispossession of immovable property, however, has no application to the case of hire-purchase agreement over moveable property where the hirer himself has agreed with the financier that in case of default, the financier would be entitled to take possession of the vehicle in question and can for that purpose, enter even into the property of the hirer.

The Supreme Court in several decisions had the occasions to deal with this type of cases and had come to the conclusion that the financier had every right to take possession of the vehicle, in case of default but in the process of taking possession they should not use any excessive force which would result in an offence punishable under the law.

If the owner of a vehicle, a moveable property, himself by agreement conceded to give right to the financier to take possession of the same in case of default in payment of instalments and in exercise of that right, the financier takes possession without committing any offence and without violating any law of the land, the hirer cannot take the shelter of Article 300A of the Constitution of India and complain that he was deprived of his property without authority of law. The position would have been different if any specific law was enacted by the legislature providing procedure for recovery of the vehicles in this situation and in such circumstances, the hirer could complain that his vehicle should be recovered only in accordance with that provision of the Statute. In the Motor Vehicles Act itself, the possession by the financier in terms of hire-purchase agreement has been recognized as would appear from Section 51(5) of the Motor Vehicles Act. A hirer, so long the entire instalments are not fully paid, without taking 'No Objection Certificate' from the financier cannot even transfer the vehicle. Although, by virtue of definition of "owner" in the Motor Vehicles Act, even a hirer, before the instalments are fully paid, is treated to be the owner for the purpose of complying with the obligations of an owner referred to in the Motor Vehicles Act, there is no law prohibiting taking of possession by the financier in terms of the agreement, if contracted to by the hirer. If there is any specific restriction imposed by any law prohibiting taking possession of the vehicle, the hirer can legitimately complain that the financier cannot take possession of the vehicle except by such recognised process.