Judgment:
ORDER
A.S. Oka, J.
1. The submissions of the learned Counsel appearing for the parties were heard on the last date. The Petitioner-Bank by filing this Petition under Article 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'the Code of 1973') has challenged the order dated 14th March 2006 as well as order dated 28th December, 2006 passed by the learned Judicial Magistrate, First Class, Pandharpur.
2. According to the case of the Petitioner, on an application made by the second Respondent, the Petitioner had granted loan in favour of the second Respondent for purchasing a two wheeler bearing registration No. MH13-AA-0174. According to the case of the Petitioner, the second Respondent executed an agreement dated 16th August, 2004 of loan-cum-hypothecation. A loan of Rs. 36,400/- was advanced by the Petitioner to the second Respondent. Apart from the loan-cum-hypothecation agreement, according to the Petitioner, the first Respondent executed a demand promissory note as well as a power of attorney in favour of the Petitioner. According to the Petitioner, defaults were committed by the second Respondent in repayment of the amount and hence, a legal notice was issued on 21st September, 2005 to the second Respondent. As there was no compliance by the second Respondent, relying upon Clause 8.2 of the agreement dated 16th August, 2004, the Petitioner took over possession of the said vehicle which was hypothecated in its favour and the said vehicle was sold to a third party for consideration.
3. An application was moved by the second Respondent before the learned Magistrate purporting to be an application under Section 94 of the Code of 1973. In the said application, it is alleged that the Petitioner took forcible possession of the two wheeler without the consent of the second Respondent on 15th February, 2006. It was alleged that the Petitioner had stolen the vehicle and therefore, a complaint was lodged in Pandharpur Police Station and no action was taken by the Police. Therefore, a prayer was made in the application to issue search warrant against the Petitioner and for a direction to hand over possession of the vehicle to the second Respondent. An order was passed on 14th March, 2006 for issuing search warrant for production of vehicle. The Petitioner did not appear to contest the application in spite of service of notice. By a further order dated 28th December, 2006, the learned Magistrate granted interim custody of the vehicle to the second respondent on executing a bond of Rs. 50,000/-.
4. The learned Counsel appearing for the Petitioner submitted that till today there is no offence registered against the Petitioner and there was no occasion for the learned Magistrate to pass order of search under Section 94 of the Code of 1973 and thereafter, to direct that possession of the vehicle shall be handed over to the second Respondent. He has placed reliance on the decision of the Apex Court in the case of Trilok Singh and Ors. v. Satya Deo Tripathi : 1980CriLJ822 . He has also placed reliance on a decision of the Apex Court in the case of K.K. Mathai @ Babu and Anr. v. Kora Bibbikutty and Anr. : (1996)7SCC212 . He submitted that on an application under Section 94 of the Code of 1973, the custody of the vehicle could not have been given to the second Respondent.
5. The learned Counsel appearing for the second Respondent submitted that a police complaint alleging theft was already filed by the second Respondent. He submitted that proceedings under Section 94 of the said Code of 1973 are also in the nature of an inquiry and at the conclusion of the said inquiry, the learned Magistrate had jurisdiction to pass an order under Section 452 of the said Code of 1973 directing that the possession of the vehicle shall be given to the second Resopndent. He, therefore, submitted that no interference was called for.
6. I have carefully considered the submissions. The Petitioner has purported to invoke Clause 8.2 of the loan-cum-hypothecation agreement for taking possession of the vehicle in question on the ground that the second Respondent committed defaults in re-payment of loan. The Petitioner is a Financer who advanced loan for purchasing the vehicle. As held by the Apex Court in the case of K.A. Mathai (supra) it cannot be said that the Petitioner had committed an offence of theft as there cannot be mens rea alleged on the part of the Petitioner-Company. The Petitioner purported to act on the basis of the loan-cum-hypothecation agreement. As held by the Apex Court in the case of K.A. Mathai (supra), an offence of theft could not have been alleged against the Petitioner. Moreover, it can be said that at the highest, there was a civil dispute between the Petitioner and the second Resopndent. It is true that the Petitioner did not appear and contest the application made under Section 94 of the Code of 1973. However, that does not mean that the application could have been mechanically allowed without considering the legal position. In paragraph No. 4 of the order dated 14th March, 2006, the learned Magistrate has observed thus:
As per Section 378 of the Indian Penal Code if the property is moved out of the possession of a person dishonestly, without the consent of the person the offence is of theft. In this particular case the opponent has not followed the due procedure of law while taking away the vehicle and from this act it can be said that the opponent has moved the property out of possession of the applicant with dishonest intention.
7. The said observation appears to be erroneous as it is not possible to attribute any dishonest intention to the Petitioner-Company. The Petitioner purportedly acted on the basis of a Clause in the Agreement which was admittedly executed by the second respondent and in fact the second respondent had taken loan under the said Agreement. The order of the learned Magistrate of issuing search warrant for production of the vehicle was illegal. Therefore, the consequential order of handing over possession to the second Respondent will have to be also held as illegal. The proceedings of an application under Section 94 of the Code of 1973 cannot be termed as an inquiry referred to in Section 452 of the Code of 1973 as the inquiry or trial contemplated under Section 452 is completely different which involves an adjudication on the allegation of commission of an offence.
8. In the circumstances, the Petition must succeed. Accordingly, Rule is made absolute in terms of prayer Clause (b). If the order dated 28th December, 2006 is already acted upon, the second Respondent will return the said vehicle to the Petitioner within a period of eight weeks from today.
9. It is made clear that no adjudication has been made on the rights of the parties as regards the vehicle in dispute and all contentions as regards rights of the parties on merits are expressly kept open.
10. This order will not prevent the second respondent from filing appropriate proceedings for claiming the possession of the vehicle.