SREI EQUIPMENT FINANCE LTD. versus RAMJAN ALI & ORS. on 5 January 2021

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SUPREME COURT REPORTS [2021] 1 S.C.R. 36

[2021] 1 S.C.R.

ASREI EQUIPMENT FINANCE LTD.

v.

RAMJAN ALI & ORS.

(Criminal Appeal No. 6 of 2021)

BJANUARY 05, 2021

[ASHOK BHUSHAN, R. SUBHASH REDDY ANDM. R. SHAH, JJ.]

Central Motor Vehicles Rules, 1989: r.61 – Termination ofhire purchase agreement – Hire purchase agreement entered intoCby appellant financier with the original owner/purchaser of vehicle– While registering the vehicle, an entry regarding hypothecationwas made in the registration certificate – Failure on part of originalowner to pay instalment of loan – Appellant referred dispute toarbitrator who passed award in favour of appellant for an amountDof Rs.25,97,053/- – Subsequently, original owner filed applicationbefore the Regional Transport Office (RTO), Basti for cancellationof entry of appellant as person with whom vehicle was hypothecated– Resultantly, entry of appellant’s name in the registration certificateof the vehicle was cancelled and fresh registration certificate inForm 23 was issued in the name of original owner without anyEentry of hypothecation – Clearance certificate was also issued byRTO, Basti for transfer of the vehicle to Respondent No. 1 withinthe jurisdiction of registering authority, Sitapur – On 9.1.2019, whenvehicle was taken into possession by four persons, respondent no.1lodged FIR under ss.364 and 392 IPC – The vehicle was seized byFpolice – Chief Judicial Magistrate in his order while rejecting theapplication of respondent No.1 for release noticed the claim of theappellant, who had filed objection to the release application – Theaward was also placed before the Magistrate – The Magistratenoticed the case of the appellant that original owner and the secondowner had manufactured fraudulent documents and in collusionGwith the officials of RTO, Basti managed to get the clearancecertificate – Magistrate rejected the application for release –Meanwhile, appellant had filed an application before RTO, Basticlaiming that cancellation of entry of hypothecation in favour of H

the appellant in the registration certificate was based on forgeddocuments – RTO, Basti passed order dated 29.06.2019 setting asideorder of cancellation of finance agreement – Respondent no.1 filedapplication u/s.482 Cr.P.C. challenging order rejecting hisapplication for release of vehicle – High Court allowed theapplication and directed release of vehicle in favour of respondentno.1 – On appeal, held: Order dated 29.06.2019 was passed inexercise of the statutory power of the registration authority unders.55(5) of the Act, the legal consequence of the said order was thatregistration certificate issued in Form 23 by RTO, Basti showingthe name of only the original owner with no entry of appellant hasbeen treated to be null and void – In consequence of that, allsubsequent acts including registration certificate issued in the nameof respondent No.1 by RTO, Sitapur became non est – RespondentNo.1 although claimed that he was a bonafide purchaser but factremained that he was beneficiary of fraud – High Court committederror in directing the release of vehicle in favour of respondentNo.1 – Order of the High Court, thus, is unsustainable – Orderpassed for release of vehicle in favour of the appellant – MotorVehicles Act, 1988 – s.55(5).

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD : The High Court observed that registrationcertificate obtained from the office of Regional Transport Office,Basti, was in the name of Amarnath Yadav as registered ownerwith no endorsement of hypothecation, which fact was relied bythe High Court in the impugned order. The High Court failed tonotice that entry of hypothecation of the vehicle in favour of theappellant was very much there in the original registrationcertificate, which entry was got deleted by submitting a forgedForm 35 by original owner, which finding has been recorded inthe order of Assistant Regional Transport Officer dated29.06.2019 cancelling the registration certificate on which reliancehas been placed by the High Court. The basis of the order of theHigh Court was the certificate of registration in name of AmarnathYadav. Without considering the fact that by order dated29.06.2019, the said certificate stood cancelled and was declaredvoid and non est, the High Court decided in favour of respondentNo.1. The High Court committed error in directing the release AB

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Aof the vehicle in favour of respondent No.1 in whose name thevehicle was registered at Regional Transport Office, Sitapur, butin view of order dated 29.06.2019, the registration in favour ofAmarnath Yadav and of certificate of clearance dated 16.08.2018having been set aside, there was no right in respondent No.1 toclaim the release of the vehicle. The order of the High Court,Bthus, is unsustainable. The vehicle is directed to be released infavour of the appellant. [Paras 22, 23][50-A-G]

Manoj and Ors. v. Shriram Tpt. Finance Co. Ltd. andOrs. JT 2002 (1) SC 293 – held inapplicable.

CCase Law Reference

JT 2002 (1) SC 293 held inapplicablePara 18

CRIMINAL APPELLATE JURISDICTION : Criminal AppealNo. 6 of 2021.

DFrom the Judgment and Order dated 28.01.2020 of the High Courtof Judicature at Allahabad, Lucknow Bench, Lucknow in U/s 482/378/407 No. 4335 of 2019.

Braj Kishore Mishra, Abhishek Yadav, Vinod Kumar, RobinKhokhar, Ms. Ritu Reniwal, Kumar Gaurav, B. N. Dubey, SuyeshPradhan, Adarsh Upadhyay, Amit Singh, Amol Chitravanshi, Advs. forEthe appearing parties.

The Judgment of the Court was delivered by ASHOK BHUSHAN, J. 1. Leave granted.

2. This appeal has been filed challenging the judgment datedF28.01.2020 of High Court of Judicature at Allahabad, Lucknow Benchallowing the application under Section 482 Cr.P.C. filed by respondentNo.1. By impugned judgment, High Court has directed for release ofvehicle JCB No.UP 51 AT 5709in favour of the respondent No.1. Theappellant, who was respondent No.3 before the High court aggrieved byGthe judgment has come up in this appeal.

3. Brief facts of the case and events necessary to be noted fordeciding this appeal are:- 3.1One Amarnath Yadav purchased the JCB machine andentered into a finance agreement dated 22.10.2016 withH

the appellant under which agreement the appellantfinanced an amount of Rs.19,83,360/-. Under theagreement, Shri Amarnath Yadav (hereinafter referredto as “original owner”) agreed to repay the loan in 46monthly instalments @ Rs.56,300/- for each month from15.12.2016 to 15.09.2020.

3.2The original owner being resident of District Basti, Stateof Uttar Pradesh applied for registration of the vehicleto the Regional Transport Officer, Basti. The vehiclewas registered by Regional Transport Officer, Basti, ShriAmarnath Yadav as owner of JCB machine bearingRegistration No. UP 51 AT 5709 and there beingagreement of finance with appellant, in the registrationcertificate the entry was made of the appellant as personin whose favour the vehicle was hypothecated asrequired by Section 51 of the Motor Vehicles Act, 1988.The original owner failed to pay any instalment of loan.The appellant as per terms of the finance agreementdated 22.10.2016 referred the dispute to an arbitrator.The arbitrator proceeded to decide the reference as perArbitration and Conciliation Act, 1996. Notices wereissued by Arbitrator to original owner. Original ownerfailed to appear before the arbitrator. The arbitratorgave an award dated 26.03.2018 in favour of theappellant namely M/s. Srei Equipment Finance PrivateLimited for an amount of Rs.25,97,053/- with interest@ 10% p.a. from the date of notice of termination(07.03.2017).

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The original owner made an application with the RegionalTransport Officer, Basti praying for seeking cancellationof entry of the appellant as person with whom the vehiclewas hypothecated. Regional Transport Officer, Bastiissued an order on 16.08.2018 cancelling the entry ofappellant as financer. The Regional Transport Officer,Basti without any information to the appellant cancelledthe entry of the appellant from the registration certificateand issued a fresh registration certificate in the nameof original owner. On 16.08.2018, the Regional A

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Transport Officer, Basti issued a clearance certificatein favour of original owner noticing the fact that vehiclehas been sold to Ramjan Ali, the respondent No.1 in thejurisdiction of other registration authority, i.e., Sitapur.

3.4On the basis of clearance certificate issued by RegionalTransport Officer, Basti, the respondent No.1, RamjanAli submitted an application for certificate of registrationto Transport Department, Sitapur and a registrationcertificate dated 27.08.2018 was issued in the name ofRamjan Ali as owner. The registration certificate dated27.08.2018 also noted the entry of hypothecation infavour of Magma Fincorp Limited. The respondent No.1after obtaining transfer from original owner has beenusing the vehicle.

3.5On 09.01.2019, the vehicle was taken possession byfour persons, with regard to which an FIR Case CrimeNo.08 of 2019 under Sections 364 and 392 was lodgedby respondent No.1, Ramjan Ali in Police Station SidhauliDistrict Sitapur. The vehicle was seized on 27.01.2019by the police. Ramjan Ali filed an application beforethe Chief Judicial Magistrate, Sitapur for release of thevehicle No. UP 51 AT 5709. Police submitted a reportbefore the Chief Judicial Magistrate, Sitapur on theapplication of respondent No.1. The appellant alsoappeared before Chief Judicial Magistrate, Sitapur andfiled an objection claiming to be the financer of thevehicle. The appellant’s objection stated that theregistration certificate, which was in the name ofAmarnath Yadav, the original owner, there was entry infavour of appellant as the person with whom the vehiclewas hypothecated. The original owner had not paidany amount and an award dated 26.03.2018 was passedin favour of the appellant against the original owner.Objection further stated that original owner andrespondent No.1 had manufactured fraudulentdocuments and in collusion with officials of RegionalTransport Office, Basti had managed to obtain clearancecertificate dated 16.08.2018. The Regional Transport 3.6

officer, Sitapur had transferred the vehicle andregistration of the vehicle in the name of respondentNo.1 which is illegal. The Chief Judicial Magistrateafter noticing the case of the respondent No.1 as wellas the appellant, who had filed a detailed objectionsobserved that there is a dispute over ownership ofvehicle between respondent No.1 and appellant andhence there is no justifiable ground to release the vehiclein favour of any of the parties. The application filed byrespondent No.1 for release as well as the objection ofthe appellant were rejected by order dated 04.05.2019.Before the aforesaid order dated 04.05.2019 waspassed, the appellant filed an application before theRegional Transport Officer, Basti on 30.04.2019 claimingthat the appellant was person with whom the vehiclewas hypothecated and entry of hypothecation in favourof the appellant in the registration certificate was gotcancelled on the basis of forged Form-35 and theclearance certificate was wrongly issued in favour oforiginal owner for transfer of the vehicle.

The Regional Transport Officer after receipt of theapplication by the appellant dated 30.04.2019 issuednotices to original owner on 30.04.2019, 08.05.2019,15.05.2019 and 01.06.2019, the original owner did notappear before the Regional Transport Officer nor gaveany reply. The Assistant Regional Transport Officerafter considering the materials produced by the appellantby application dated 30.04.2019 and other materialspassed an order on 29.06.2019 setting aside the orderof cancellation of finance agreement as well as the noobjection certificate earlier issued by Regional TransportOfficer, Basti. The Regional Transport Officer heldthat registration certificate issued by Regional TransportOfficer, Basti in Form-23 in respect of vehicle(JCBMachine) bearing No. UP 51 AT 5709 and no objectioncertificate shall be treated as null and void. TheAssistant Regional Transport Officer also wrote to theSuperintendent of Police, Basti to register a case under AB

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appropriate section of the Indian Penal Code againstthe original owner.

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3.7The respondent No.1 filed an application under Section482 Cr.P.C. before the High Court challenging the orderdated 04.05.2019 passed by the Chief Judicial Magistraterejecting his application for release of the vehicle. Theappellant was subsequently impleaded as respondentNo.3 in the application under Section 482 Cr.P.C.

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3.8The High Court vide its impugned judgment dated28.01.2020 allowed the application under Section 482Cr.P.C., set aside the order of Chief Judicial Magistratedated 04.05.2019 and directed the release of the vehiclein favour of respondent No.1 Ramjan Ali. The appellantaggrieved by the said order dated 28.01.2020 has comeup in this appeal.

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D4. On 27.10.2020 while issuing the notice following order was passed:- “Issue notice, returnable in four weeks.

We further direct that the vehicle bearing No.UP51AT-5709in question shall not be further transferred by the respondent no.1.”

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5. The counter affidavits have been filed by respondent Nos.2and 3 as well as respondent No.1.

6. We have heard learned counsel for the appellant, learnedcounsel appearing for respondent No.1 as well as learned counselappearing for the State.F

7. Learned counsel for the appellant submits that the vehicle wasregistered with Regional Transport Office, Basti in October, 2016 in thename of Amarnath Yadav, the original owner, with entry of appellant asa person with whom the vehicle was hypothecated. The original ownerfailed to pay the loan EMI and on a reference made to the arbitrator anGarbitration award dated 26.08.2018 was passed and after the arbitrationaward having been passed against the original owner, he hatched a planto cheat the appellant. The original owner by submitting the forgeddocuments including forged Form-35, got cancelled the entry of appellantin the registration certificate and a clearance certificate was issued onH16.08.2018 by Regional Transport Office, Basti. On the basis of clearance certificate vehicle was got registered in the name of respondent No.1 atRegional Transport Office, Sitapur. The transfer by original owner waswholly illegal and without jurisdiction. The vehicle having beenhypothecated to appellant, it could not have been transferred withoutclearing the loan and without consent of the appellant. The respondentNo.1, who is beneficiary of fraud was not entitled to the release of thevehicle and the High Court committed an error in releasing the vehicle infavour of respondent No.1. It is further submitted that Regional TransportOffice, Basti having passed an order on 29.06.2019 cancelling theregistration certificate issued in the Form 23 as well as the No ObjectionCertificate, High Court committed error in directing the release of thevehicle in favour of respondent No.1. The vehicle being hypothecated toappellant and there being award against original owner, the vehicle canneither be transferred to respondent No.1 nor there is any right inrespondent No.1 to claim the vehicle.

8. Learned counsel appearing for the respondent No.1 submitsthat respondent No.1 is bonafide purchaser, who had paid amount ofRs.7,50,000/- to original owner and has obtained finance of Rs.10 lakhsfrom M/s. Magma Fincorp Limited, the vehicle was rightly released bythe High Court in his favour. It is submitted that in the registrationcertificate, which was produced by original owner, there was no entryof the hypothecation in favour of the appellant. The respondent No.1has diligently obtained the transfer and got the vehicle registered in hisname with Regional Transport Office, Sitapur. The JCB machine, whichwas purchased by respondent No.1 was not under any hire purchaseagreement, there is no error in purchase of the vehicle by respondentNo.1. The respondent No.1 after purchase of the vehicle has obtainedinsurance cover and is paying the tax for the use of JCB to registeringauthority, Sitapur. The vehicle having been forcibly taken possession on09.01.2019, the same has rightly been released to the respondent No.1.

9. Learned counsel appearing for the State submits that afterregister of the FIR investigation was initiated by the Sub-Inspector andit was found that Amarnath Yadav, the original owner died of cancer on08.07.2019. In the counter affidavit filed by the State, necessary factsof the case have been mentioned.

10. We have considered the submissions of the learned counselfor the parties and have perused the records.

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A11. The Motor Vehicles Act, 1988 contains detail provisionsregarding registration of vehicle, transfer of ownership and specialprovisions regarding motor vehicle subject to hire purchase agreement.The present is a case where the appellant had entered into hire purchaseagreement with original owner Amarnath Yadav on 22.10.2016. Anentry regarding hypothecation was made in the registration certificateBwhile registering the vehicle No. UP 51 AT 5709. Section 51(1), (3) and(4) which are relevant for the present case are as follows:- A

“51. Special provisions regarding motor vehicle subject tohire-purchase agreement, etc.—(1) Where an application forregistration of a motor vehicle which is held under a hire-purchase,Clease or hypothecation agreement (hereafter in this section referredto as the said agreement) is made, the registering authority shallmake an entry in the certificate of registration regarding theexistence of the said agreement.

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(3) Any entry made under sub-section (1) or sub-section (2), maybe cancelled by the last registering authority on proof of thetermination of the said agreement by the parties concerned on anapplication being made in such form as the Central Governmentmay prescribe and an intimation in this behalf shall be sent to theEoriginal registering authority if the last registering authority is notthe original registering authority.

(4) No entry regarding the transfer of ownership of any motorvehicle which is held under the said agreement shall be made inthe certificate of registration except with the written consent ofFthe person whose name has been specified in the certificate ofregistration as the person with whom the registered owner hasentered into the said agreement.

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12. From the facts, which have been brought on the record, it isGclear that when the vehicle was initially registered at Regional TransportOffice, Basti, the name of original owner was Amarnath Yadav andentry in the name of appellant as the person with whom the vehicle washypothecated was there in the registration certificate. Rule 61 of TheCentral Motor Vehicle Rules, 1989 deals with termination of hire purchaseHagreement etc. Rule 61, which is relevant is as follows:-

“61. Termination of hire-purchase agreements, etc.—(1)An application for making an entry of termination of agreementof hire purchase, lease or hypothecation referred to in sub-section(3) of section 51 shall be made in Form 35 duly signed by theregistered owner of the vehicle and the financier, and shall beaccompanied by the certificate of registration and the appropriatefee as specified in rule 81.

(2) The application for the issue of a fresh certificate ofregistration under sub-section (5) of section 51 shall be made inForm 36 and shall be accompanied by a fee as specified in rule81.

(3) Where the registered owner has refused to deliver thecertificate of registration to the financier or has absconded thenthe registering authority shall issue a notice to the registered ownerof the vehicle in Form 37.”

13. The entry of the appellant’s name in the registration certificateof the vehicle was got cancelled by submission of Form 35 by originalowner and thereafter fresh registration certificate in Form 23 dated14.08.2018 was issued in the name of Amarnath Yadav as original ownerwithout any entry of hypothecation. The clearance certificate dated16.08.2018 was also issued by Regional Transport Office, Basti fortransfer of the vehicle to Ramjan Ali within the jurisdiction of registeringauthority, Sitapur. In the FIR No.08/2019 under Sections 364 and 392,the vehicle was seized on 27.01.2019. Chief Judicial Magistrate in hisorder dated 04.05.2019 rejecting the application of respondent No.1 forrelease has noticed the claim of the appellant, who had filed objection tothe release application. The award dated 26.03.2018 was also placedbefore the Chief Judicial Magistrate where it was noted that outstandingamount in favour of the appellant is Rs.25,97,053/-. Chief JudicialMagistrate noticed the case of the appellant that original owner and thesecond owner had manufactured fraudulent documents and in collusionwith the officials of the Regional Transport Office, Basti managed to getthe clearance certificate dated 16.08.2018 whereas No ObjectionCertificate could not have been issued. The Chief Judicial Magistratehas rejected the application for release.

14. The Regional Transport Office, Basti had passed an orderdated 29.06.2019 in exercise of power under Section 55(5) of the Motor A

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AVehicles Act. Section 55(5) under which the order dated 29.06.2019was passed is to the following effect:- “55. Cancellation of registration.—XXXXXXXXXXXXXX

B(5) If a registering authority is satisfied that the registration of amotor vehicle has been obtained on the basis of documents whichwere, or by representation of facts which was, false in any materialparticular, or the engine number or the chassis number embossedthereon are different from such number entered in the certificateof registration, the registering authority shall after giving the ownerCan opportunity to make such representation as he may wish tomake (by sending to the owner a notice by registered postacknowledgement due at his address entered in the certificate ofregistration), and for reasons to be recorded in writing cancel theregistration.

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15. The order dated 29.06.2019 was filed before the High Court,which order has been looked into and commented by the High Court.The last paragraph of the order of the Assistant Divisional TransportOfficer, Basti, which is relevant is as follows:- E

“Under the aforementioned facts and circumstances, I havearrived at the conclusion that Sh. Amarnath Yadav with the intentionto cheat in a dishonest manner had fraudulently manufactured theForm 35 and on the basis of such fake document had managed toget the financial contract of the aforementioned vehicle cancelled.FIt is a settled position of the law and that of the Motor Vehicle Actthat an act which is void ab initio can never hold good with theefflux of time. (Quad initio vitionism est non protest tractu temporisconvales cere). Keeping in mind the aforementioned maxim, Ihave arrived at the bonefide conclusion that Sh. Amarnath Yadavwhile concealing the actual facts had submitted fraudulentlyGmanufactured documents and thereby had managed to get theorder dated 19.6.2018 for cancellation of the financial agreementin respect of the Vehicle No. UP 51 AT 5709 JCB and the orderdated 16.8.2018 for issuance of the no-objection certificate of thevehicle. As such, I, while exercising the powers vested on me U/

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s 55 (5) of the Central Motor Vehicle Act 1988, do hereby setaside the previously Issued order of cancellation of financeagreement and the no-objection certificate. From today i.e. from29.6.2019, the registration certificate issued by this office in theForm 23 in respect of the aforementioned vehicle and the no-objection certificate shall be treated null and void. Sending a requestletter to the Registration Officer, Sitapur, with the expectationthat he shall cancel the orders passed by his office on the basis ofthe forms issued by this office earlier and remit back the no-objection certificate of the vehicle to this office. That apart, letcorrespondence be made with the Superintendent of Police, Bastito lodge case under the appropriate sections of the IPC for theact done by Sh. Amarnath Yadav. Accordingly, the applicationdated 30.4.2019 of the Financier Srei Equipment Finance Limitedmade in connection with the Vehicle No. UP 51 AT 5709 JCB isbeing finally disposed of in the light of the aforementionedconclusion and provision of the Law.

Sd// Registration Officer

Motor Vehicle Department, Basti”

16. The registering authority has come to the conclusion that Form35 on the basis of which the entry in the name of the appellant as personwith whom the vehicle was hypothecated was fraudulently removed.The Assistant Divisional Transport Officer has cancelled the order dated16.08.2016 as well as the No Objection Certificate of the vehicle and,thus, the registration certificate given by office of Regional TransportOffice, Basti in Form 23, which has been filed as Annexure CA-2 to thecounter affidavit of respondent No.1 has been held to be null and void.All subsequent proceedings including certificate of registration obtainedby respondent No.1 on 27.08.2018 on the basis of certificate of clearancedated 16.08.2018 shall also automatically be treated non est. The orderof the Assistant Divisional Transport Officer, Basti dated 29.06.2019has not been shown to have been either set aside or stayed by anycompetent court. The High Court in paragraph 10 of the judgment hasnoted about the order of the Assistant Divisional Transport Officer. TheHigh Court has observed that the contents of the order dated 29.01.2019are baseless and the action of the Assistant Regional Transport Office,Basti is also derogatory. We fail to see that on what basis, the HighCourt proceeded to make the following observations:- AB

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“10. ……………the contents of the order dated 29.01.2019 arebaseless and the action of ARTO, Basti is alsoderogatory,…………..”

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17. Although High Court was right in its observation that the recordof office of Assistant Regional Transport Office, Basti was provided byBthe officials to the owner of vehicles, but there were ample materialsbefore Assistant Regional Transport Officer, which were submitted byapplication dated 30.04.2019 of the appellant and other records availablewith the Assistant Regional Transport Officer including four notices issuedto original owner which has been noticed by Assistant Regional TransportOfficer in his order. More so, when order of the Assistant RegionalCTransport Officer dated 29.06.2019 has neither been set aside nor stayed,High Court could not have ignored the effect and consequences of theorder. The order dated 29.06.2019 having been passed in exercise ofthe statutory power of the registration authority under Section 55(5), thelegal consequence of the said order is that registration certificate issuedDin Form 23 by Regional Transport Office, Basti showing the name ofonly Amarnath Yadav with no entry of appellant has been treated to benull and void.

18. The High Court in its order has relied on judgment of thisCourt in Manoj and Ors. Vs. Shriram Tpt. Finance Co. Ltd. andEOrs., JT 2002(1) SC 293, where this Court has observed that vehiclehaving been released in favour of the registered owner though it wasopen for the financier to approach in the civil court for proper relief. Inthe above case, the motor vehicle was registered in the name of theappellant Manoj Sharma. On his application, the Magistrate has directedfor release of the vehicle in favour of Manoj Sharma. The said orderFwas reversed by the High Court in revisional jurisdiction. The argumentwhich was made before this Court was that there was a civil suit pendingwhere an order of status quo was passed due to which the High Courtwas not justified in releasing the vehicle to Manoj Sharma. In the abovecase, this Court in paragraph 4 of the judgment has made followingGobservations:- “4. Mr. Rao appearing for the financier vehemently contendedthat in view of the pendency of the civil suits, and the order of thestatus quo passed therein, the magistrate was not justified inpassing the order granting the vehicle in possession of Shri ManojHSharma. We do not find any substance in the aforesaid contention inasmuch as the magistrate has categorically held in the orderthat the order delivering possession of the property to Shri ManojSharma is subject to any variation to be made by the civil court. Ifthe financier was aggrieved by the order directing release of thevehicle in favour of Shri Manoj Sharma, who continues to be theregistered owner of the vehicle, it was open for the financier toapproach the civil court in the pending civil suit for interference.In this view of the matter, we set aside the impugned order of theHigh Court and direct that the order of the magistrate dated3.4.2000 be complied with, and in case Shri Manoj Sharma furnishesa necessary bond to the extent of Rs. 5 lacs, then the vehiclecould be given to Shri Manoj Sharma, which would be subject toany variation of the order by the civil court.”

19. In the above case, there was no dispute that Manoj Sharmawas registered owner of the vehicle. The present is a case whereregistration certificate which was issued by Regional Transport Office,Basti in Form 23 stood cancelled including the setting aside of theclearance certificate dated 16.08.2018. The subsequent registrationobtained from Regional Transport Office, Sitapur on the strength ofclearance certificate dated 16.08.2018 shall also be of no avail to therespondent No.1 in view of registration certificate having been set asideon 29.06.2019. The above case, thus, has been wrongly relied by theHigh Court in support of the claim of the respondent No.1.

20. The statutory authority while cancelling the registrationcertificate of the vehicle issued by Regional Transport Office, Basti inForm 23 has recorded his conclusion that entry of the appellant as aperson in whose favour the vehicle was hypothecated, which was therein the original registration certificate has been fraudulently deleted. Inconsequence of above, all subsequent acts including the registrationcertificate issued in the name of respondent No.1 by Regional TransportOffice, Sitapur became non est. The respondent No.1 although claimedthat he is a bonafide purchaser but fact remains that he is beneficiary offraud.

21. The High Court unduly influenced by the fact that applicationfor release of vehiclewas filedby respondent No.1, the High Court lostsight of the fact that the appellant has also filed objection to the applicationof release filed by respondent No.1 objecting the release and claimingitself to be entitled to the vehicle as being person with whom the vehicle AB

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Awas hypothecated, whose hypothecation entry was fraudulently removedto facilitate the transfer in favour of respondent No.1, which was illegaland void.

22. The High Court in paragraph 9 has observed that registrationcertificate obtained from the office of Regional Transport Office, Basti,Bwas in the name of Amarnath Yadav as registered owner with noendorsement of hypothecation, which fact was relied by the High Courtin the impugned order. The High Court failed to notice that entry ofhypothecation of the vehicle in favour of the appellant was very muchthere in the original registration certificate, which entry was got deletedby submitting a forged Form 35 by original owner, which finding hasCbeen recorded in the order of Assistant Regional Transport Officer dated29.06.2019 cancelling the registration certificate on which reliance hasbeen placed by the High Court in paragraph 9. The basis of the order ofthe High Court was the certificate of registration in name of AmarnathYadav, which has been filed before us as Annexure CA-2. WithoutDconsidering the fact that by order dated 29.06.2019, the said certificatestood cancelled and was declared void and non est, the High Courtdecided in favour of respondent No.1.

23. In view of the foregoing discussions, we are of the consideredopinion that the High Court committed error in directing the release ofEthe vehicle in favour of respondent No.1 in whose name the vehicle wasregistered at Regional Transport Office, Sitapur, but in view of orderdated 29.06.2019, the registration in favour of Amarnath Yadav (CA-2)and of certificate of clearance dated 16.08.2018 having been set aside,there was no right in respondent No.1 to claim the release of the vehicle.The order of the High Court, thus, is unsustainable and is hereby setFaside. We further order that vehicle No. UP 51 AT 5709 be released infavour of the appellant. Chief Judicial Magistrate, Sitapur shall ensurethat vehicle is received back from respondent No.1 and released in favourof appellant on such terms and conditions as may be deemed fit andproper, which exercise shall be completed within a period of four weeksGfrom today. The appeal is allowed accordingly.

Devika Gujral

Appeal allowed.

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