HEDGE FINANCE LTD. Vs. VIPIN KUMAR

JUDGEMENT

(1.) The appellant is the petitioner in M.A.(Arb.) No.272/2024 of the Additional District Court-VIII, Ernakulam, filed under Sec. 9 of the Arbitration and Conciliation Act, 1996, for repossessing a hypothecated vehicle through the Advocate Commissioner appointed by the Court.

(2.) In this Appeal, this Court is called upon to adjudicate the rival claims between the appellant/financier and the 2nd respondent/purchaser in confiscation proceedings, over a Toyota Innova Car. The 1st respondent/original registered owner of the vehicle contends that the financier is to recover the hire purchase money from the vehicle itself and not to proceed against him.

(3.) The facts are more or less admitted by the parties. The 1st respondent was the registered owner of a Toyota Innova Car bearing Reg.No.KL 23 F 6111. The vehicle was hypothecated with the appellant for the loan availed by the 1st respondent as per the Hire Purchase Agreement. The hypothecation in favour of the appellant was duly endorsed in the Registration Certificate of the vehicle. The vehicle was involved in an NDPS offence. The vehicle was seized by the Excise Department. The 1st respondent filed Application before the Sessions Court claiming interim custody of the vehicle under Sec. 451 Cr.P.C. and the same was dismissed by the Sessions Court holding that in view of the Circular issued by the Government, the District Level Narcotic Drugs and Psychotropic Substances and Conveyance Disposal Committee (Drug Disposal Committee) constituted under Sec. 5 of the NDPS Act is the authority to dispose of the vehicle involved in NDPS offences. The 1st respondent filed an Application for interim custody before the Drug Disposal Committee and this Court as per judgment dtd. 2/11/2022 in W.P.(Crl)No.881/2022 directed the Drug Disposal Committee of Kollam to dispose of the said Application within 30 days from the date of receipt of copy of the said judgment. A Communication dtd. 23/7/2022 was issued to the first respondent that the vehicle is in the custody of the Court; that the vehicle will be brought to the Disposal Committee only after getting permission from the Court and thereafter the Committee will take decision to dispose of the vehicle through auction. On 26/11/2022, the Drug Disposal Committee of Kollam decided to dispose of vehicles including the vehicle of the 1st respondent in auction. The 1st respondent has filed W.P.(Crl.) No.186/2023 challenging the proceedings of the Drug Disposal Committee of Kollam dtd. 26/11/2022 and for other reliefs and the said writ petition is pending consideration before this Court on the ground that the order was passed in violation of the direction of this Court in W.P.(Crl.) No.881/2022. The vehicle was later sold in eauction conducted by the Excise Department. The vehicle was purchased by one Bosekutty Abraham for an amount of Rs.5,38,729.00. From the said Bosekutty Abraham the 2nd respondent herein purchased the vehicle. At present, the 2nd respondent is the registered owner of the vehicle. Since the monthly hire installments payable to the appellant were defaulted by the 1st respondent and an amount of Rs.4,76,788.00 is due from him, the appellant decided to initiate arbitration proceedings against the 1st respondent as provided in the Hire Purchase Agreement. The appellant filed M.A.(Arb.)No.272/2024 before the District Court, Ernakulam under Sec. 9 of the Arbitration and Conciliation Act, 1996 to repossess the vehicle through Court as an interim measure. As per the Interim Order in I.A.No.3/2024 in M.A.(Arb)No.272/2024, the Advocate Commissioner was appointed to take the vehicle into custody and hand over the same to the appellant. The Advocate Commissioner obtained possession of the vehicle from the 2nd respondent and handed over the vehicle to the appellant. The 2nd respondent filed I.A.No.6/2024 to get himself impleaded in M.A. (Arb) No. 272/2024 and I.A.No.5/2024 seeking to restrain alienation of the vehicle and restoration of the possession of the vehicle to the 2nd respondent. I.A.No.6/2024 was allowed impleading the 2nd additional respondent in M.A. (Arb) No. 272/2024. I.A.No.5/2024 was allowed ordering restoration of the vehicle back to the 2nd respondent, holding that on confiscation, the vehicle will vest with the Government free from all encumbrances unless and until the said order of confiscation is set aside. Since I.A.No.5/2024 is allowed ordering restoration of the vehicle to the 2nd respondent, M.A.(Arb)No.272/2024 was rejected by the District Court by a separate order. The present Appeal is filed challenging the order in M.A. (Arb.) No.272/2024, taking grounds against the order in I.A.No.5/2024.