TMI Blog1980 (9) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... nd conditions stipulated in the hire purchase agreement. In the certificate of registration issued by the Regional Transport Officer, Belgaum (hereinafter referred to as the R.T.O), functioning under the provisions of the Motor Vehicles Act of 1939 (Central Act No. 4 of 1939) (hereinafter referred to as the 1939 Act) the fact that petitioner No. 1 is the registered owner of the said vehicle and the same is subject to a hire purchase agreement with petitioner No. 2 are recognised by the said authority. From 8-10-1973, petitioner No. 1 was using the said vehicle as its registered owner. 3. Petitioner No. 1 has alleged that he had permitted the use of the said vehicle by respondent No. 3 under an agreement and a general power of attorney dated 23-8-1974 (Annexures B and C) and from that day onwards he was using the said vehicle, though he continued to be the registered owner of the same. 4. On 19-12-1974 the aforesaid vehicle which was proceeding from Kumta to Sirsi, was intercepted by the officers of the customs department and was seized for the alleged violations of the Act. In the adjudication proceedings initiated, the Collector notified petitioner No. 1, respondent No. 3 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principles of natural justice. In support of their contention, learned counsel for the petitioners strongly relied on the ruling of Sinha, J. in Pradeep and Company v. Collector of Customs and Others (A.I.R. 1973 Calcutta 131). 8. Shri U.L. Narayana Rao, learned counsel for respondent No. 1 urged that petitioner No. 2 was not the owner of the vehicle and, therefore, he was not entitled for a notice either under Section 124 of the Act or the principles of natural justice and that the one and the only remedy available to it was to recover the amounts either from petitioner No. 1 or the other person as was liable to pay the same. 9. Respondent No. 3 who has been served by substituted service has remained absent and is unrepresented. 10. The assertion of the petitioners that the vehicle had been permitted to be used by petitioner No. 1 under a hire purchase agreement with petitioner No. 2, that neither petitioner No. 1, nor respondent No. 3 had paid all the instalments due thereto to petitioner No. 2, that petitioner No. 1 had not purchased the vehicle exercising the option to purchase on payment of the price, that the certificate of registration issued under the 1939 Act re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hirer is given the right to purchase the goods on certain conditions. That, however, is an option, not an obligation to purchase. The hirer may elect to purchase the goods, and when he does that and fulfils all the conditions prescribed in the agreement the title to the goods will pass to him. But he may elect not to do so, and in that event he is entitled to return the goods and terminate the agreement in the manner provided therein. In an agreement of credit-sale, on the other hand, the purchaser has no right to terminate it as his option. If he did that, he would be in breach of the contract and would be liable, in law, in damages, vide Lee v. Butler [1893 (2) Q.B.D. 318); Helby v. Mathews (1895 A.C. 471); Auto Supfily Co. v. Ragunsth Chetti (I.L.R. 52 Mad. 829). In Halsbury's Laws of England, the distinction between hire purchases and credit sales is stated to be that "under the latter type of contract there is a binding obligation on the hirer to buy and the hirer can therefore pass a good title to a purchaser or pledgee dealing with him in good faith and without notice of the rights of the true owner, whereas in the case of a contract which merely confers an option to purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice, though he is recognised as its 'registered owner' in the records of the authorities functioning under the 1939 Act. While the hirer is under no obligation to purchase the vehicle, he becomes its owner on payment of all the instalments, exercises the option to purchase and pays the purchase price to the real owner of the vehicle. The mere user of the recognition by the authorities under the 1939 Act/ does not by itself make him the owner of that vehicle. 17. On facts there is no dispute that petitioner No. 1, the registered owner, had not paid all the instalments, exercised the option of purchase and had not paid the purchase price to petitioner No. 2. When that is so, it follows that petitioner No. 2 was the owner of motor vehicle No. MEL 4681 as on the dates the same was seized, proceedings were initiated and the order for confiscation was made by the Collector. But, the same is not the position in the case of respondent No. 3 to whom a show cause notice had been issued. 18. Section 124 of the Act peremptorily directs that an order for confiscation or penalty, cannot be made without notifying the owner of the goods or the vehicle and an opportunity of oral hearing, if de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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