Court holds hypothecation does not make finance company the “owner” for Supurdagi; only registered owner or his agent can seek interim custody
The Madhya Pradesh High Court at Indore has dismissed a criminal revision filed by S.K. Finance Limited seeking interim custody of a Swift car seized in a narcotics case, ruling that a financier company cannot claim Supurdagi merely because its name appears as hypothecatee in the registration certificate or because the borrower defaulted in EMI payments.
Justice Jai Kumar Pillai upheld the order of the Special Judge (NDPS Act), Neemuch, which had earlier rejected the financier’s application for custody of the vehicle. The court held that the dispute arising out of a loan agreement is a civil matter and cannot be converted into a right to obtain custody of case property in criminal proceedings.
The case arose after police in Neemuch intercepted the vehicle, bearing registration number RJ-27-CK-7132, and allegedly recovered 7 kg of opium from the conscious possession of one Dhanraj Singh. An NDPS case was registered under Section 8/18 of the Narcotic Drugs and Psychotropic Substances Act, 1985. The vehicle was registered in the name of Respondent No. 2, who had purchased it through a loan from the petitioner-finance company.
S.K. Finance argued that since the borrower had defaulted on EMIs and the loan agreement contained a repossession clause, the company was entitled to take the vehicle back. It also contended that the vehicle was lying unused and deteriorating in the police premises. However, the State opposed the plea, saying that criminal courts cannot hand over seized property to a financier who is neither the registered owner nor the owner’s agent.
Relying heavily on the Supreme Court’s decision in Bishwajit Dey v. State of Assam, the High Court noted that interim release of a vehicle seized in an NDPS case is generally available to the owner of the vehicle or his agent, depending on the facts of the case. The Court observed that the Supreme Court’s expression “owner of the vehicle and/or his agent” cannot be stretched to include a financier company simply because it has a security interest in the vehicle.
The Court further held that hypothecation only protects the financier’s financial interest and does not transfer legal ownership for the purpose of criminal proceedings. Any right of repossession under the loan agreement may be enforced through civil remedies or arbitration, but not through an application for Supurdagi before a criminal court.
Finding no illegality, perversity, or jurisdictional error in the Special Judge’s order, the High Court dismissed the revision petition and affirmed the refusal to grant interim custody of the vehicle to the finance company.
Bottom Line :
NDPS Act - Interim custody of seized vehicle - Financier company shown as hypothecatee in registration certificate is not entitled to Supurdagi merely on basis of loan agreement and default in EMIs - Criminal Court cannot enforce contractual repossession rights of financier - For interim release of vehicle seized in NDPS case, claim lies with owner of vehicle or his agent, not with financier.
Statutory provision(s): Bharatiya Nagarik Suraksha Sanhita, 2023 Sections 438, 442, 497, 503, Narcotic Drugs and Psychotropic Substances Act, 1985 Section 8/18
S. K. Finance Limited v. State of Madhya Pradesh, (MP)(Indore) : Law Finder Doc id # 2984427
