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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
Writ Petition No.915 of 2007
1. Nagpur Vehicle Hire Purchase
Association, Nagpur,
a Society duly registered under the
provisions of the Societies Registration
Act, 1860, bearing Registration
No.MH-953/01, having its Office
at C/o N.K. Kusumgar & Co.,
1, Medical College Square,
Nagpur-440 009,
through its President Shri Naresh
S/o Zumberlal Bharut (Jain).
2. Kusumgar Finance and Marketing
Company,
a duly registered Partnership Firm,
having its place of business at
1, Medical College Square,
Nagpur-440 009,
through its Partnership Nikhil
S/o Shri Naresh Kusumgar. ...Petitioners
Versus
1. The Transport Commissioner,
State of Maharashtra,
Administrative Building,
4th Floor, Near Dr. Ambedkar Garden,
2
Government Colony,
Bandra (East),
Mumbai – 400 051.
2. The Regional Transport Officer,
R.T.O. Office, Nagpur.
3. The State of Maharashtra,
through its Secretary,
Department of Road Transport,
Mantralaya Annexe,
Mumbai – 400 032.
4. The Union of India,
through its Secretary,
Ministry of Road Transport,
Transport Bhawan,
1, Parliament Street,
New Delhi. ... Respondents
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Shri S.V. Manohar, Advocate for Petitioners.
Smt. B.H. Dangre, AGP for Respondents No.1 to 3.
Smt. S.W. Deshpande, Advocate for Respondent No.4.
Coram : A.H. Joshi & R.C. Chavan, JJ.
Dated : 20 th April, 2007
Oral Judgment (Per A.H. Joshi, J.) :
1. Rule. Rule is made returnable forthwith by consent of the
learned Advocates for the parties.
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2. The petitioners herein have challenged circular Annexure-P2,
wherein respondent No.1 - the Transport Commissioner, Maharashtra
State, Mumbai, communicated to all officers under his control certain
instructions. Apart from recital-part contained in the said circular, the
direction-part reads as follows :
“(A) In your office a list be prepared containing the
Financial Institutions/Banks/Finance Corporations,
who are providing loans for vehicle purchase and are
recognized by the Reserve Bank of India, along with
their branches.
(B) Whenever these financial institutions/banks/finance
corporations approach for registering the hire
purchase/mortgage charge, they should make it
compulsory to seek trade certificate for every category
of vehicle. Branches should be asked to seek separate
trade certificate. Fees and necessary taxes be accepted.
(C) If there is no financial institution in your area, then in
whose jurisdiction they are operating, they should have
the trade certificate from that registering authority.
For example : Vehicle owners is from Kolhapur and
office of financial institution is at Sangli, at such time,
financial institution should have obtained the Trade
Certificate from the Deputy Regional Transport Officer,
Sangli.
(D) If the state government and central government
department is giving loan to its employees, then they
be excluded from this.
(E) If the financial company is from other state, then they
be asked to obtain Trade Certificate from this State.
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(F) This circular be implemented scrupulously and
government revenue be recovered. Said circular be
acknowledged.”
3. We find that the effort of the petitioners is to prove their
proposition that the said circular is ultra vires by taking use of provisions
regarding concession carved out under a supporting legislation, i.e.
Rules 33, 34 and 35 of the Central Rules, while the principal enactment,
i.e. the Motor Vehicles Act, 1988, in no ambiguous terms, describes what
the “dealer” means. For ready reference, the definition of “dealer” is
quoted as below :
“Section 8 - “dealer” includes a person who is engaged--
(a) Omitted by Act 54 of 1994.
(b) in the building bodies for attachment to
Chassis; or
(c) in the repair of motor vehicles; or
(d) in the business of hypothecation, leasing or
hire-purchase of motor vehicle.”
4. The petitioners have challenged the very power of respondent
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No.1 to issue the said circular and hence contended that the said circular
is ultra vires. The petitioners, therefore, prayed that the said circular be
struck down and quashed. The foundation of the challenge contained in
the petition can be summarized as follows :
(a) Though the petitioners do not dispute that a “dealer”
admittedly includes one who is engaged in business of hypothecation,
lease or hire purchase of motor vehicles, nevertheless, this class of
traders/financers does not claim certain concessions carved out under the
Central Rules and in particular of playing vehicles without obtaining
registration under Rules 33, 34 and 35 thereof and hence insistence of
authorities for trade certificate to financers is wholly unnecessary.
(b) The Motor Vehicles Act, 1988, being a Central Legislation, no
power of rule-making is vested with the State Government or any of its
officers and, therefore, in absence of express provision requiring
registration of dealer, financer, etc., insisting on a trade certificate for
such person amounts to legislating without authority.
5. The learned Advocate for the petitioners placed reliance on the
judgments in (1) Parmeshwar Prasad v. Union of India and others,
reported in (2002) 1 SCC 145, (2) Orix Auto Finance (India) Ltd. v.
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Jagmander Singh and another, reported in (2006) 2 SCC 598, and (3)
Feroz Ahmad v. Delhi Development Authority and others, reported in
(2006) 10 SCC 399, in support of his submissions.
6. We find that though the Motor Vehicles Rules are made under
a Central enactment by the Central Government, its implementation is
vested with the State Government. Further, the matters related to tax on
motor vehicles is a matter within the power of the State. While we do not
wish to view the circular prescribing necessity of a trade certificate as a
review mopping measure for the State, we find that Rule 41 of Central
Motor Vehicle Rules, 1989, which enumerates purposes for which motor
vehicles with trade certificates may be used, may make it desirable that
the petitioners have a trade certificate. The relevant part of Rule 41 is
reproduced as under :
“Rule 41. Purposes for which motor vehicle with trade
certificate may be used.-- The holder of a trade
certificate shall not use any vehicle in a public place
under that certificate for any purpose other than the
following :--
(a) ... ... ...
(b) ... ... ...
(c) ... ... ...
(d) ... ... ...
(e) ... ... ...
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(f) ... ... ...
(g) ... ... ...
(h) for removing the vehicle after it has been taken
possession of by or on behalf of the financier due to
any default on the part of the other party under the
provisions of an agreement of hire-purchase, lease or
hypothecation.”
A financer, who is in the business of hypothecation, lease or hire purchase
in motor vehicles, may obviously be required to remove a vehicle after
repossessing it, should the borrower fail to pay the amount loaned.
Therefore, ordinarily for such removal after repossession a trade
certificate may have to be used. It will, therefore, be implicit that the
Companies involved in hire purchase of vehicles would have to hold a
trade certificate in order to avail the benefit of clause (h) of Rule 41.
Therefore, we do not see any illegality in respondents' insistence that the
petitioners should obtain a trade certificate.
7. While executing and implementing the provisions of the Act or
the Rules, the Executive Authorities may face various practical problems
and in public interest they would sort out those problems by following
certain practices. It is always in interest of public at large to have such
practices declared and kept on record in written format and made known
to the public at large. This course helps in avoiding subjectivity in actions
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of the Executive Authorities. A common borrower, whose motor vehicle is
sought to be repossessed and removed by financer, may not know that the
financer can removed such a vehicle by using a trade certificate and,
therefore, may not have been able to ask the financer if he possesses such
a trade certificate. Therefore, a circular, which makes it necessary for the
financer to have a trade certificate, may not be undesirable. In this
background when the person doing the business of the type referred to in
sub-clause (d) of Clause 8 of Section 12 of the Act are included in the
definition of “dealer”, and under clause (h) of Rule 41 of the Central
Motor Vehicle Rules, such person could remove a repossessed vehicle by
using a trade certificate, insistence on such person's applying for trade
certificate is obviously for the purpose of enforcing the existing provisions
of law. A circular issued to enforce existing law, therefore, does not
amount to exercising a rule-making power, muchless exercising such
power without existence of the authority of or under the law. We find
that the circular in question is, therefore, in the nature of a direction for
ensuring the compliance of statutory provisions and, therefore, do not in
any manner amount to transgression of executive function under
purported exercise of legislative power. We are not persuaded to believe
that law makers were unmindful while including in the definition of
“dealer” class of persons referred to in clause (d) of sub-section (8) of
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Section 12.
8. The judgment in Orix Auto Finance (India) Ltd. refers to
recognition of hire purchaser's right. We find that the circular in question
does not in any manner put fetters on hire purchaser's right under the
general law or under the contract between the parties. The circular in
question only prescribes as to how and when the trade certificate should
be insisted upon.
In the aforesaid factual background, we do not think that it is
necessary to go into the details and refer to the judgments of the Apex
Court relied upon by the petitioners. The administrative law in relation to
performance of executive functions always has a different penumbra than
one in service law.
9. We find that there is no substance in the challenge to the
validity of circular on the ground of absence of power to issue the same.
10. The petitioners' grievance suggested indirectly is about the fee
chargeable on such application and its renewal. We find that there is no
challenge to the circular in the petition on such a ground.
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11. It was also suggested that the obligation of Registering
Authority is to register the hire purchase agreement under Section 51 of
the Act. Though the nature of obligation is of imperative nature, it does
not absolve the dealer referred to in sub-clause (d) of Clause 8 of Section
12 of the Act of the requirement of obtaining trade certificate and
insistence of the authorities to have such trade certificate and, therefore, it
cannot be painted as refusal to discharge obligation under Section 51 of
the Act.
12. We, therefore, find that there is no merit in the petition and the
same is, therefore, dismissed. Rule is discharged with costs.
(R.C. Chavan) (A.H. Joshi)
Judge Judge
pdl
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