Aswathy Kumar vs Registering Authority

K. Vinod Chandran, J.—The petitioner is before this Court, with respect to the tax demand, made by the 1st respondent, on two contract carriage vehicles, bearing registration No.KL 9 U 9650 and KL 9 U 7197; as also the proceedings for sale of the said vehicle, conducted by the 2nd respondent. The admitted facts are that, both the vehicles were originally purchased by the 4th respondent, who was the registered owner, after availing loan from the 3rd respondent. The loan was defaulted and both the vehicles were taken possession of, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity "SARFAESI Act") by the 2nd respondent on 18.04.2013. As per Ext.P1, auction was conducted on an, as is where is basis, in which auction, the petitioner participated and bid successfully. On 31.08.2013 the sale was confirmed in the name of the petitioner and the sale certificates were issued as evidenced by Ext.P2 series. The petitioner''s travails began on such purchase.

The Registering Authority refused to accept the sale certificates, issued by the 3rd respondent, on the ground that the financier should first transfer the vehicle in its name. The financier-the 3rd respondent, then made two applications with respect to both the vehicles before the Registering Authority. The petitioner was before this Court in W.P(C) No. 23129/2013 seeking consideration of such applications, which was allowed by judgment dated 12.09.2013. The applications were considered and as is submitted by the learned counsel appearing for the 3rd respondent, with respect to KL 9 U7197, the registration was transferred in the name of the 3rd respondent-financier with effect from 18.04.2013 and with respect to the other vehicle, the registration was transferred, with effect from 05.09.2013. The separate dates for the two vehicles is neither explained nor relevant to our purpose.

Even after that, the petitioner was not able to take possession of the vehicle, from the godown, in which the 2nd respondent had parked it for reason of the transfer being not effected in the Registration Certificate. Admittedly, there were tax dues even from the time when the original registered owner, the 4th respondent was in possession of the vehicle. The petitioner, hence came to this Court contending that the earlier registered owner had filed ''G'' forms for tax exemption, in respect of both the vehicles. This Court hence directed consideration of the same as also the resultant exemption, claimed by the petitioner. The said claim was rejected by Ext.P5, which is assailed herein.

The prayers raised in the above writ petition are: (i) a mandamus directing transfer of registration as per Ext.P2 sale certificate, (ii) direction to the 2nd respondent to deliver the vehicles on the basis of Ext.P2 sale certificate, without insisting for payment of alleged tax due on the vehicles as also yard rent, (iii) declaration that the petitioner is not liable to pay the tax due of the vehicles and to direct proceedings against respondents 3 and 4 for realisation of tax due, and (iv) call for the records leading to Ext.P5 and quash the same.

With respect to the first prayer, the learned counsel appearing for the 2nd and 3rd respondents, in an attempt to advance the prayer for transfer of registration made by the petitioner as also to absolve the said respondents from the liability to tax, relies on a judgment reported in Nisamudheen Vs. The Joint Regional Transport Officer, . As to the question of transfer of registration, this Court, in the afore cited decision, held that Rule 57 of the Central Motor Vehicles Rules, 1989 [for brevity "CMV Rules"] which speaks of the transfer of ownership of vehicle, purchased in public auction, does not interdict such transfer being effected, for reason only of there being tax arrears. There can be no dispute with respect to such a proposition, but the same is applicable only to public auctions conducted by the Central or State Governments, as is clear from the language of Rule 57. The public auction, conducted herein, by a finance company would not fall under the said provision.

The respondents 2 and 3 further contend that they are absolved from the tax liability, since they, as financier, merely enforced charge over the vehicles, and sold it in public auction. That contention cannot be sustained on the facts and law noticed in the aforesaid judgment. In the said case, Employees Provident Fund Organisation, who had a statutory first charge over the assets of an establishment covered under the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952; seized the latter''s vehicle and sold it in public auction. The first charge created by the Central Legislation was taken note of by this Court to find that, such charge would override the liability cast by Section 9 of the Kerala Motor vehicles Taxation Act, 1976 [for brevity "KMV Taxation Act"]; a State enactment. No such statutory first charge can be claimed by the financier taking into account the provisions of the KMV Taxation Act and the Motor Vehicles Act, 1988 [for brevity " MV Act, 1988"].

The MV Act, 1988 authorises a financier to seek for endorsement of a hire-purchase, lease or hypothecation agreement, with respect to a motor vehicle, in its registration certificate; under Section 51. Elaborate provisions have been incorporated to make such entries and cancel the same, as also to protect the interest of the financier. On default, the financier has the right to take possession of the vehicle and seek for transfer of registration in its own name. The financier, then, essentially steps into the shoes of the registered owner, with all rights and liabilities therefore, and also subject to Section 9 of the Taxation Act. This Court in Nisamudheen (supra) was concerned with "distress sale for realisation of statutory charge by instrumentalities of State, especially for recovery of statutory dues" (sic) [para 6]. Neither would the decision be applicable to the sale conducted by the financier/respondents 2 and 3 herein, nor would Rule 57 apply.

With respect to the 2nd prayer as to the delivery of the vehicle from the 2nd respondent, the 2nd respondent, not being an authority under Article 12 of the Constitution of India, would not be amenable to the extra ordinary jurisdiction exercised by this Court, under Article 226. In any event, it has to be noticed that the 2nd respondent is not the authority who is entrusted with collection of tax and there could be no insistence on the part of the 2nd respondent to satisfy such tax arrears. However, with respect to ''yard rent'' it is a matter of contract, the terms of which again cannot be looked into, by this Court, under Article 226. Incidentally, it has to be noticed that the learned counsel appearing for the petitioner had vehemently argued on the basis of Ext.P1 notice, that it did not disclose any tax dues of the vehicle and hence, the action of the respondents 2 and 3 in making a public sale without mentioning such tax due is clearly mala fide. The issuance of sale certificates without any encumbrance thereon, with respect to the tax due, is a factor which should result in cancellation of the sale itself, is the further argument. Again, these are not contentions which could be urged in a writ petition under Article 226 and the petitioner would definitely, be reserved the right to agitate it before the appropriate forum.

The declaration sought for, is with respect to the non-liability of the petitioner for tax dues under the KMV Taxation Act, for the periods prior to the purchase of a vehicle. In fact, it has to be noticed that Section 3 of the KMV Taxation Act provides for a levy of tax on the motor vehicle itself and the liability to pay is cast on the registered owner or any person having possession or control of a motor vehicle, which is deemed to be used or kept for such use within the State. Further by Section 9, any subsequent transferee is also made liable for the tax dues of a vehicle, even for periods prior to the subject transfer. Section 13, deems, for the purpose of recovery, any amount due under the Act to be an arrear of public revenue due on land. By sub-section (2) of Section 13, a specific power is conferred on the authorities under the Act, to restrain and sell the vehicle, for which tax has fallen in arrears.

In the teeth of the above provisions, the liability of motor vehicle tax is on the registered owner, any subsequent transferee or any person in possession or control of the vehicle and the liability is joint and several, for all the periods, irrespective of the date of such transfer or the period of possession. In addition to this, the liability would be on the vehicle as such and the authorities are entitled to proceed against the vehicle, for recovery of tax dues, by detention and sale of the same. Hence there can be no declaration granted as sought for by the petitioner. If the petitioner asserts his title on the vehicles, it comes with the liability to tax, due on the vehicle, subject however to the petitioner''s remedy to seek for recovery of the tax satisfied for a period, from any person who was in actual custody of the vehicle during that period.

The reliance placed by the petitioner''s counsel on N.P.R. Finance Ltd. Vs. State of Kerala, is also of no avail. The Division Bench, therein, asserted the joint and several liability of the registered owner, the financier and the person who is in control of the vehicle; on a conjoint reading of Sections 3(3), 4(1), 9 and 13 of the KMV Taxation Act. The financier''s liability was declared, unequivocally; but the same was not exclusive, absolving all others who were cast with the liability to tax, by the statute. A subsequent transferee was never intended to be released of the liability merely for reason of the financier having taken possession of the vehicle and sold it for satisfaction of the debts to the financier. The Division Bench decision of this Court in C. Sebastian Vs. The State of Kerala, Joint Regional Transport Officer, The Tahsildar (RR), Nedumangadu and The Manager, Vijay Hemant Finance, , relied on by the financier also does not divert from the joint and several liability cast by the statute. Both the decisions categorically, on the strength of the provisions in the statute, rope in one or other of the persons on whom the statute casts the liability, and does not pin it on one, in exclusion to another.

The further relief sought for is setting aside of Ext.P5. Ext.P5 was passed pursuant to a judgment of this Court referred to earlier in W.P (C) 27765/2013, wherein the contention was that the earlier registered owner filed "G" Forms. The Regional Transport Officer has specifically found that no such ''G'' forms, have been filed by the earlier registered owner or any subsequent transferee. It is also pertinent that Ext.P5 finds that, despite notice of hearing being given, the petitioner was not present when such order was passed. For all the above reasons, there can be no interference with Ext.P5 order also.

The only prayer which could have been considered validly by this Court, in the above writ petition was the first prayer where the petitioner seeks transfer of registration to his name. However, there is nothing in the writ petition to show that an application was made as provided under Chapter IV of the MV Act, Chapter III of the CMV Rules and Chapter IV of the KMV Rules. Needless to say, the petitioner on the strength of the sale certificate issued would be entitled to make an application, at any point of time as provided under the statute and rules framed thereunder. In such circumstance, the tax liability as far as the present case is concerned, would be against the original registered owner, the financier, the petitioner herein, as also the vehicle, which is joint and several and the State would be entitled to proceed against either of the parties.

The petitioner, having never come into possession of the vehicle, would be liable only as a subsequent transferee; that too only if he asserts his ownership on the strength of the sale. As of today, the petitioner has no liability, but he cannot seek transfer of vehicles to his name and contiguously seeks for a declaration of non-liability to tax. If tax is satisfied or recovery effected from any of the parties, necessarily, that party would be entitled to seek recovery from that other party; the tax for the period in which that other party was in actual control and possession of the vehicle.

The learned counsel for the respondents 2 and 3 submits that they have filed ''G'' forms for the period from 1.7.2013 to 30.6.2014, when the vehicle remained in the yard where it is parked even now. Exemption for that period would have to be considered by the authority.

Writ petition is disposed of, with the above observations.