State Governments are entitled to prescribe fee for assignment of “distinctive” registration numbers to motor vehicles

Supreme Court: In the case where Rule 55A of the M.P. Motor Vehicles Rules, 1994 were challenged for being ultra vires the state’s power under the Motor Vehicles Act, 1988 and the Central Motor Vehicle Rules, 1989, the bench of L. Nageswara Rao and S. Ravindra Bhat, JJ upheld the validity of the said Rule and said that

“… the assignment of “distinctive marks” i.e. registration numbers to motor vehicles (which includes the power to reserve and allocate them, for a specific fee) is a distinct service for which states or their authorities are entitled to charge a prescribed fee. Rule 55A of the MP Rules is not therefore, in excess of the powers conferred upon the state, by the Act or the Central Rules.”

What is Rule 55A of the M.P. Motor Vehicles Rules, 1994?

  • The said Rule prescribes four different fees – ₹15000/- for the registration marks 1 to 9 in any series prevalent within the jurisdiction of the registering authority; and ₹ 12000/- for reservation of marks from 10 to 100 in any series within the jurisdiction of the registering authority.
  • For reservation of large series of numbers indicated in Rule 55A(c), ₹ 10000/- and ₹ 2000/- for reservation of any other number or numbers within 1000 from the last number assigned in the serial order. 31.
  • In addition to charging such fees, the registering authority is enjoined by Rule 55A(2) to follow the principle of first-come-first-serve in reserving particular numbers; and to allot the registration mark reserved upon production of the vehicle along with the application in Form-20 (of the Central Rules), provided the vehicle is compliant with the provisions of the Act and Rules.
  • By Rule 55A(d), the reservation of the mark would be cancelled if the vehicle is not produced for allotment within three months from the date of allotment. This is meant to avoid abuse of the reservation process by trafficking in numbers, by providing finite time within which such numbers can be used.

Does Rule 55A of the MP Rules violate the Motor Vehicles Act, 1988?

The existence of specific provisions empowering the State (such as Sections 41(13), 47(7), 49(4) and 50(5)), means that the power of the State to claim or charge amounts is specifically recognized by express provisions. Further, there are certain services and functions for which the State is empowered to levy fees. It is precisely to cover these contingencies, i.e. where the service is rendered or some function performed, that the State is empowered by a residual provision to levy fees.

Further, Section 211 is cast in wide terms and that any rule which the Central Government or the State Government is empowered to make under this Act may, notwithstanding the absence of any express provision to that effect, provide for the levy of such fees in respect of applications, amendment of documents, issue of certificates, licences, permits, tests, endorsements, badges, plates, countersignatures, authorisation, supply of statistics or copies of documents or orders and for any other purpose or matter involving the rendering of any service.

“Clearly, therefore, the Parliament intended that contingencies not covered by a specific power to levy fees or amounts, which entailed some activity on the part of the State, including rendering of any service could be legitimately charged or subjected to the levy of fee or amounts.”

The Court further explained that Section 43 enables the owner of a motor vehicle to apply to any registering authority or other authority which may be prescribed by the State Government to have the vehicle temporarily registered. This provision contains a non-obstante clause. Various provisions of the Act deal with orders of higher authorities and appellate authorities.

It also said that the generality of the power under Section 65(1) to frame rules, is sufficient along with Section 211, to conclude that the State Government has the authority to prescribe a fee for reserving certain numbers or distinguishing marks to be assigned as registration numbers.

After an overall reading of the M.P. Rules and the Act, the Court held that besides the express authorization to levy fees or collect amounts, both the Central Government and the State Government are empowered – in fact duty bound to extend certain services in the performance of such duties. Both these bodies, i.e. the Central and State Governments would therefore, be acting within their authority to charge or levy fees.

Why Assignment of Registration Numbers is a part of State Policy?

The assignment of numbers by the registering authority through an official/agency or department notified by the State Government, cannot be seen as a mere step – albeit at the fag-end of the registration allotment process. In fact, though it is the culmination of the allotment process, it is nevertheless an important step. The state is entitled to indicate its choice or manner of assigning by prescribing a particular set of procedures for the assignment of numbers. Thus, for instance, the assignment of the concerned “code” – to the individual registering authorities followed by the assignment of numerics may follow a predetermined pattern which may be district wise, state government department wise (in the case of publicly owned vehicles), different sequences for buses and heavy vehicles and so on. If such a predetermined choice can be made by prescribing the mode of assignment, it is both regulatory and at the same time indicative of State policy.

“Per se, the Court cannot brush aside the element of service which may be involved – especially if the general public or a sub-section of it, wishes to choose particular numbers for various considerations. Such “fancy” numbers or “auspicious” numbers may well therefore have to be set apart having regard to the peculiar socio-cultural needs of the people of the state. It is in such an event that the availability of such numbers and their reservation as a choice and the power of their assignment assumes importance.”

[State of MP v. Rakesh Sethi, 2020 SCC OnLine SC 673, decided on 26.08.2020]

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