Allahabad High Court: In a writ petition filed challenging the order passed by the Assistant Regional Transport Officer (‘RTO’), Bareilly and restraining the RTO from issuing a fresh Registration Certificate (‘RC’) in favour of the financier, the Division Bench of Manoj Kumar Gupta and Manish Kumar Nigam JJ., has held that refusal of registered owner to surrender registration certificate or his abscondence are not mandatory conditions to exercise power under Section 51(5) of the Motor Vehicle Act, 1988 to cancel and issue fresh certificate of registration.
In the case at hand, the petitioner had taken finance of Rs. 42,00,000/- from the respondent/financier for purchasing a truck, that was to be repaid in monthly instalments. The petitioner had paid only a sum of Rs. 8,00,000/- and admitted that he could not deposit the monthly further instalments. Accordingly, the financier on account of the default on the part of the petitioner exercised its right to possess the vehicle and requested Administration by filing Form-36 to issue the fresh RC in his name. The RTO passed the order directing for the grant of fresh RC for the remaining period of validity in favour of the financier after realising the requisite fee in the exercise of power under Section 51(5) of the Motor Vehicle Act, 1988.
The impugned order by the RTO recorded that in the notice issued in Form-37 to the petitioner calling for his explanation, the petitioner filed his objection and submitted that the vehicle must not be transferred in favour of the financier. The respondent reiterated in the reply that the petitioner had defaulted in payment of the outstanding amount despite notice to him. After verification that, the financier had taken possession of the vehicle owing to default on the part of the petitioner in repaying the loan in terms of the agreement relating to finance, the RTO directed for a fresh RC to be issued in the name of the financier.
The petitioner contended that Section 51(5) of the Motor Vehicle Act, 1988 (‘Act’) could only be exercised in case, the registered owner refuses to deliver the certificate of registration or has absconded. Further, the original RC was lying in the vehicle at the time its possession was taken by the financier and therefore, it was not a case of refusal to deliver the RC.
Analysis:
The Court noted that the petitioner has not clarified any fact relating to the amount taken as loan and the amount repaid by him.
The Court said that the main ingredient for exercise of power under Section 51 (5) is the establishment of the fact that the registered owner had purchased vehicle by taking finance and had defaulted in repayment of the amount in terms of the said agreement. The other necessary ingredient is that the financier has taken possession of the vehicle from the registered owner. All these ingredients are fully established in the instant case. The stipulation regarding refusal on part of registered owner to hand over certificate of registration or that he had absconded is not sine qua non for exercise of the power.
As per the Court, notwithstanding the aforesaid two contingencies, the registering authority still has power to cancel the certificate and issue a fresh certificate of registration in the name of person with whom the registered owner had entered into the agreement of finance.
The Court also perused Rules 61(2) and 61(3) of the Central Motor Vehicles Rule, 1989, Form 36, and Form 37 and concluded that when there is a default on the part of the registered owner in repaying the loan to the financier in terms of the agreement and on account of which the financier takes possession of the vehicle, the financier becomes entitled to a fresh RC in his name.
The Court further said that the registered owner is, therefore, required to surrender the certificate of registration so that it is cancelled, and a fresh certificate of registration is issued in the name of the financier. Where the registered owner does not surrender the certificate of registration or absconds, he is put to notice and when even thereafter the certificate of registration is not produced, the Registering Authority has been conferred with power to issue new registration certificate to the financier notwithstanding the fact that the original registration certificate had been withheld by the registered owner or had absconded. Therefore, the Court rejected the petitioner’s submission that the power under Section 51(5) of the Act could not be exercised unless the registered owner refuses to surrender the registration certificate or absconds.
Thus, the Court said that, in case the certificate was lying in the vehicle at the time it was repossessed, the impugned order directing for the vehicle to be registered in the name of the financier would not cause any prejudice nor could be said to be contrary to any provisions of law.
Therefore, the Court dismissed the petition.
[Shahrukh Saleem v. State of U.P., 2023 SCC OnLine All 383, Order dated 04-07-2023]
Advocates who appeared in this case :
Advocate from petitioner: Advocate Virendra Jaiswal;
Advocate from respondent: Chief Standing Counsel.
