JUDGMENT In the Circular it is noted that as per S.51 of the Motor Vehicles Act, entries have been made in the RC Books in the usual course with regard to the vehicle owners who have purchased the vehicles on obtaining loan/financial assistance from nationalized banks and other financial institutions, However, it is also expressed that some transport financiers and also private financiers are extracting more interest and thus deceiving the vehicle owners. Referring to the provisions of the Money Lenders Act, 1961 and the Rules therein and also based on the letter of the Government dated 14.6.2010, the Commissioner for Transport has issued the Circular to various Regional Transport Officers directing the registering authorities to cross-check private financiers whether they are registered under the Karnataka Money Lenders Act and also whether they are charging interest in excess of the limit prescribed under the Exorbitant Interest Act on the money lent for the purchase of the vehicle and, only after securing the necessary documents in this regard, to make entry of the name of the financier in the RC Book, meticulously. On the ground that the Circular dated 6.9.2010 issued by the Transport Commissioner to crosscheck and to seek for all necessary documents from private financiers as to whether they have obtained money lending license and whether they are charging interest on the money lent on the basis of the Money Lenders Act and the prohibition imposed therein on charging excess interest, is illegal, the said Circular has been challenged by the Association of private money lenders. They are questioning their authority in insisting for all details before making entry of the names of the financier whether they are registered under the Money Lending Act or not or the rate of interest they are charging. Heard the counsel representing the parties. They are questioning their authority in insisting for all details before making entry of the names of the financier whether they are registered under the Money Lending Act or not or the rate of interest they are charging. Heard the counsel representing the parties. In the course of argument advanced at the Bar in this regard, learned counsel has relied upon a decision rendered by this Court in WP 8460/1996 on 8.4.1996 wherein in a similar situation, this Court has already held that it is not necessary for the RTO to examine the ground upon which the endorsement is issued that is, licence has not been obtained under the provisions of the Karnataka Money Lenders Act, is totally irrelevant for the purpose of Motor Vehicles Act as such, the endorsement issued by the Commissioner stands quashed and the RTO was directed to reconsider the application without relying upon the ground on which it was returned declining to make entry in the RC Book. It appears, this judgment, so far as not been set aside or distinguished. In the case of Charanjit Singh Chadha & Ors vs. Sudhir Mehra – (2001) 7 SCC 417 ) relied upon by the petitioner’s counsel representing the Association with respect to hire purchase contracts are concerned, the Apex Court has opined that it is an executory contract of sale, conferring no right in rem on the hirer until the conditions for transfer of the property to him have been fulfilled and it is held that, if any dispute with regard to hire purchase contract is concerned, it is to be resolved on the basis of the terms incorporated in the agreement. The Apex Court has also observed that the finance charge – difference between the cash price and the hire purchase price, is not interest but, represents a sum to be paid – a privilege being allowed to discharge the purchase price by installments. S.51 of the Motor Vehicles Act, 1988 provides for making an entry in the RC Book. S.51 mandates, when an application for registration of motor vehicle is made under hire purchase/lease/hypothecation agreement, the Registering Authority shall make an entry in the Certificate of Registration regarding existence of the said agreement. The section also provides for the procedure on such termination of the agreement and transfer, etc. S.51 mandates, when an application for registration of motor vehicle is made under hire purchase/lease/hypothecation agreement, the Registering Authority shall make an entry in the Certificate of Registration regarding existence of the said agreement. The section also provides for the procedure on such termination of the agreement and transfer, etc. In the instant case, the petitioners are questioning the Circular which authorizes and insists upon every RTO to make entries only on such production of the documents like registration under the Karnataka Money Lenders Act and also the rate of interest charged, etc. Learned counsel for the impleading applicant, on behalf of the Association of Borrowers, has submitted there is exploitation by the money lenders in charging higher rate of interest and even without obtaining the money lending license since under the Money Lenders Act, which is a regulatory provision and one has to necessarily have a money lending license for financial transactions and, as regards the rate of interest, it shall not exceed the permissible limit as is provided under the RBI Guidelines. In gross violation of the RBI Guidelines and even without registering under the Money Lenders Act, these financiers are exploiting the intended purchaser of the vehicle on the basis of the finance raised through them. In this background, according to him, the Circular issued is in accordance with law. The Authorities have been entrusted to cross-check to avoid/minimize such illegal exploitation of the borrowers who intended to purchase the vehicle with financial assistance. Government Pleader submits, the Transport Commissioner having understood the implication and exploitation, has issued a Circular which is harmonious and is not in violation of S.51 of the Motor Vehicles Act, rather it is to regulate and promote the interest of the borrower as well as the financier, and is not in derogation of S.51 of the Act. The Motor Vehicles Act, 1988 is a Central Act which, of course, authorizes the State Government also to frame/make/issue Circulars. However, whether the Circular issued is in terms of S.51 or the Rules framed under the Motor Vehicles Act, 1988 is not made clear by the respondent authorities. The Circular is issued on the basis of the government letter. Might be, the government with a noble idea to regulate such money lending by persons who are not having Money Lending license and also to avoid exhorbitant charging of interest, has issued such a direction. The Circular is issued on the basis of the government letter. Might be, the government with a noble idea to regulate such money lending by persons who are not having Money Lending license and also to avoid exhorbitant charging of interest, has issued such a direction. The hire purchase agreement is a sort of sub-contract as is held by the Apex Court and it is an executory contract. It is also noticed that the difference in the cash and hire purchase price is not interest to rather, it is a privilege being allowed to discharge the purchase price of goods by installments. In that view of the matter, when the hire purchase agreement is necessarily entered with a private financier or with a public institution like nationalized/non-nationalized banks, ultimately, the agreement is there in the form of a hire purchase contract. Necessarily that hire purchase agreement forms the basis on which the authorities are required to make an entry in the RC Books which is the mandate. But the restriction imposed by way of a Circular to make entries, if the registration of vehicles is required to be done in the name of the financier, only on producing authentic documents like Money Lenders License or the rate of interest charged, may not come within the purview of S.51(1) of the Act. However, under the Money Lenders Act if the license is made compulsory for money lending, for violation of the same, penal consequences could be invoked under the Act on coming to know of the illegal money lending and, it is open to the concerned Department under the Act to have recourse to law. Since already this Court has held that such imposing of conditions by way of a Circular, is extraneous to the Motor Vehicles Act, 1988 thereby violating the provisions provided under S.51 of the Motor Vehicles Act. The very idea behind the Circular though would be noble, it cannot be held as a regulatory measure by the RTO authorities. In the circumstances, the Circular and its implications would be implemented as per the provisions of the Money Lenders Act and not under the Motor Vehicles Act, 1988 or by the authorities under the Motor Vehicles Act. Accordingly, the writ petitions are allowed. The Circular dated 6.9.2010 issued by the Transport Commissioner is quashed. In the circumstances, the Circular and its implications would be implemented as per the provisions of the Money Lenders Act and not under the Motor Vehicles Act, 1988 or by the authorities under the Motor Vehicles Act. Accordingly, the writ petitions are allowed. The Circular dated 6.9.2010 issued by the Transport Commissioner is quashed. However, it is for the Government to take appropriate action in accordance with law either under the Money Lenders act or any other Act under the Statute which would regulate the money lenders and also the charging of excess interest.