Research › Search › Judgment

Kerala High Court · body

2017 DIGILAW 1442 (KER)

Mark Motors v. State of Kerala, represented by its Secretary, Motor Vehicles Department

2017-11-24

SHAJI P.CHALY

body2017
JUDGMENT : 1. The captioned writ petitions are all materially connected in respect of cancellation of trade certificates issued to the petitioners under Rule 35 of the Central Motor Vehicles Rules, 1989 [for short, the Rules, 1989], apparently invoking the power conferred on the Regional Transport Officer (RTO) under Rule 44 of Rules, 1989. Therefore, I heard the writ petitions together and propose to deliver a common judgment. 2. The question raised in these writ petitions is that, there is no power vested with the Regional Transport Officer to cancel a trade certificate, otherwise than as provided under Rules 39 to 43 of Rules, 1989. The order passed by the RTO is an appeal able order under Rule 45 of Rules, 1989. Some of the writ petitioners have preferred appeals before the appellate authority. I propose to decide the question raised by the petitioners and then relegate the parties to the appellate authority, since various factual circumstances are involved in the subject issue. At the same time, I find that the RTO has passed the impugned orders after providing sufficient opportunity and hearing the respective parties. Facts discernible from W.P.(C) No.14168 of 2017 are recited for the purpose of disposal of the writ petitions. 3. Petitioner herein is an authorized dealer for 'HONDA' motorcycles and scooters, operating within the jurisdiction of the RTO, Thiruvananthapuram. On 25.03.2017, petitioner was served with a show cause notice by the 1st respondent requiring to show cause why action shall not be taken against him for selling vehicles with incorrect entries regarding the month/year of manufacture, evident from Ext.P1. According to the petitioner, Ext.P1 did not specify the source of power invoked nor the nature of the action proposed. On the other hand, it merely referred to a complaint received from one Shibukumar and a letter of the 2nd respondent issued in that regard. 4. On 10.04.2017, petitioner submitted a reply to Ext.P1 notice contending that the error, if any, could have been occasioned on account of the online temporary registration process, which was implemented throughout the State vide Circular No.12 of 2016 issued by the 2nd respondent, and the confusion that prevailed on account of the introduction of the novel process. It was contended that, mistake, if any, in uploading, the vehicle and customer data, was directly attributable to accidental slips and human error. It was contended that, mistake, if any, in uploading, the vehicle and customer data, was directly attributable to accidental slips and human error. A true copy of the reply is produced and marked as Ext.P2. 5. On 15.04.2017, the authorized representative of the petitioner was called for a personal hearing. It was further pointed out that, as many as 9734, 9673 and 10,667 vehicles were sold during the years, 2014, 2015 and 2016 respectively. In other words, on an average, not fewer than 34 vehicles are registered every working day, and therefore, chances of clerical errors are more real than imagined. However, after hearing the parties, the RTO has passed an order, suspending the trade certificates issued to the petitioner for a period of three months from 17.04.2017, on the ground that as many as 69 vehicles were registered with incorrect particulars regarding the month and year of manufacture, evident from Ext.P3 order. 6. It is submitted by the petitioner that, as per subsection (5) of Sec.55 of the Motor Vehicles Act, 1988 [hereinafter called 'the Act, 1988'], such a situation, if proved to be true, warrants cancellation of trade certificate or registration of the vehicle. On the other hand, a trade certificate can be suspended or cancelled under Rule 44 of the Rules, 1989, only if the dealer has not complied with the provisions of Rules 39 to 43 of Rules, 1989. Rules 39 to 43 do not envisage registration of motor vehicles with incorrect particulars, which is a situation expressly dealt with by Sec.55 (5) of the Act, 1988. None of the above rules envisage a post registration situation warranting suspension or cancellation of a trade certificate. These are the background facts projected by the petitioner to secure the relief’s sought for in the writ petition, which are as follows: “(i) To issue a writ in the nature of certiorari or such other writ, order or direction calling for the records leading to Ext.P3 and quash the same; and (ii) To issue such other appropriate writ, order or direction as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.” 7. A counter affidavit is filed by the 1st respondent refuting the allegations and claims and demands raised by the petitioner. A counter affidavit is filed by the 1st respondent refuting the allegations and claims and demands raised by the petitioner. Among other contentions, it is stated that, the action of cancellation of trade certificate was necessitated on the basis of complaints received from the public and the news appeared in both print and electronic media regarding the illegal trade practices adopted by the petitioner in dealing with Honda two wheelers and selling the vehicles to the public after correcting the actual month and year of manufacture of the vehicles in the bill and other documents relating to the vehicles. The 2nd respondent, the Transport Commissioner, has issued a letter dated 23.03.2017, and directed the 1st respondent to conduct proper enquiry regarding the issue and take necessary action. Ext.P3 order was issued after conducting necessary enquiry after issuing notice to the petitioner, and evaluating the explanation submitted by the petitioner and also after hearing him. 8. It is further submitted that, the unsold vehicles which were manufactured years back were assigned recent date of manufacture and thus the petitioner has cheated both the purchaser of the vehicle and Motor Vehicles Department. Owners of the vehicles have failed to find out the malpractices adopted by the petitioner and they got the vehicle registered on the strength of forged documents relating to the date of manufacture of the vehicle. This action of the petitioner amounts to criminal offence and also he is liable to be proceeded under the Motor Vehicles Act and Rules. On account of the said act on the part of the dealer, purchaser of the vehicle got the vehicle registered on the strength of forged documents issued by the petitioner. After noticing the illegal action, 1st respondent has taken action against the petitioner after observing the legal formalities. It is also submitted that, the RTO is vested with ample powers to cancel the trade certificate. That apart, it is contended that, even though the petitioner has a case that if any malpractice is done, the remedy available to the 1st respondent is to cancel the registration by resorting to sub-section (5) of Sec.55 of Act, 1988, cannot be sustained for the reason that, the registered dealers are innocent in the matter, and therefore, if such a course of action is adopted, innocent owners of the vehicles will be put to difficulties. 9. 9. It is also contended that, by invoking sub-section (5) of Sec.55 of Act, 1988, no manner of action can be taken against the dealers and the said provision only deals with cancellation of the registration. Other contentions are also raised with respect to the power conferred on the RTO to cancel the trade certificate. That apart, it is contended that, every motor vehicle dealer should have clear data regarding the model and year of manufacture of the vehicle in their stock and there is absolutely no chances for mentioning the manufacturing year as the current year. In all the cases, it is seen that the year of manufacture is corrected with succeeding years and not even, in a single case, entries are made with respect to preceding years, which indicate the malafide intention of the petitioner to cheat the purchaser and departmental authorities to get unlawful enrichment. It is also stated that, there are chances of clerical error while entering chassis number and engine number, but no such errors have crept in these cases. 10. It is also submitted that, action has been taken against the petitioner after conducting proper enquiry in the matter. It is further submitted that, the 2nd respondent, being the Head of the Motor Vehicles Department, is competent to issue directions/circulars wherever necessary. Therefore, according to the 1st respondent, there are no circumstances made out by the petitioner justifying interference in the order of suspension passed by the RTO. 11. A reply affidavit is filed by the petitioner, refuting the allegations and reiterating the stand adopted in the writ petition. Various documents are also produced along with the reply affidavit, in order to demonstrate the manner in which the invoices are drawn with the intention of establishing that the month and year of manufacture was entered into the invoices by mistake, and the same is only a human error. 12. In all the other writ petitions, the subject issue is in respect of creating invoices with incorrect entry with respect to the month and year of manufacture. Similar are the contentions raised by the petitioners. All the petitioners have a contention that, since it was a new introduction, there is every possibility of mistake being crept in the invoices and the petitioners did not have any wilful or malafide intention to cheat the customers. Similar are the contentions raised by the petitioners. All the petitioners have a contention that, since it was a new introduction, there is every possibility of mistake being crept in the invoices and the petitioners did not have any wilful or malafide intention to cheat the customers. It is also commonly submitted that, the RTO is not vested with any power to cancel the trade certificate otherwise than as provided under Rules 39 to 43 of the Rules, 1989. In most of the cases, various invoices are drawn with incorrect month and year of manufacture. It is also an admitted fact that, the entries made in the invoices are of current years and not the preceding years. In one of the cases, there is only one instance, wherein the wrong entry is made. 13. I have heard learned counsel for the petitioners and the learned Senior Government Pleader. Perused the documents on record and the pleadings put forth by the respective parties. 14. The primary question raised in these writ petitions, as I have pointed out earlier, is the lack of power vested with the RTO of the concerned jurisdiction to cancel a trade certificate. In order to answer the said question, reference to certain provisions of the Rules, 1989 are necessitated. Rule 35 deals with grant or renewal of trade certificate and it stipulates that, on receipt of an application for the grant or renewal of a trade certificate in respect of a vehicle, the registering authority may, if satisfied that the applicant is a bona fide [dealer or manufacturer of automobile or automobiles ancillary or a test agency specified in Rule 126] and requires the certificates specified in the application, issue to the applicant one or more certificates, as the case may be, in Form 17 [within thirty days from the date of receipt of such an application] and shall assign in respect of each certificate a trade registration mark consisting of the registration mark referred to in the notification made under sub-section (6) of Section 41 and followed by two letters and a number containing not more than three digits for each vehicle. Subsection (2) of Sec.35 stipulates that, no application for trade certificate shall be refused by the registering authority unless the applicant is given an opportunity of being heard and reasons for such refusal are given in writing. 15. Subsection (2) of Sec.35 stipulates that, no application for trade certificate shall be refused by the registering authority unless the applicant is given an opportunity of being heard and reasons for such refusal are given in writing. 15. As per Rule 37, a trade certificate granted or renewed under Rule 35 shall be in force for a period of twelve months from the date of issue or renewal thereof, and shall be effective throughout India. Rule 41 deals with purposes for which motor vehicle with trade certificate may be used, which stipulates that 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) For test, by or on behalf of the holder of a trade certificate during the course of, or after completion of, construction or repair; or (b) For proceeding to or returning from a weigh bridge for or after weighment, or to and from any place for its registration; or (c) For a reasonable trial or demonstration by or for the benefit of a prospective purchaser and for proceeding to or returning from the place where such persons intends to keep it; or (d) For proceeding to or returning from the premises of the dealer or of the purchaser or of any other dealer for the purpose of delivery or (e) For proceeding to or returning from a workshop with the objective of fitting a body to the vehicle or painting or for repairs; or (f) For proceeding to and returning from airport, railway station, wharf for or after being transported; or (g) For proceeding to or returning from an exhibition of motor vehicles or any place at which the vehicle is to be or has been offered for sale; or (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.” 16. Rule 42 stipulates that no holder of a trade certificate shall deliver a motor vehicle to a purchaser without registration, whether temporary or permanent. Rule 42 stipulates that no holder of a trade certificate shall deliver a motor vehicle to a purchaser without registration, whether temporary or permanent. Rule 44 deals with suspension or cancellation of trade certificate, and if the registering authority has reason to believe that the holder of any trade certificate has not complied with the provisions of Rules 39 to 43, it may, after giving the holder an opportunity of being heard, suspend or cancel the trade certificate held by him. These are the important provisions to consider the question raised by the petitioners. 17. According to the petitioners, none of the issues contained under Rules 39 to 43 is available for the RTO to cancel the trade certificate. True, the issue involved in these writ petitions is in respect of the wrong entry made in the invoices of the manufacturing month and year. On a prima facie appreciation of Rules 39 to 43 of Rules, 1989, it may not appear directly that the RTO has power vested to cancel the trade certificate on the ground of wrong entry in respect of the month and year of manufacture made in the invoices. However, Rule 42 deals with delivery of vehicle subject to registration. In my considered opinion, delivery of a vehicle can be made with correct entries including engine number, chassis number, year and month of manufacture and other relevant aspects liable to be incorporated in an invoice or any other document issued by the dealer to a purchaser of the vehicle and relied upon by the Motor Vehicles authority for registration of the vehicle. Therefore, I am of the opinion that, the issue raised by the petitioners that there is no violation of Rules 39 to 43 cannot be sustained, there being violation of Rule 42 of Rules, 1989. 18. Be that as it may, the grant or renewal of trade certificate under Rule 35 is discussed above. It is important to note that, a very prominent expression is used in Rule 35 viz., “bona fide”, wherein it is stipulated that the registering authority may, if satisfied that the applicant is a 'bona fide' dealer or manufacturer of automobile or automobiles ancillary or a test agency specified in Rule 126, issue to the applicant one or more certificates, as the case may be, in Form 17. Therefore, it is evident that, a discretion is available to the RTO, who is the registering authority of motor vehicles to decline a trade certificate sought for by an applicant, if he is not a bona fide dealer, after providing an opportunity of hearing as stipulated under sub-rule (2) of Rule 35. 19. In my considered opinion, whenever the 'bona fide' of the dealer is suspected and proved to the satisfaction of the registering authority, then the registering authority who has issued/renewed a trade certificate is vested with ample powers to cancel the same, which thus also means, a dealer who is issued with a trade certificate having identified and understood his 'bona fides', is liable to transact all its actions bonafidely throughout. As per Black's Law Dictionary (Ninth Edition), the word 'bona fides' mean; good faith, the standard of conduct expected of a reasonable person, acting without fraudulent intent or malice etc. In my considered opinion, Sec.16 of the General Clauses Act, 1897 (Central Act) will come into play, in this particular fact situation, which read thus: “16. Power to appoint to include power to suspend or dismiss.--Where, by any (Central Act) or Regulation, a power to make any appointment is conferred, then, unless a different intention appears, the authority having for the time being, power to make the appointment shall also have power to suspend or dismiss any person appointed, whether by itself or any other authority, in exercise of that power.” 20. Sec.16 is self-explanatory, that the authority who makes appointment is also vested with power to suspend or dismiss such appointment. That apart, Sec.21 of the General Clauses Act is also relevant, which read thus: “21. Power to issue, to include power to add to, amend, vary or rescind notifications, orders, rules or bye-laws.-- Where, by any Central Act, or Regulations a power to issue notifications, orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued.” 21. On a reading of the afore-quoted two provisions makes it clear that, there is ample power vested with the RTO who is the authority vested with powers to issue the trade certificate, to cancel the same, if bona fides is suspected and established before the said authority. On a reading of the afore-quoted two provisions makes it clear that, there is ample power vested with the RTO who is the authority vested with powers to issue the trade certificate, to cancel the same, if bona fides is suspected and established before the said authority. 22. Therefore, reckoning the factual circumstances and the legal situation discussed above, I am of the considered opinion that, there is every power vested with the RTO, the registering authority, to suspend the trade certificate. Therefore, the contention advanced by the learned counsel for the petitioners in the writ petitions that the registering authority is not vested with powers to suspend the trade certificate otherwise than as provided under Rules 39 to 43 of Rules, 1989 also cannot be sustained under law. Therefore, I hold that the suspension of the trade certificates of the petitioners by the registering authority is in accordance with law. 23. However, I find that various issues are pointed out by the petitioners, based on factual circumstances, and the possibility of human error while preparing the invoices, especially due to the fact that the procedure adopted is a newly constituted one for the purpose of temporary registration of the vehicles. I also find that the orders of suspension were passed after issuing show cause notices, receiving objections, and hearing the petitioners. Therefore, there are no circumstances made out by the petitioners justifying interference under Article 226 of the Constitution of India, especially due to the fact that, there is a remedy of appeal provided under Rule 45 of Rules, 1989, to the head of the Motor Vehicles Department established under Section 213, i.e. the Transport Commissioner. I am informed that, in some of the cases, appeals have been preferred, which are pending consideration. 24. Therefore, those petitioners who have not preferred appeal are free and at liberty to submit their appeals within two weeks from the date of receipt of a copy of this judgment, which shall be accepted as if it is an appeal preferred within the time. All the appeals shall be disposed of within two months from the date of receipt of a copy of this judgment, after providing sufficient opportunity of hearing to the petitioners and any other interested persons. 25. All the appeals shall be disposed of within two months from the date of receipt of a copy of this judgment, after providing sufficient opportunity of hearing to the petitioners and any other interested persons. 25. It is also made clear that the observations made above shall not be construed as findings on merits of the factual aspects and the interest of the parties. The factual circumstances pointed out in respect of innocence, human error, etc. etc. are left open to be considered by the appellate authority. While these writ petitions were admitted to the files of this Court, interim orders were passed staying the operation of impugned orders, and they are still in force. Therefore, till such time the appeals are decided, the orders so passed will be in force. The writ petitions are disposed of accordingly.