Orissa High Court
Tata Motors Finance Ltd vs State Transport Authority Odisha And ... on 17 August, 2017
Equivalent citations: AIR 2018 ORISSA 20, (2017) 2 ORISSA LR 776 (2018) 4 ACC 115, (2018) 4 ACC 115
Author: B.R. Sarangi
Bench: B.R. Sarangi
HIGH COURT OF ORISSA : CUTTACK
W.P.(C). NO. 7544 OF 2017
In the matter of an application under Articles 226 and 227 of the
Constitution of India.
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AFR
Tata Motors Finance Ltd. .......... Petitioner
-Versus-
State Transport Authority,
Odisha and another ........... Opp. Parties
For petitioner : M/s. J. Pal, B.K. Mishra, L. Dash,
and N. Behera, Advocates.
For opp. parties : Mr. Bigyan Kumar Sharma,
Standing Counsel for Transport
Department.
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PRESENT
THE HON'BLE DR. JUSTICE B.R. SARANGI
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Date of hearing : 03.08.2017 : Date of Judgment: 17.08.2017
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DR. B.R. SARANGI, J. The petitioner Tata Motors Finance Limited, a
company incorporated under the Companies Act, 1956, is involved
in the business of financing and refinancing of the vehicles and
equipments in the entire India, having its registered office at 10th
Floor, 106 A & B Makar Chamber III, Jamanlal Bajaj Marg,
2
Nariman Point, Mumbai- 400021. It has its Branch Office at 1st
Floor, Kashari Talkies Complex-98, Kharvel Nagar, Bhubaneswar,
District-Khurda. By means of this writ petition, the petitioner-
company has sought for direction to opposite party no.2 to accept
the application for registration of new vehicles financed by it,
register the vehicles and, while doing so, enter hypothecation
endorsement as per Rule-60 of the Central Motor Vehicles Rules,
1989 (in short "Rules, 1989") and cancel/terminate such
endorsement in the registration certificate as per Rule 61 of the
Rules, 1989.
2. The factual matrix of the case, in hand, is that in
course of business, the petitioner-company has financed for
purchasing of new vehicles to different customers and entered into
hypothecation agreement for such financing and to safeguard its
interest. Special provisions, with regard to hypothecation of the
vehicles subject to hire purchase agreement etc., have been
provided under Section 51 of the Motor Vehicles Act, 1988 (in
short "Act, 1988") read with Rules 60 and 61 of the Rules, 1989,
but the opposite parties are not carrying out their duties, as
assigned in the statute, hence this application.
3
3. Mr. J. Pal, learned counsel for the petitioner
states that when statute prescribes under Section 51 of the Act,
1988 to make endorsement of hypothecation in the certificate of
registration (R.C. Book) and also on satisfaction of the loan
terminate the said hypothecation, the same is not being carried
out by the opposite parties. Due to non-discharging of duties
assigned to the authorities concerned, the petitioner has
approached this Court by filing the present writ petition. To
substantiate his contention he has relied upon the judgment of
this Court in Subash Chandra Nayak v. Union of India, 2016
(I) OLR 922.
4. Mr. B.K. Shamra, learned Standing Counsel for
Transport Department states that the petitioner, being a dealer
within the meaning of the definition under Section 2(8) of the Act,
1988, is required to have trade certificate which is valid for a
period of one year, but after expiry of trade certificate, no
permission is accorded to enter or cancel the hypothecation as it
has not carried out the renewal of such trade certificate. As such,
the action of the authorities in refusing to enter and cancel the
hypothecation in the certificate of registration is justified.
4
5. Having heard learned counsel for the parties and
after perusing the records, since pleadings between the parties
have been exchanged, with the consent of the learned counsel for
the parties, this writ petition is being disposed of finally at the
stage of admission.
6. For just and proper adjudication of the case, the
relevant provisions, which are required to be considered for this
case, are reproduced below:-
"Section 2(8) of the Motor Vehicles Act, 1988
"dealer" includes a person who is engaged-
[(a) ***]
(b) in building bodies for attachment to chassis; or
(c) in the repair of motor vehicles; or
(d) in the business or hypothecation, leasing or hire
purchase of motor vehicles.
Section 39 of the Motor Vehicles Act, 1988
Necessity for registration- No person shall drive any
motor vehicle and no owner of a motor vehicle shall cause
or permit the vehicle to be driven in any public place or in
any other place unless the vehicle is registered in
accordance with this Chapter and the certificate of
registration of the vehicle has not been suspended or
cancelled and the vehicle carries a registration mark
displayed in the prescribed manner:
Provided that nothing in this section shall apply to a motor
vehicle in possession of a dealer subject to such conditions
as may be prescribed by the Central Government.
Section 51 of the Motor Vehicles Act, 1988
5
Special provisions regarding motor vehicle subject to
hire-purchase agreement, etc.- (1) Where an application
for registration of a motor vehicle which is held under a
hire-purchase, lease or hypothecation agreement (hereafter
in this section referred to as the said agreement) is made,
the registering authority shall make an entry in the
certificate of registration regarding the existence of the
said agreement.
(2) Where the ownership of any motor vehicle registered
under this Chapter is transferred and the transferee enters
into the said agreement with any person, the last
registering authority shall, on receipt of an application in
such form as the Central Government may prescribe from
the parties to the said agreement, make an entry as to the
existence of the said agreement in the certificate of
registration and an intimation in this regard shall be sent
to the original registering authority if the last registering
authority is not the original registering authority.
(3) Any entry made under sub - section (1) or sub - section
(2), may be cancelled by the last registering authority on
proof of the termination of the said agreement by the
parties concerned on an application being made in such
form as the Central Government may prescribe and an
intimation in this behalf shall be sent to 68 the original
registering authority if the last registering authority is not
the original registering authority.
Section 191 of the Motor Vehicles Act, 1988
Sale of vehicle in or alteration of vehicle to condition
contravening this Act. - Whoever being an importer of or
dealer in motor vehicles, sells or delivers or offers to sell or
deliver a motor vehicle or trailer in such condition that the
use thereof in a public place would be in contravention of
Chapter VII or any rule made thereunder or alters the
motor vehicle or trailer so as to render its condition such
that its use in public place would be in contravention of
Chapter VII or any rule made thereunder shall be
punishable with fine which may extend to five hundred
rupees :
Provided that no person shall be convicted under this
section if he proves that he had reasonable cause to
believe that the vehicle would not be used in a public place
until it had been put into a condition in which it might
lawfully be so used.
6
Section 192 of the Motor Vehicles Act, 1988
Using vehicle without registration. - (1) Whoever
drives a motor vehicle or causes or allows a motor vehicle
to be used in contravention of the provisions of section 39
shall be punishable for the first offence with a fine which
may extend to five thousand rupees but shall not be less
than two thousand rupees for a second or subsequent
offence with imprisonment which may extend to one year
or with fine which may extend to ten thousand rupees but
shall not be less than five thousand rupees or with both :
Provided that the Court may, for reasons to be
recorded, impose a lesser punishment.
(2) Nothing in this section shall apply to the use of a
motor vehicle in an emergency for the conveyance of
persons suffering from sickness or injuries of for the
Transport of food or materials to relieve distress or of
medical supplies for a like purpose.
Provided that the person using the vehicle reports
about the same to the Regional Transport Authority within
seven days from the date of such use.
(3) The Court to which an appeal lies from any conviction
in respect of an offence of the nature specified in Sub-
section (1), may set aside or vary any order made by the
Court below, notwithstanding that no appeal lies against
the conviction in connection with which such order was
made.
Section 2 (g) of the Central Motor Vehicle Rules, 1989
"Trade certificate" means a certificate issued by the
registering authority under rule 35.
Rule 34 of the Central Motor Vehicle Rules, 1989
Trade certificate.--(1) An application for the grant or
renewal of a trade certificate shall be made in Form 16
and shall be accompanied by the appropriate fee as
specified in rule 81.
(2) Separate application shall be made for each of the
following classes of vehicles,
namely:--
(a) motor cycle;
7
(b) invalid carriage;
(c) light motor vehicle;
(d) medium passenger motor vehicle;
(e) medium goods vehicle;
(f) heavy passenger motor vehicle;
(g) heavy goods vehicle;
(h) E-rickshaw;
(i) E-cart;
(j) any other motor vehicle of a specified description.
Rule 35 of the Central Motor Vehicle Rules, 1989
Grant or renewal of trade certificate.--(1) 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 and
requires the certificates specified in the application, issue
to the applicant one or more certificates, as the case may
be, in Form 17 71[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, for example:-
AB--Represent State Code.
12--Registration District Code.
TCI--Trade certificate number for the vehicle.
(2) 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.
Rule 37 of the Central Motor Vehicle Rules, 1989
Period of validity.--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 39 of the Central Motor Vehicle Rules, 1989
Use of trade registration mark and number.--(1) A
trade registration mark and number shall not be used
upon more than one vehicle at a tune or upon any vehicle
other than a vehicle bona fide in the possession of the
dealer in the course of his business or on any type of
8
vehicle other than the one for which the trade certificate is
issued.
(2) The trade certificate shall be carried on a motor vehicle
in a weatherproof circular folder and the trade registration
mark shall be exhibited in a conspicuous place in the
vehicle.
Rule 41 of the Central Motor Vehicle Rules, 1989
Purposes for which motor vehicle with trade
certificate may be used.-- 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 person 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
if) 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.
Rule 60 of the Central Motor Vehicle Rules, 1989
Endorsement of hire-purchase agreements, etc.--An
application for making an entry of hire-purchase, lease or
hypothecation agreement in the certificate of registration of
a motor vehicle required under sub-section (2) of section 51
shall be made in Form 34 duly signed by the registered
owner of the vehicle and the financier and shall be
accompanied by the certificate of registration and the
appropriate fee as specified in rule 81.
9
Rule 61 of the Central Motor Vehicle Rules, 1989
Termination of hire-purchase agreements, etc.--(1)
An application for making an entry of termination of
agreement of hire purchase, lease or hypothecation
referred to in sub-section (3) of section 51 shall be made in
Form 35 duly signed by the registered owner of the vehicle
and the financier, and shall be accompanied by the
certificate of registration and the appropriate fee as
specified in rule 81.
(2) The application for the issue of a fresh certificate of
registration under sub-section (5) of section 51 shall be
made in Form 36 and shall be accompanied by a fee as
specified in rule 81.
(3) Where the registered owner has refused to deliver the
certificate of registration to the financier or has absconded
then the registering authority shall issue a notice to the
registered owner of the vehicle in Form 37."
7. The petitioner, being a financer within the meaning of
Section 2(8) of the Motor Vehicles Act, 1988, is engaged in the
business of hypothecation, leasing or hire-purchase of motor
vehicles. In view of the provisions contained under Section 39 of
the Motor Vehicles Act, 1988, no person shall drive any motor
vehicle and no owner of a motor vehicle shall cause or permit the
vehicle to be driven in any public place or in any other place
unless the vehicle is registered and the certificate of registration of
the vehicle has not been suspended or cancelled and the vehicle
carries a registration mark displayed in the prescribed manner.
Thereby, restriction has been imposed with regard to plying of a
vehicle without any registration number by the person or even
10
owner of a vehicle in a public place. But, proviso to Section 39
authorized a dealer, who is in possession of the vehicle, to ply a
vehicle without registration subject to conditions as prescribed by
the Central Government. In other words, the restriction imposed
to ply a vehicle by a person or owner is not applicable to a dealer
who possessed a motor vehicle subject to condition prescribed by
the Central Government without any registration. The motor
vehicle cannot be driven or caused to be driven or caused to be
used in any public place or any other place for any of the parties
indicated therein without requisite registration. Section 40 thereof
deals with registration where to be made, where as Section 41
deals with registration how to be made. Section 42 deals with
special provision for registration of motor vehicles of diplomatic
officers, whereas Section 43 deals with temporary registration and
Section 44 deals with production of vehicle at the time of
registration. Section 45 deals with refusal of registration or
renewal of the certificate of registration. Section 191 deals with
sale of vehicle in or alteration of vehicle to condition contravening
the Act. If any dealer contravenes Chapter-VII or any rule made
thereunder, shall be punishable with fine which may extend to
hundred rupees. Section 192 deals with using vehicles without
registration, which clearly specifies that whosoever drives a motor
11
vehicle or causes or allows a motor vehicle to be used in
contravention of the provisions of Section 39 shall be punishable
as per the provisions mentioned therein.
8. Chapter-III of the Central Motor Vehicles Rules, 1989
deals with registration of motor vehicle. Under sub-heading "trade
certificate", Rule-33 puts a condition for exemption from
registration as per the proviso to Section 39, which provides that if
a motor vehicle in the possession of a dealer/ manufacturer shall
be exempted from the necessity of registration subject to the
condition that he obtains a trade certificate from the registering
authority having jurisdiction in the area as his place of business
in accordance with the provisions of the chapter. Rule-34 deals
with trade certificate, which specifically provides that application
for grant or renewal of a trade certificate, shall be made in Form-
16 appended to the rules. Clause-5 of Form-16 clearly states the
number of certificates required. The validity of the trade certificate
granted 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 as per the provisions under Rule-37.
Rule-39 clearly speaks about use of trade registration mark and
number shall not be used upon more than one vehicle at a time or
upon any vehicle other than a vehicle bona fide in the possession
12
of the dealer in course of his business or on any type of vehicle
other than the one for which the trade certificate is issued. Rule-
41 clearly provides 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 conditions to (a) to (h). The said conditions
are in consonance with the provisions contained in proviso to
Section 39 of the Motor Vehicles Act, 1988 read with Rule-33 of
the Rules, 1989. Except the condition stipulated in clause (a) to
(h) of Rule-41, the dealer cannot ply a vehicle in a public place
under the trade certificate issued in his favour by the registering
authority.
9. As per the provisions contained under Section 51 of
the Act, 1988, where an application for registration of a motor
vehicle which is held under a hire-purchase, lease or
hypothecation agreement is made, the registering authority shall
make an entry in the certificate of registration regarding the
existence of the said agreement. Similarly, if the ownership of any
motor vehicle registered, is transferred and the transferee enters
into the said agreement with any person, the last registering
authority shall, on receipt of an application in such form as the
Central Government may prescribe from the parties to the said
agreement, make an entry as to the existence of the said
13
agreement in the certificate of registration. Further any entry
made under sub-section (1) or sub-section (2) of Section 51 of the
Act, 1988, may be cancelled by the last registering authority on
proof of the termination of the said agreement by the parties
concerned on an application being made in such form as the
Central Government may prescribe. To give effect to such
provisions, Rule 60 clearly speaks an application for making an
entry of hire-purchase, lease or hypothecation agreement in the
certificate of registration of a motor vehicle required under sub-
section (2) of section 51 shall be made in Form 34 duly signed by
the registered owner of the vehicle and the financier and shall be
accompanied by the certificate of registration and the appropriate
fee as specified in Rule 81. Similarly, for termination of such
hypothecation agreement, Rule 61 prescribes the mode of making
application to the registering authority for cancellation of such
endorsement made in the registration certificate issued by the
authority concerned. On perusal of the provisions contained
under Section 51 of the Act, 1988 read with Rules 60 and 61 of
the Rules, 1989, it is seen that no where it has been prescribed
that unless the financer has valid trade certificates the
endorsement in the registration certificate and cancellation thereof
cannot be undertaken. Rather, it has been made clear that the
14
provisions contained under the Act, 1988 read with Rules, 1989
cast a duty on registering authority to make entry of
hypothecation in the registration certificate and, on satisfying the
loan, cancel such entry made in the registration certificate. Due to
non-entering of hypothecation endorsement by the registering
authority in the new registration certificates of the vehicles
financed by the petitioner-company, which is a statutory
obligation casts on the registering authority to discharge in view of
the provisions contained under Section 51 of the Act, 1988 read
with Rules 60 and 61 of the Rules, 1989, the vehicles purchased
by the respective purchasers on being financed by the petitioner-
company are compelled to ply on the road in contravention of the
provisions contained under the Act, 1988. Similarly, on repayment
of the loan amount, when an application is made by the
purchasers, if no endorsement is made by the registering
authority for cancellation of hypothecation endorsement entered
between the petitioner-company with the purchaser from the
registration certificate issued by the authority concerned, that will
amount to contravening the provisions contained in the Act, 1988
and Rules, 1989.
10. Mr. B.K. Sharma, learned Standing Counsel for
Transport Department contended that the petitioner being a
15
dealer is required to take trade certificate. The same having been
suspended, due to non-renewal thereof, the petitioner is
prohibited from doing the business. As such, the action of the
registering authority, in not entering hypothecation endorsement
and cancellation thereof in the certificate of registration, cannot be
said to be unjustified. As it appears from the provisions contained
for grant of trade certificate, there is no condition precedent for
the financers or dealers to have such trade certificate for
endorsement of hypothecation and cancellation thereof. Rather,
the trade certificate is issued to a dealer for the purpose as
specified under Rule 41 of the Rules, 1989, save and except sub-
rule (h) of Rule 41, where it is stated that for removing the vehicle
after it has been taken possession of by or on behalf of the
financer due to any default on the part of the other party under
the provisions of the agreement of hire-purchase, lease or
hypothecation. In view of such position, the financer though
comes under the definition of dealer and is required to take trade
certificate as per Rule 35 of the Rules, 1989, but the purpose of
obtaining the trade certificate is very limited, as has been
mentioned in Rule 41(h) of the Rules, 1989. There is no provision
under the Act, 1988 or the Rules, 1989, which says that a 'dealer'
is only required to have a trade certificate to do its business. The
16
financer also requires the trade certificate under Rule 35 of the
Rules, 1989 for the purpose of taking possession of the vehicle, as
per the provisions of agreement of hypothecation. This can be
illustrated from the fact that if a financer is seizing a transport
vehicle, which requires a permit to ply on road and when the said
vehicle is seized and taken to a place i.e. the stockyard of the
financer for keeping the vehicle and if the said alignment of road,
through which the vehicle will be removed to the stockyard, is not
permitted under the permit, then the "trade certificate" will come
to rescue of the financer, as Section 66 of the Act, 1988 stipulates
that no owner of a motor vehicle shall use or permit the use of
vehicle without permit on road.
11. Mr. B.K. Sharma, learned Standing Counsel for
Transport Department further urged that there are certain
outstanding against the vehicle financed by the petitioner-
company towards tax and penalty. If that be so, the same can be
recovered from the owner and not from the financer. Furthermore,
the said issue is altogether different from the issues under
consideration by this Court in the present writ petition. Non-
payment of tax and penalty by the owner cannot be a ground not
to endorse and cancel the hypothecation in the registration
certificate issued by the registering authority. Availability of valid
17
trade certificate and renewal thereof is not a sine qua non for
entering and terminating the hypothecation in the certificate of
registration issued by the registering authority and, as such, the
contention raised to the contrary cannot sustained in the eye of
law. The provisions contained under the Act, 1988 and the Rules,
1989 are absolutely clear that the registering authority has to
make an endorsement of hypothecation and termination thereof in
the certificate of registration. Save and except the provisions
contained under Section 51 of the Act, 1988 and the Rules 60 and
61 of the Rules, 1989, there is no other provisions made available
to the registering authority to refuse endorsement of
hypothecation and cancellation thereof in the certificate of
registration. For some plea or other, opposite party no.2 cannot
coerce the financer to go for a trade certificate, which is not the
condition precedent for endorsing and cancelling the
hypothecation in the registration certificate issued by the
registering authority.
12. It is apt to refer here the legal maxim "Expressio
Unius est exclusion alterius" i.e. if a statute provides for a thing
to be done in a particular manner, then it has to be done in that
manner and any other manner are barred. Similar question had
18
come up for consideration before this Court in Subash Chandra
Nayak (supra) and this Court in paragraph-8 observed as follows:
".............the statute prescribed a thing to be done in a
particular manner, the same has to adhered to in the
same manner or not at all. The origin of the Rule is
traceable to the decision in Taylor v. Tailor, (1875)
LR I Ch D 426, which was subsequently followed by
Lord Roche in Nazir Ahmad v. King Emperor, AIR
1936 PC 253(2). But the said principle has been well
recognized and holds the field till today in Babu
Verghese v. Bar Council of Kerala (1999) 3 SCC
422, and Zuari Cement Limited v. Regional
Director, Employees' State insurance
Corporation, Hyderabad and others, (2015) 7 SCC
690 and the said principles has been referred to by
this Court in Manguli Behera v. State of Odisha
and others (W.P.(C) No. 21999 of 2014 disposed of on
10.03.2016)"
In view of the above settled position of law, there is no doubt that if an action is required to be undertaken in a particular manner, then that has to be done in that manner or not at all. Therefore, applying the same to the present context, if the statute specifically provides the manner in which the hypothecation endorsement is to be entered into the certificate of registration and the termination thereof, when an application is made, as has been provided under the statute in Rules 60 and 61 of the Rules, 1989 in the prescribed forms, i.e., Forms-34 and 35 along with the fees, then the registering authority cannot have any option than to follow the law as prescribed under the Act, 1988 read with Rules, 1989. As such, the registering authority cannot and could not 19 have refused to make endorsement or terminate the hypothecation in the certificate of registration, because the financer has not renewed the trade certificate for doing its business in the State. The grant of trade certificate to a financer is only confined to Rule 41(h) of the Rules, 1989. Therefore, the financer cannot use trade certificate for any purpose other than specified under the Rule 41(h) of the Rules, 1989. Thus, the action of the registering authority in refusing to make endorsement of hypothecation and cancellation thereof in the certificate of registration, in the name of renewal of trade certificate, amounts to, not only arbitrary and unreasonable exercise of power, but also contrary to the provisions of law.
13. In view of the discussions made above, this Court is of the considered view that, as the power has been vested with the registering authority by the statute prescribing the manner of endorsement and termination of the hypothecation in the certificate of registration, the registering authority has to discharge its duty, without taking into consideration any ancillary or corollary reasons, in consonance with the provisions contained under Section 51 of the Act, 1988 read with Rules, 60 and 61 of the Rules, 1989. As such, the registering authority cannot refuse 20 endorsement of hypothecation and cancellation thereof in the certificate of registration on the grounds not permissible in law.
14. The writ petition is allowed accordingly. No order to cost.
Sd/-
(DR. B.R. SARANGI) JUDGE The High Court of Orissa, Cuttack The 17th August, 2017/Ajaya True Copy Sr. Steno