Kerala High Court
P.Vimalchand Bokadia vs Regional Transport Officer, Palakkad on 29 July, 2025
2025:KER:56132
W.P.(C).Nos.26015 & 26909 of 2015
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
TUESDAY, THE 29TH DAY OF JULY 2025 / 7TH SRAVANA, 1947
WP(C) NO. 26015 OF 2015
PETITIONERS:
1 P.VIMALCHAND BOKADIA
PROPRIETOR, M/S.MAHAVEER INVESTMENT,
NO.6, CHANDRAPPA MUDALI STREET, SOWCARPET,
CHENNAI - 600 079.
2 ABHISHEK NAHAR
NO.54, ERULLAPAN STREET, SOWCARPET,
CHENNAI - 600 079.
3 NORATMAL SISODIA
NO.31, CHANDRAPPA MUDALI STREET,
SOWCARPET, CHENNAI-600 079.
4 DHANRAJ RATHI
NO.13, MANGAPPAN STREET, SOWCARPET,
CHENNAI-600 079.
BY ADV SMT.MEERA V.MENON
RESPONDENTS:
1 REGIONAL TRANSPORT OFFICER,
PALAKKAD - 678 001.
2 COMMISSIONER OF TRANSPORT,
TRANSPORT COMMISSIONERATE,
THIRUVANANTHAPURAM -695 001.
BY SR.GOVERNMENT PLEADER - ADV.RASMI.K.M.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 29.07.2025, ALONG WITH WP(C).26909/2015,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
2025:KER:56132
W.P.(C).Nos.26015 & 26909 of 2015
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
TUESDAY, THE 29TH DAY OF JULY 2025 / 7TH SRAVANA, 1947
WP(C) NO. 26909 OF 2015
PETITIONERS:
1 M/S MADRAS HIRE PURCHASE ASSOCIATION
HAVING OFFICE AT HEERACHAND GOUTHAMCHAND NAHAR,
CHAMBER,GOLDEN COMPLEX,128,(NEW NO.220),
N.S.C.BOSE ROAD, 4TH FLOOR, CHENNAI-600 079,
REPRESENTED BY ITS SECRETARY, MR.VISHAL LODHA,
AGED 29, S/0 LATE PREM PRAKASH LODHA.
2 RAJESH SINGHVI
AGED 46 YEARS
S/O.BADALCHAND SINGHVI, PROPRIETOR,
SREERAJ FINANCE, 43, AUDIAPPA NAICKEN STREET,
SOWCAR PET,CHENNAI-79.
BY ADV SHRI.VARGHESE C.KURIAKOSE
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY SECRETARY,
DEPARTMENT OF MOTOR VEHICLES,
SECRETARIAT,THIRUVANANTHAPURAM-695001.
2 THE TRANSPORT COMMISSIONER
TRANSPORT COMMISSIONERATE,
STATE OF KERALA,
TRANS TOWERS,THIRUVANANTHAPURAM-695001.
OTHER PRESENT:
ADV RASHMI K M, SR.GP
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 29.07.2025, ALONG WITH WP(C).26015/2015, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
2025:KER:56132
W.P.(C).Nos.26015 & 26909 of 2015
3
[CR]
S.MANU, J.
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W.P.(C).Nos.26015 & 26909 of 2015
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Dated this the 29th day of July, 2025
JUDGMENT
First petitioner in W.P.(C)No.26909/2015 is an association of individuals engaged in financing of motor vehicles. It is a society registered under the Tamil Nadu Societies Registration Act, 1975. Second petitioner is a member of the 1 st petitioner and he is doing hire-purchase finance business. Petitioners in W.P.(C)No.26015/2015 are also persons engaged in financing for motor vehicles.
2. Since the reliefs sought in these writ petitions are virtually the same, these cases were heard together.
3. Petitioners are aggrieved by Circular Nos.13/2011 dated 13.06.2011, 14/2011 dated 28.06.2011 and 19/2015 dated 22.07.2015 issued by the Transport Commissionerate, Thiruvananthapuram. In the first circular issued on 13.06.2011 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 4 the Transport Commissioner stated that the actions to be taken by the Motor Vehicles Department when motor vehicles are being registered and hire-purchase agreements are terminated are explained in Section 51 of the Motor Vehicles Act, 1988 and Rules 60 and 61 of the Motor Vehicle Rules, 1989. Endorsements are being made under Section 51 without examining the credentials of the financing companies. Such practices were causing difficulties to the vehicle owners and also to the Department. The Department sought advice of the Reserve Bank of India as to who all can be considered as financiers. The Reserve Bank opined that financial institutions as defined under Section 45-I(c) of the RBI Act, 1934 (including Hire-purchase Companies registered under the Companies Act, 1956) have to apply for registration under Section 45-IA of the RBI Act to carry on business as non-banking financial company. Therefore, the Transport Commissioner directed that at the time of making endorsements with respect to hire-purchase agreements and hypothecation agreements it must be insisted 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 5 that certificate of registration provided under the Reserve Bank of India Act shall be produced. It was clarified that these directions would not apply in the case of institutions already functioning in the banking sector. Further, it was directed that the instructions shall be followed with effect from 01.07.2011.
4. By Circular No.14/2011 dated 28.06.2011, it was clarified that Circular No.13/2011 was modified to the effect that in the absence of certificate of registration under the RBI Act, production of license obtained under the Kerala Money Lenders Act, 1958 would suffice. Circular No. 19/2015 was issued on 22.07.2015, directing that endorsements regarding hypothecation, in addition to the financing institutions mentioned in the previous circulars, can also be made for Co- operative Banks under the control of the Reserve Bank of India, Co-operative Societies under the Co-operative Societies Act, and Hire-purchase Institutions registered under the Hire-purchase Act of 1972.
2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 6
5. Petitioners contend that they are not providing loans or receiving any deposits. They are involved only in hire- purchase transactions. Hence, they contend that they are not money lenders as contemplated under Section 2(7) of the Kerala Money Lenders Act. Under the law governing hire- purchase, the owner of the motor vehicle will be the hire- purchase finance company/institution, and the registered owner will be only a hirer under the hire-purchase finance company/institution. This ownership will be specifically incorporated in the agreement of the hire-purchase though the vehicle will be used by the hirer. When registration is done, an endorsement will be made in the registration certificate regarding the nature of the claim of the financier as provided under Section 51(1) of the Motor Vehicles Act, 1988. Under the said provision, making an entry in the certificate of registration is required when the vehicle is held under a hire-purchase, lease or hypothecation agreement. Petitioners contend that the circulars issued by the Transport Commissioner are improper 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 7 and illegal as the instructions issued are not in tune with the provisions of Section 51 of the Motor Vehicles Act. It is further contended that the reliance placed by the Transport Commissioner on the advice received from the Reserve Bank was also inappropriate. Petitioners also contend that even if the advice received from the Reserve Bank was legally correct that was not relevant for the purpose of Section 51 of the Motor Vehicles Act.
6. Counter affidavit was filed on behalf of the 2 nd respondent. It was stated in the counter affidavit that the Motor Vehicles Department received large number of complaints regarding closure of establishments conducting hire-purchase and hypothecation business. Registered owners were unable to revoke the endorsements from registration certificates even after paying the entire agreed amount to the financier. Large number of applications were pending before different offices of the Department on account of letters issued to the firms for confirmation of payment of agreed amounts being returned 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 8 unserved due to closure of offices of the firms. Several firms involved in the business were avoiding registration under the relevant laws to evade from the clutches of law. In the judgment of this Court in W.P.(C)No.17402/2011 it was held that any activity of financing carried on within the State would be illegal in so far as no license had been obtained under the Money Lenders Act, 1958 and Reserve Bank of India Act, 1934. The Circulars are not in conflict with the provisions of Motor Vehicles Act. They were issued to reduce the sufferings of the vehicle owners and general public. Hence, the 2nd respondent contended that the Circulars are not liable to be set aside by this Court.
7. Heard Sri.Varghese C. Kuriakose, learned counsel appearing for the petitioners in W.P.(C)No.26909/2015, learned counsel for the petitioners in W.P.(C)No.26015/2015 and Smt.Reshmi.K.M., learned Senior Government Pleader appearing for the respondents.
2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 9
8. Sri.Varghese C.Kuriakose relied on a judgment of the Karnataka High Court in Karnataka Hire Purchase Association and etc. v. Commissioner for Transport in Karnataka, Bangalore and another [AIR 2011 Kar.101] rendered on 07.02.2011 in a batch of writ petitions challenging a similar Circular issued by Transport Commissioner of Karnataka. Court held that the Circular was in conflict with Section 51 of the Motor Vehicles Act and it was quashed. He contended that Section 51 of the Act does not contain any stipulation that registration of the financier shall be verified before making endorsements. The Transport Commissioner was therefore incompetent to restrict the scope of the provision by issuing a circular. He contended that even if it is conceded that the circular was issued in public interest the same cannot be a reason to sustain the circular as it is obviously not in tune with the provisions of Section 51. Learned counsel further submitted that it is trite law that the authorities under an enactment cannot issue administrative circulars which are in the nature of 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 10 overriding the provisions of the Act. He relied on the judgment of the Hon'ble Supreme Court in Kerala Financial Corporation v. CIT [(1994) 4 SCC 375]. The learned counsel further submitted that hire-purchase agreements are well recognized as lawful arrangements. He referred to the judgments of the Hon'ble Supreme Court in Charanjit Singh Chadha v. Sudir Mehra [(2001) 7 SCC 417] and Magma Fincorp Ltd. (M/s.) v. Rajesh Kumar Tiwari [(2020) 10 SCC 399] in this regard. The learned counsel therefore submitted that the Transport Commissioner by issuing the impugned Circulars has virtually attempted to interfere with the right of the petitioners to engage in business. Learned counsel appearing for the petitioners in W.P.(C)No.26015/2015 adopted the contentions of Sri.Varghese C.Kuriakose.
9. The learned Senior Government Pleader Smt.Reshmi.K.M. submitted that the issue raised by the petitioners is already decided against them by this Court. She referred to the judgment of a learned Single Judge of this Court 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 11 in W.P.(C)No.18477/2011 rendered on 15.01.2015. She contended that in the said judgment this Court disallowed the prayer of a financier to effect endorsements, who had no license to carry on financing activities either under the Reserve Bank of India Act or under the Kerala Money Lenders Act. Further, this Court observed that any activity of financing carried on within the State would be illegal, insofar as no license had been obtained under the 1958 Act. She further submitted that the Transport Commissioner issued impugned circulars for the reasons explained in the counter affidavit. Difficulties were faced by several persons on account of closure of business or offices by the financing companies and the department was not able to process requests made by the purchasers who had paid the entire amounts as per the agreements to the financing companies as letters issued for verification were being returned since the offices of some of the companies were closed. She, hence submitted that the circulars were issued with the objective of ameliorating the grievance of several persons who 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 12 entered into agreements with financing companies and institutions which were not having proper licenses and registration. She also submitted that in the light of the judgment of this Court cited by her, the judgment of the Karnataka High Court pointed out by the learned counsel for the petitioner may not be followed.
10. I have appreciated the rival contentions. Section 51(1) of the Motor Vehicles Act, 1988 reads as under: -
"51. 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."
11. Under Section 51, there is no stipulation that entries in the certificate of registration under Section 51(1) can be 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 13 made only if the financier is having a registration under any particular law. Section 51(1) speaks only about an entry to be made in the certificate of registration when an application for registration of a motor vehicle which is held under a hire- purchase, lease or hypothecation agreement is received. No provision in the Rules is also brought to the notice of the Court which adds any further qualifications or requirements for making an entry as provided under Section 51(1).
12. It is also relevant to note that the Transport Commissioner has not mentioned any provision of law which authorises him to issue a circular which insists for production of proof of registration or license under the Reserve Bank of India Act or Kerala Money Lenders Act. The Transport Commissioner by issuing the impugned circulars was essentially making an attempt to incorporate some requirements which are not there under Section 51(1) of the Motor Vehicles Act or under any provisions of the Rules made thereunder.
2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 14
13. The attempt made by the Transport Commissioner virtually amounted to re-writing of the provisions of Section 51(1) by incorporating conditions for making endorsements in registration certificates. The same is impermissible. Provisions of a statute cannot be tinkered with and ambit of the statutory provision enlarged or curtailed by executive orders and instructions. I therefore agree with the view adopted by the Karnataka High Court in Karnataka Hire Purchase Association and etc. v. Commissioner for Transport in Karnataka, Bangalore and another [AIR 2011 Kar.101].
14. The clarification obtained by the Transport Commissioner from Reserve Bank of India was pointed out by the learned Senior Govt. Pleader. The RBI had stated in their letter to the Commissioner that all financial institutions including hire- purchase companies shall obtain registration under the provision of the RBI Act, failing which they cannot do business as a non banking financial company. Failure to obtain registration would attract penal consequences also. However the 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 15 said clarification given in the context of the RBI Act and regulatory regime under the RBI also cannot vindicate the issuance of impugned circulars in a manner reducing the ambit of the Section 51(1) and imposing conditions which lack statutory imprimatur.
15. Though the objective and purpose of issuing the impugned circulars were in public interest and can be considered as laudable, the Transport Commissioner was not competent to issue such circulars which amounted to meddling with the provisions of the Act. If the Government desire to incorporate such requirements also for making entries in the registration certificates, proper course open to it is to appropriately amend the Act or the Rules. Operation of unscrupulous financiers may be leading to several issues as pointed out in the counter affidavit. Restricting the persons and companies lacking credentials from involving in financing of vehicles may be necessary. Enforcement of the statutory provisions governing the field is indispensable. However the 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 16 said purposes shall be achieved through legally sustainable methods, necessarily in coordination with the other competent departments of the Government.
16. The learned Special Government Pleader had placed heavy reliance on the judgment of this Court in W.P. (C)No.18477/2011. It is clearly discernible from the said judgment that this Court did not consider the validity and sustainability of any of the circulars in that case. It appears that such a challenge was not pressed by the petitioner in the said writ petition and therefore this Court had no occasion to analyse the validity of the circulars. In these writ petitions, validity of the circulars is under challenge. Therefore, the said judgment in a writ petition filed by some others cannot stand in the way of the petitioners herein challenging the validity of the circulars.
17. In the result, these writ petitions are allowed. Circular Nos.13/2011 dated 13.06.2011, 14/2011 dated 28.06.2011 and 19/2015 dated 22.07.2015 issued by the Transport Commissioner, restricting endorsements of hire 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 17 purchases in registration certificates of motor vehicles are quashed as they are in conflict with the provisions of Section 51(1) of the Motor Vehicles Act, 1988.
Nonetheless, it will be open to the Government to address the issues pointed out in the counter affidavit in support of the decision taken by the Transport Commissioner in a lawful manner and incorporate remedial provisions into the statutory framework.
Sd/-
S.MANU JUDGE skj 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 18 APPENDIX OF WP(C) 26015/2015 PETITIONER'S EXHIBITS Ext.P1 COPY OF RETURN FILED BY THE 1ST PETITIONER DT.31-10-2014 Ext.P1(a) COPY OF RETURN FILED BY THE 2ND PETITIONER DT.
13.4.2015 Ext.P1(b) COPY OF RETURN FILED BY THE 3RD PETITIONER DT.29.09.2014 Ext.P1(c) COPY OF RETURN FILED BY THE 4TH PETITIONER DT.
17.07.2015 Ext.P2 COPY OF REGISTRATION CERTIFICATE OF VEHICLE NO.KL-10/AH-6688 DT.23.08.2011 Ext.P2(a) COPY OF REGISTRATION CERTIFICATE OF VEHICLE NO.KL-57/C-8448 DT. 24.01.2011 Ext.P2(b) COPY OF REGISTRATION CERTIFICATE OF VEHICLE NO.KL-49/A-11 DTD. 01.09.2008 Ext.P2(c) COPY OF REGISTRATION CERTIFICATE OF VEHICLE NO.KL-58/E-653 DT. 22.11.2010 Ext.P3 COPY OF CIRCULAR NO.13/2011 ISSUED BY THE 2ND RESPONDENT DT. 13.06.2011 Ext.P3(a) COPY OF CIRCULAR NO.14/2011 ISSUED BY THE 2ND RESPONDENT DT. 28.06.2011 Ext.P3(b) COPY OF CIRCULAR NO.19/2011 ISSUED BY THE 2ND RESPONDENT DT. 22.07.2015 RESPONDENTS' EXHIBITS:
EXT.R2(a) COPY OF THE LETTER No.DNBS(T)No.668/02.07.008/2010-11 dated 15.12.2010.
EXT.R2(b) COPY OF W.P.(C)No.18477/2011. EXT.R2(c) COPY OF THE JUDGMENT OF W.P.(C)No.18477/2011 DTD.15.01.2015.
2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 19 APPENDIX OF WP(C) 26909/2015 PETITIONER'S EXHIBITS EXT.P1 TRUE PHOTOSTAT COPY OF THE CERTIFICATE OF REGISTRATION ISSUED BY REGISTRAR ASSIGNING REGISTRATION NO.S12/1992 EXT.P2 TRUE COPY OF THE INCOME TAZX RETURNS SUBMITTED BY THE 2ND PETITIONER TOT HE INCOME TAX DEPARTMENT FOR THE ASSESSMENT YEARS 2014-15 EXT.P3 TRUE PHOTOSTAT COPY OF THE CIRCULAR NO.1 0F 2011 DATED 31.01.2011 EXT.P4 TRUE PHOTOSTAT COPY OF THE HIRE PURCHASE AGREEMENT ENTERED ON 27.02.2015 BY THE 2ND PETITIONER WITH A CUSTOMER BY NAME MR.LUSHAMANUL HAKKIM EXT.P5 TRUE PHOTOSTAT COPY OF THE REGISTRATION CERTIFICATE BOOK PERTAININNG TO KL-55C-688 EXT.P6 TRUE PHOTOSTAT COPY OF THE CIRCULAR NO.13/2011 DATED 13/06/2011 EXT.P7 TRUE PHOTOSTAT COPY OF THE CIRCULAR NO.14/2011 DATED 28.06.2011 EXT.P8 TRUE PHOTOSTAT COPY OF THE ADVISE GIVEN BY RESERVE BANK OF INDIA EXT.P9 TRUE PHOTOSTAT COPY OF THE TRANSLATED VERSION OF THE LETTER WAS ISSUED IN MALAYALAM EXT.P10 TRUE PHOTOSTAT COPY OF THE MEMORANDUM DATED 16.06.2015 ADDRESSED TO THE HON'BLE MINISTER EXT.P11 TRUE PHOTOSTAT COPY OF THE COMMUNICATION DATED 25.06.2015 ISSUED FROM THE OFFICE OF THE HON'BLE MINISTER EXT.P12 TRUE PHOTOSTAT COPY OF THE MEMORARANDUM DATED 09.07.2015 SUBMITTED BY THE IST PETITIONER BEFORE 2ND RESPONDENT EXT.P13 TRUE PHOTOSTAT COPY OF THE CIRCULAR NO.19/2015 DATED 22.07.2015 2025:KER:56132 W.P.(C).Nos.26015 & 26909 of 2015 20 EXT.P14 TRUE PHOTOSTAT COPY OF THE COMMUNICATION DATED 30.07.2015 WAS SUBMITTED BY THE 1ST PETITIONER TO THE 2ND RESPONDENT EXT.P15 TRUE PHOTOSTAT COPY OF THE TRANSLATED VERSION OF THE HAS COMMUNICATION DATED 23.07.2006 ISSUED BY TRANSPORT COMMISSIONER OF THE STATE OF KARNATAKA EXT.P16 TRUE PHOTOSTAT COPY OF THE TRANSLATED VERSION OF CIRCULAR DATED 14.08.2006 ISSUED BY TRANSPORT DEPARTMENT.