Abdul Salam v. Joint Regional Transport Officer, Kothamangalam; Regional Transport Officer, Muvattupuzha; Deputy Tahsildar (Revenue Recovery), Kothamangalam; Village Officer, Thrikkariyoor; M/S Shriram Transport Finance Company Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** ## **FRIDAY, THE 5TH DAY OF AUGUST 2016/14TH SRAVANA, 1938** ## **WP(C).No. 18802 of 2011 (A)** **---------------------------------------** ## **PETITIONER(S):** **-----------------------** **ABDUL SALAM, S/O.MAKKAR PAREETH, AGED 40, CHITTETHUKUDIYIL HOUSE, PANIPPARA PO, KOTHAMANGALAM.** **BY ADV. SRI.SAJEEV KUMAR K.GOPAL** ## **RESPONDENT(S):** - **-------------------------** **1. THE JOINT REGIONAL TRANSPORT OFFICER, KOTHAMANGALAM 686 691.** **2. THE REGIONAL TRANSPORT OFFICER, MUVATTUPUZHA 686 661.** **3. THE DEPUTY TAHSILDAR (REVENUE RECOVERY), KOTHAMANGALAM 686 691.** **4. THE VILLAGE OFFICER,THRIKKARIYOOR VILLAGE- 686 692.** **5. M/S.SHRIRAM TRANSPORT FINANCE COMPANY LTD., REPRESENTED BY ITS BRANCH MANAGER, GEETHA COMMERCIAL COMPLEX, NEAR YWCA, KOTTAYAM 686 001.** **R1-4 BY GOVERNMENT PLEADER SRI.BOBBY JOHN R5 BY ADV. SRI.RAJESH NAMBIAR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05-08-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **PJ** ## **WP(C).No. 18802 of 2011 (A)** ## **---------------------------------------** ## **APPENDIX** ## **PETITIONERS' EXHIBITS** **----------------------------------** - **P1: COPY OF THE DEMAND NOTICE ISSUED TO THE PETITIONER BY THE R1** - **P2: COPY OF THE LETTER DATED 27/3/2008 ISSUED BY HE R5** - **P3: COPY OF THE G.FORM SUBMITTED BY THE PETITIONER** - **P4: COPY OF THE ACKNOWLEDGEMENT CARD** - **P5: COPY OF THE DEMAND NOTICE ISSUED UNDER SECTION 7 OF THE REVENUE RECOVERY ACT** - **P6: COPY OF THE REPRESENTATION BY THE PETITIONER DATED 7/7/11 SUBMITTED ON 8/7/11.** ## **RESPONDENTS' EXHIBITS** **------------------------------------** ## **R1(A): COPY OF THE PROCEEDINGS NO.C2/384/2008/EK DTD.28/3/08** **R1(B): COPY OF THE LETTER FROM FINANCIER DTD.30/9/08** - **R1(C): COPY OF THE LETTER MEMO ISSUED TO THE REGISTERED OWNER DTD.12/8/11.** **/ TRUE COPY /** **PJ** **P.S. TO JUDGE** ## **A.M. SHAFFIQUE, J.** ## =============== W.P. (C) No. 18802 of 2011 ================== Dated this, the 5[th] day of August, 2016 ## **J U D G M E N T** This writ petition is filed challenging Ext.P5 by which revenue recovery proceedings had been taken against the petitioner for an amount of `4,25,250/- being arrears of motor vehicles tax along with interest and other charges. 2. The petitioner was the registered owner of a contract carriage bearing Regn.No.KL3/G 4780. The vehicle was under hire purchase to the 5[th] respondent. The tax was paid upto the quarter ending 30/9/2007. According to the petitioner, the vehicle was taken possession by the 5[th] respondent on account of the petitioner committing default in payment of the hire amount. There was a demand by the 1[st] respondent to the petitioner on 13/3/2008 by which the petitioner was called upon to pay `40,500/- as tax for the period from 1/10/2007 to 31/3/2008. Ext.P1 is the said notice dated 13/3/2008. 3. Petitioner received a letter from the 5[th] respondent as Ext.P2 wherein the petitioner was called upon to pay the amount W.P(C) No.18802/11 ## -:2:- due to them failing which it was mentioned that they will be constrained to sell the vehicle to third party. On this basis, petitioner claims to have send a reply to Ext.P1 to the 2[nd] respondent stating that vehicle is in the custody of the 5[th] respondent. He also submitted a G Form seeking exemption from payment of tax from 01/04/2008 to 31/3/2009. Ext.P4 is the acknowledgment card. Thereafter, there was no communication and now the petitioner is faced with Ext.P5. According to the petitioner, after the vehicle was taken possession by the 5[th] respondent, he cannot be called upon to pay any amount as motor vehicles tax. 4. Counter affidavit is filed by the 1[st] respondent _inter alia_ stating that the petitioner had replied stating that the vehicle was taken possession by the financier and the petitioner had submitted a G form as well. An enquiry was conducted and it was reported that the G form was not genuine and accordingly the same was rejected as per Ext.R1(a) proceedings. The 5[th] respondent was addressed to ascertain whether the vehicle was in their custody and it was reported that the loan was granted under the guarantee of Mr.George M.P., Mattathil House, W.P(C) No.18802/11 ## -:3:- Kothamangalam and it was he who surrendered the vehicle to them. Therefore, the vehicle was released to him on 7/4/2008. Ext.R1(b) is the said letter. It is therefore stated that demand notice was issued to the petitioner from 1/10/2007 to 31/12/2010 and the notice was returned undelivered with the endorsement “addressee not claimed”. It is stated that during the relevant time, petitioner was working abroad. Subsequently, he filed a representation dated 7/7/2011. He was heard in the matter and he was asked to inform the department about the whereabouts of the vehicle. It is further observed that though directions had been issued to all Regional Transport Officers and Joint Regional Transport Officers in Kerala to find out the whereabouts of the vehicle, the replies are awaited. It is stated that since all attempts to collect the tax had failed, the demand is being made against the petitioner. It is submitted by the learned counsel for the petitioner that though as a registered owner of the vehicle, he had the obligation to pay tax, in an instance where the vehicle had been taken away from his custody, which is admitted by the financier, and when the financier had informed the Motor Vehicles Department that the vehicle was handed over to a third person, W.P(C) No.18802/11 -:4:- petitioner cannot be mulcted with the liability to pay motor vehicle tax. 5. On the other hand, learned Government Pleader submits that the registered owner of the vehicle cannot escape from the liability to pay motor vehicle tax especially in an instance where the financier had clearly indicated that he had handed over the vehicle to a person, who was the guarantor. It is stated that it was handed over to the person who had surrendered the vehicle to the financier. 6. Though no counter affidavit is filed, learned counsel appearing for the 5[th] respondent submits that there is factual and legal infirmities in the writ petition. It is contended that when the Regional Transport Authority admits the fact that the 5[th] respondent had handed over the vehicle to a person who had surrendered possession, nothing else requires to be considered in the matter as far as the 5[th] respondent is concerned. The 5[th] respondent was not in possession of the vehicle during the period when the tax had become payable. 7. Having heard the learned counsel on either side, the short question to be considered is whether petitioner can be W.P(C) No.18802/11 ## -:5:- made liable for the motor vehicle tax in respect of the vehicle in question. The levy of tax is under Section 3 of the Motor Vehicles Taxation Act. Payment of tax and issue of licence is provided under Section 4. In terms of Section 4(1), the liability to pay tax under Sections 3(1) and 9 is on the registered owner or person having possession or control of the motor vehicle. There cannot be any doubt about the proposition that the liability to pay tax is on the registered owner or the person having possession or control of the motor vehicle. As far as the petitioner is concerned, he is the registered owner. But the contention is that he had ceased to have possession or control of the vehicle the moment it was taken possession by the financier. When the possession of the vehicle is taken over by the financier, the financier has two options. One is to effect sale of the vehicle for recovering the amount due to the financier or to return the vehicle to the registered owner or the person having possession or control of the vehicle. In the case on hand, the financier admits that the vehicle has been taken possession, but, according to them, and as described from the counter affidavit filed by 2[nd] respondent, the vehicle itself was surrendered by a third party, who was the W.P(C) No.18802/11 -:6:- guarantor and the vehicle was returned to him. Therefore, the contention urged by the financier and as believed by the Motor Vehicles Department would show that petitioner was not having possession or control over the vehicle. 8. Further, it could be seen that by an interim order dated 12/7/2011, while admitting the writ petition, this Court directed respondents 1 to 4 to proceed against the vehicle in question for recovery of motor vehicle tax on account of a charge on the vehicle itself. By a further order dated 1/8/2011, this Court was informed that proceedings have been initiated against the vehicle and that it will be completed within one month. In the proceedings dated 5/9/2011, it is seen that the Government Pleader sought for further time to trace out the vehicle. By an order dated 23/9/2011, this Court took note of the submission of the learned Government Pleader wherein it is stated that the vehicle could not be traced. Hence, this Court observed that proceedings may continue for recovery of tax in accordance with law against all persons liable for payment of tax. This is a peculiar situation in which the petitioner did not have the advantage of use of the vehicle after it was taken possession by the financier. Even W.P(C) No.18802/11 ## -:7:- according to the financier, the vehicle was not returned to the petitioner. In the counter affidavit filed by respondents, it is stated that petitioner was working abroad for quite some time and he was not in India. Sufficient opportunity had been given to the respondents to trace out the vehicle for recovering the motor vehicles tax. Even in the counter affidavit which was filed on 7/2/2012 it is stated that steps were being taken to find out the vehicle. But it is relevant to note that according to the 5[th] respondent, the vehicle was given to one Mr.George M.P., Mattathil House, Kothamangalam P.O., on 7/4/2008. Ext.R1(b) is the letter. When the vehicle is given to Geroge M.P., Mattathil House, Kothamangalam, it ought to have been made by the 5[th] respondent either with the consent of the petitioner or by effecting sale of the vehicle. It is stated in Ext.R1(b) that “the guarantor surrendered the vehicle to us and therefore it was released to him on 7/4/2008”. It is therefore clear that the vehicle was in the possession and control of George M.P., atleast from 7/4/2008 and therefore, he is the person who is liable to pay tax from the said date onwards. It is apparent that no steps had been taken by the Department to recover tax from the aforesaid W.P(C) No.18802/11 ## -:8:- person. That apart, there is no material to indicate the terms and conditions on which the vehicle was given by the 5[th] respondent to the aforesaid George. At this juncture, it would be relevant to note a few judgments of this Court which have been relied upon by the learned counsel for the petitioner. 9. In **M** _**otor and General Finance Limited v. DTC**_ (2010 (2) KLT 1032), a learned Single Judge of this Court while considering the question as to whether a financier is liable to pay the tax due from the previous owner held that the financier will also come within the term 'operator' and is liable to satisfy the tax liability. However, the matter was remitted back for considering the actual liability. 10. In another judgment, _**ART Leasing Ltd. v. Additional Registering Authority**_ (2002 (2) KLT 367), a learned Single Judge of this Court held that the financier is liable to motor vehicles tax relating to the period before the seizure of the vehicle by him. Paragraphs 4 to 9 are relevant, which read as under; _“4. It is not in dispute that the petitioner is liable to pay the tax from July, 1999 onwards. The dispute relates to the period from June, 1998 to June, 1999. The relevant statutory provisions are Ss. 9 and 13_ -:9:- ## W.P(C) No.18802/11 _of the Kerala Motor Vehicles Taxation Act. S. 9 reads as follows:_ ## _**"9. Liability to payment of tax by persons succeeding to the ownership, possession or control of motor vehicles-**_ _(1) If the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person before payment of the tax has transferred the ownership of such vehicle or has ceased to be in possession or control of such vehicle, the person whom the ownership of the vehicle has been transferred or the person who has possession or control of such vehicle shall be liable to pay the said tax._ _(2) Nothing contained in sub-s. (1) shall be deemed to affect the liability to pay the said tax of the person who has transferred the ownership or has ceased to be in possession or control of such vehicle." (emphasis supplied)_ _5. A plain reading of the above said Section will show that if the tax leviable in respect of any motor vehicle remains unpaid, the person who is in possession or control of such vehicle shall be liable to pay the said tax. It is not in dispute that tax remains unpaid in relation to the vehicle. It is also not in dispute that the petitioner is the person who has possession or control over the vehicle now. Therefore, it is liable to pay the tax which remains unpaid by virtue of the operation of S. 9(1). In the absence of any challenge to the said Section, the petitioner is bound by it._ ## W.P(C) No.18802/11 ## -:10:- _6. Apart from that, the vehicle in question can be seized and sold in auction, even if the same is out of control of the person liable to pay the tax. This is evident from S.13 which reads as follows:_ ## _**13. Amounts recoverable as arrear of land**_ ## _**revenue:-**_ _(1) Any amount due under this Act or the rules made thereunder shall be recoverable in the same manner as an arrear of public revenue due on land._ _(2) The motor vehicle in respect of which any amount is due or its accessories may be distrained and sold in pursuance of sub-s. (1), whether or not such vehicle or accessories is or are in the possession or control of the person liable to pay the amount."_ _7. From the above provision, it is clear that the authorities are entitled to seize and sell the motor vehicle or its accessories to realise the amount due._ _8. In view of the above statutory scheme, the inescapable conclusion is that the petitioner being in possession of the vehicle, is bound to pay the tax._ _9. If the view canvassed by the petitioner is accepted, the collection of motor vehicles tax can be successfully sabotaged by any operator in collusion with the financier. After defaulting substantial amounts towards the tax, seizure by the financier can be arranged to defeat the claim of the State. Most of the vehicles on our roads are financed by banks or private financiers. In contemplation of this contingency, the Legislature in its wisdom enacted Ss. 9 and 13 making the_ ## W.P(C) No.18802/11 ## -:11:- _vehicle and also the person in possession thereof liable to pay the tax.”_ Going by the aforesaid judgments, it would be useful to consider the scope and effect of Section 9 of the Act. Section 9 reads as under; _“_ _**9. Liability to payment of tax by persons succeeding to the ownership, possession or**_ _**control of motor vehicles** . - (1) If the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person before payment of the tax has transferred the ownership of such vehicle or has ceased to be in possession or control of such vehicle, the person to whom the ownership of the vehicle has been transferred or the person who has possession or control of such vehicle shall be liable to pay the said tax._ _(2) Nothing contained in sub-section (1) shall be deemed to affect the liability to pay the said tax of the person who has transferred the ownership or has ceased to be in possession or control of such vehicle.”_ 11. As per the version of the financier, petitioner did not have possession of the vehicle. It would be useful to consider what forms transfer of ownership. In _**Narayanan Nair v. Mariakutty**_ (1992 (1) KLT S.N.42), it is held that transfer of vehicle is governed by the provisions of Sale of Goods Act and in W.P(C) No.18802/11 ## -:12:- the absence of any agreement to the contrary, payment of price and delivery of vehicle make the sale complete and the title passes to the purchaser. The obligation to register the vehicle is for the purpose of controlling and regulating the movement of vehicles by the authorities under the Act and they do not stand in the way of passing title to the purchaser. The same position has been held in _**Saidu Mohamed v. Rema**_ (1995 (2) KLT 343 and a Full Bench of Andhra Pradesh High Court in _**Madineri Kondiah v. Yasin Fathima and Others**_ [AIR 1986 AP 62 (FB)]. There is no dispute about the fact that the liability to pay tax that has fallen due is primarily on the owner but where such owner transfers the ownership or possession or control over the vehicle, such liability is vested with the person succeeding to the possession of the vehicle. 12. In _**Vibhuraj v. Joseph**_ (2007 (1) KLT 853), this Court held that so long as a person continues to be a registered owner, even after the sale of the vehicle, he is equally liable just like a person who is in possession or control over the vehicle. Review petition is filed before the Division Bench wherein a contention was taken that the review petitioner had transferred possession of ## W.P(C) No.18802/11 ## -:13:- the vehicle to the 1[st] respondent on 29/3/1996, which fact was intimated to the 2[nd] respondent on 7/9/1998. After referring to the relevant provisions, it was held at paragraphs 5 to 8 as under:- _“5. S.3 (1) of the Kerala Motor Vehicles Taxation Act, 1976 a tax shall be levied on every motor vehicle used or kept for use in the State at the rate specified for such vehicle in the schedule. According to sub-s.(3) of S.3 of the said Act, the registered owner of, or any person having possession or control of, a motor vehicle shall, for the purpose of the Act, be deemed to use or keep such vehicle for use in the State, except during any period for which no tax is payable on such motor vehicle under sub-s.(1) of S.5. As per sub-ss.(1) and (3) of S.3 of the Kerala Motor Vehicles Taxation Act, 1976 the review petitioner being the registered owner of the vehicle is liable to pay tax in respect of the vehicle._ _6. S.9 of the Kerala Motor Vehicles Taxation Act deals with liability to payment of tax by persons succeeding to the ownership, possession or control of motor vehicles. As per sub-s.(1) if the tax leviable in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person before payment of the tax has transferred the ownership of such vehicle or has ceased to be in possession or control of such vehicle, the person to whom the ownership of the vehicle has been transferred or the person who has possession or_ ## W.P(C) No.18802/11 ## -:14:- _control of such vehicle shall be liable to pay the said tax. Sub-s. (2) of S.9 states that nothing contained in sub-s.(1) shall be deemed to affect the liability to pay the said tax of the person who has transferred the ownership or has ceased to be in possession or control of such vehicle. Cumulative effect of S.3 along with S.9 of the Act is that both the registered owner of the vehicle or any person having possession or control of the vehicle are all liable to pay motor vehicle tax in respect of the vehicle in question._ _7. We are of the view, assuming that the review petitioner is ceased to be in possession of the vehicle and sub-s. (1) of S.9 would enable the authorities to levy tax from the person who is in possession or control of the vehicle that does not mean the registered owner though not in possession can escape from the liability. Argument raised on rebuttable presumption is also not sound. We are of the view the liability of the registered owner and the person who is in possession or control of the vehicle is joint and several. We are of the view, so far as review petitioner continues to be registered owner he is equally liable just like a person who is in possession and control of the vehicle. Review petitioner cannot import the provisions of the Sale of Goods Act to raise a contention that in fact there was transfer of the vehicle from the registered owner. Registered owner has been defined in S.2(e) of the Act which means the person in whose name a motor vehicle is registered or deemed to be registered under the_ ## W.P(C) No.18802/11 ## -:15:- _Motor Vehicles Act, 1939. S.3 deals with levy of tax and S.4 deals with payment of tax and issue of licence. S.9 deals with liability to payment of tax by persons succeeding to the ownership, possession or control of motor vehicle. On a conjoint reading of all the provisions it is clear that the liability is joint and several on the registered owner, person who is in possession or the person who is in control of the vehicle._ _8. We may in this connection refer to the decision of a learned single Judge of this court in Basheer v. State of Kerala (1997 (2) KLT 155) wherein learned Judge has taken the view that the liability rests on the registered owner and the person having possession or control of the vehicle and is joint and several. That does not mean liability of the transferor or the person who is ceased to be in possession is effaced. We fully endorse the view of the learned single Judge. In this connection we may also refer to the decision of another single Judge in Kunji Mohammed v. R.T.O. Malappuram (2000 (1) KLT SN 68 (C.No. 78)) wherein learned Judge interpreting S.9 held that the liability of a registered owner who had transferred the ownership or possession of the vehicle to pay the tax does not cease at all by reason of transfer of ownership or possession unless the same has been intimated to the registering authority and change effected. A Division Bench of this court in N.P.R. Finance Ltd. v. State of Kerala (2002 (1) KLT 591) interpreting S.9 of the Kerala Motor Vehicles Taxation Act held that financier who is in control of the vehicle is liable to_ W.P(C) No.18802/11 ## -:16:- _pay the amount due by way of arrears of tax. In view of the aforementioned legal position, we find no reason to review the judgment. Review Petition therefore lacks merits and is hereby dismissed.”_ 13. Therefore, there cannot be any doubt regarding the proposition that despite a transfer, a registered owner will be jointly and severally liable to pay along with the person who is in possession or control over the vehicle. However, if we look at the factual position in the present case, I think a different view is possible. It is settled law and as held by various judgments of this Court as well as the Apex Court that if a financier has seized the vehicle and taken possession and control of it, he is also included in the definition of the expression 'operator' irrespective of the fact that he is a permit holder or not and is liable to pay tax. This position has been held in the judgment cited in _**ART Leasing Ltd.**_ (supra) as well as by the Apex Court in _**M/s. Sundaram Finance Limited v. RTO.**_ [ILR 1975 1 Kerala 490]. 14. According to the financier, the vehicle was handed over to another person, the guarantor. No counter affidavit has been filed before this Court to indicate in what manner the transfer was effected. Therefore, this was a typical case wherein the financier has possessed the vehicle and having become liable W.P(C) No.18802/11 ## -:17:- to pay the tax, transfers the vehicle to another person without complying with any of the statutory requirements known to law. Under such circumstances, the financier also will be liable to pay the motor vehicles tax and such liability cannot be fastened on the petitioner. It shall be open for the Department to take appropriate steps against the 5[th] respondent, the transferee or any person having control of the vehicle for collecting the tax. In the said circumstances, this writ petition is allowed as under:- Ext.P5 is set aside, however, reserving right of respondents 1 to 4 to take appropriate proceedings against the 5[th] respondent or the person in possession of the vehicle, in accordance with law. **Sd/-** ## **A.M. SHAFFIQUE, JUDGE** Rp