JAGAL KUMAR v. HDB FINANCIAL SERVICES LTD. and Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** ## **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** # **FRIDAY, THE 31ST DAY OF JANUARY 2020 / 11TH MAGHA, 1941** # **WP(C).No.1818 OF 2020(B)** **PETITIONER:** **JAGAL KUMAR, AGED 42 YEARS, S/O.GOPI, 10/163, KOZHIYECHAL HOUSE, KUTTIPUZHA,KUNNUKARA.P.O, NORTH PARAVUR.** **BY ADVS. SRI.DEEPAK JOY.K., SRI.M.R.MADHU** ## **RESPONDENTS:** |**1**|**HDB FINANCIAL SERVICES LTD.,**| |---|---| ||**2ND FLOOR,CHAITHANYA BUILDING, K.K.ROAD,**| ||**KADAVANTHARA, KOCHI-682020.**| |**2**|**SUB REGIONAL TRANSPORT OFFICER,**| ||**NORTH PARAVUR, PIN-683513.**| |**3**|**THASILDAR (REVENUE RECOVERY),**| ||**NORTH PARAVUR TALUK, PIN-683513.**| |**4**|**THE DISTRICT COLLECTOR,**| ||**COLLECTORATE, CIVIL STATION,**| ||**KAKKANADU, KOCHI-682022.**| |**5**|**DEVOSHIA SHAJI, PROPRIETOR,**| ||**SAM ENTERPRISES, BEHIND KRISTHU JAYANTHI HOSPITAL,**| ||**PERUMPILLY, NARAKKAL.P.O, VYPIN,PIN-682505.**| ||**ADV. SRI.P.PAULOCHAN ANTONY FOR R1.**| ||**DR.THUSHARA JAMES, GOVT.PLEADER FOR R2 TO R4.**| **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## ALEXANDER THOMAS, J. ------------------------------------W.P.(C) No. 1818 of 2020 ------------------------------------- ## Dated this the 31[st] day of January, 2020 ## J U D G M E N T The prayers in the above Writ Petition (Civil) are as follows: - “ - _i. Declare that only the 1[st] respondent is liable to pay the amounts due under Exhibit P11 and Exhibit P12 Notices._ - _ii. Issue a writ of certiorari calling for the records leading to Exhibit P9, Exhibits P11 and Exhibits p12 and quash the same._ - _iii. Issue a writ of mandamus or any other appropriate writ, order or direction, directing the respondents 2 and 3 not to proceed further with the Exhibit P11 and P12 notices._ - _iv. Such other appropriate writ order or direction as this Honourable Court may deem fit and proper to meet the ends of Justice.”_ 2. Heard Sri.K.Deepak Joy, learned counsel appearing for the petitioner, Dr.Thushara James, learned Government Pleader appearing for respondents 2 to 4 and Sri.P.Paulochan Antony, learned counsel appearing for R-1 (HDB Financial Services Ltd.). In the nature of order proposed to be passed in this petition, notice to R-5 (garage owner) will stand dispensed with. 3. The petitioner has filed this writ petition impugning Exts.P-9, P-11 & P-12 demand notices and revenue recovery notice. According to the petitioner, he had entered into hypothecation W.P.(C) No. 1818 of 2020 **==> picture [19 x 9] intentionally omitted <==** agreement with the 1[st] respondent financier, and purchased the stage carriage vehicle as the petitioner could not pay all the instalments, he had duly surrendered the vehicle to the 1[st] respondent as can be seen from Ext.P-5 receipt dated 21.6.2016 issued in that regard by the 1[st] respondent financier. The vehicle was kept in the yard owned by the 1[st] respondent from the date of surrender, as can be seen from Ext.P-7 dated and Ext.P-10 letter dated 29.5.2017 sent by M/s.Sam Enterprises, which is under the proprietorship of the 5[th] respondent. The petitioner would assert that after he had surrendered the vehicle to the respondent financier, he has never used the vehicle. Further that, after the vehicle was garaged, it has not used at all and the petitioner has intimated the abovesaid facts to the Joint RTO, North Paravur, who is the superior of the 2[nd] respondent Sub RTO, North Paravur, as can be seen from Exts.P-8 & Ext.P-10 letter dated 29.5.2017. Inspite of the abovesaid intimation, the 2[nd] respondent has now issued the impugned Exts.P-9 and P-11 demand notices and consequent to this, Ext.P-12 revenue recovery notices been issued W.P.(C) No. 1818 of 2020 ..4.. by the 3[rd] respondent revenue recovery officer. The petitioner would contend that the levy of tax, interest, collection charges and other charges is highly illegal and ultra vires. It is in the light of these aspects that the petitioner has filed the instant Writ Petition (Civil) with the aforementioned prayers. 4. The petitioner would place serious reliance on the Division Bench judgment of this Court in the case in _**Sebastian C. v. State of Kerala and Others [2010 (1) KHC 950 = AIR 2020 Ker. 75]**_ wherein this Court has construed the provisions contained in Secs.3(3) & 9 of the Kerala Motor Vehicles Taxation Act, 1976, and the Division Bench of this Court therein had dealt with a case of liability for payment of tax in respect of a vehicle purchased on hire purchase agreement and where the financier had re-possessed the vehicle when the owner of the vehicle had defaulted the payment of hire charges, and it is held therein that under Sec.3(3), the liability for payment of tax is on the registered owner of the vehicle or on the person in possession and control of the vehicle and their liability to pay tax is joint and W.P.(C) No. 1818 of 2020 ..5.. several. Further that, by virtue of Sec.9, transferee or the person who takes over possession and control of the vehicle is also liable for payment of entire arrears of tax due on the vehicle. Accordingly the Division Bench of this Court had directed therein that the department may recover the tax which fell due when the owner was in possession, from the owner and for the period financier was in possession, from the financier, etc. It will be profitable to refer to paragraphs 4 to 6 of the abovesaid judgment of this Court in _**Sebastian's**_ case supra _**[2010 (1) KHC 950]**_ , which reads as follows: _“4. Procedure for levy, collection and recovery of motor vehicle tax are contained in the Kerala Motor Vehicles Taxation Act. S.3 (2) makes it clear that liability for payment of tax is on the registered owner or the person in possession and control of the vehicle, who by the fiction introduced in the said Section is deemed to be keeping the vehicle for use in the State. Therefore, liability under S.3(3) is joint and several and both the appellant and 4th respondent are liable for payment of tax that was due after 17/12/1997 when the vehicle was repossessed by the financier - 4th respondent. In other words, appellant being the registered owner as well as the person in possession and control of the vehicle, was solely liable for payment of arrears of tax from 01/07/1996 to 17/12/1997. So much so, the judgment of the learned Single Judge upholding liability of the appellant upto 17/12/1997 calls for no interference. Since liability is till end of the month of the quarter, arrears could be recovered from the appellant from 01/07/1996 to 31/12/1997._ _5. Next question to be considered is the liability for tax after date of repossession by the 4th respondent. We have already referred to S.3(3) which along with registered owner casts joint liability on the person who is in possession and control of the vehicle. In fact, it is worthwhile to refer to S.9 of the Motor Vehicles Taxation Act which is_ W.P.(C) No. 1818 of 2020 ..6.. _as follows:_ _'S.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.'_ _6. It is very clear that the purpose of S.9 is to ensure recovery of tax even after sale or transfer of possession of a vehicle that was in arrears of tax. Without exonerating the registered owner who incurred the liability for tax during the period of use under sub-clause (2) of S.9, sub-clause (1) of it makes the transferee or the person who takes over possession and control of the vehicle, also liable for payment of arrears of tax. Therefore, the departmental authorities are entitled to recover the arrears from the person who has purchased or got possession of the vehicle that was in arrears of tax. Therefore, arrears of tax from 01/07/1996 also could in fact be recovered from the 4th respondent by virtue of operation of S.9(1) of the Act. We have already found liability for arrears of tax on the appellant from 01/07/1996 to 31/12/1997 and if the appellant fails to remit the same, recovery will be made without delay. We do not think the 4th respondent can escape from liability for payment of tax from 01/01/1998 till 31/01/1999 because during that period they were in possession and control of the vehicle and the same is an admitted fact. So much so, we direct respondents 1 to 3 to recover the arrears of tax from 4th respondent for the period commencing from 01/01/1998 to 31/01/1999. Counsel for the 4th respondent rightly contended that tax liability is also covered by agreement between the 4th respondent and the appellant and also with the subsequent purchaser and so much so, 4th respondent is free to enforce the provisions of the agreement between the parties in accordance with law and if tax paid by them under our judgment could be recovered from the appellant or the subsequent purchaser, 4th respondent is free to do so by resorting to legal remedies. Since the appellant's business collapsed on account of financial losses and 4th respondent also has not been a beneficiary of the transaction, we feel they could be exonerated from surcharge or interest on tax, provided both the appellant and 4th respondent discharge liability by making voluntary payment of the arrears of tax excluding the surcharge or interest for the separate period stated above, within a period of six weeks from today. While demanding the balance from the appellant, amount remitted under interim orders of this Court should be credited._ W.P.(C) No. 1818 of 2020 **==> picture [18 x 9] intentionally omitted <==** _However, if there is any excess payment, there is no need to grant refund because of the waiver of surcharge granted by us.”_ 5. Now it is submitted by Sri.P.Paulochan Antony, learned counsel appearing for R-1 (financier) that after the vehicle was surrendered by the petitioner to the 1[st] respondent, later the 1[st] respondent had auctioned the vehicle and sold it to one Sri.Faisal on 11.9.2017, and that the 1[st] respondent has not been intimated about any of the proceedings by the department, and in case the impugned orders are made available to the 1[st] respondent, the said party also has been adviced to file an appeal under Sec.23 of the Kerala Motor Vehicles Taxation Act, 1976. 6. After hearing both sides and after careful evaluation of the facts and circumstances of the case with reference to the pleadings and materials on record, this Court is of the considered view that the matter requires serious reconsideration at the hands of the authority concerned, in the light of the legal principles laid down by the Division Bench of this Court in _**Sebastian's**_ case supra _**[2010 (1) KHC 950]**_ . Accordingly, the matter in relation to the impugned Exts.P-11 proceedings will stand remitted to the W.P.(C) No. 1818 of 2020 **==> picture [20 x 9] intentionally omitted <==** 2[nd] respondent for consideration and decision afresh. For effectuating such a remit, it is ordered that the impugned Ext.P-11 order dated 9.10.2019 will stand quashed and rescinded and the matter in relation thereto will stand remitted to the 2[nd] respondent for consideration and decision afresh, after hearing all the parties concerned. The 2[nd] respondent will issue notice of hearing to the petitioner, the 1[st] respondent and the 5[th] respondent. 7. The 1[st] respondent will also furnish the address of the person to whom the vehicle has been subsequently transferred on 11.9.2017 to the 2[nd] respondent, and it will be open to the 2[nd] respondent to give notice of hearing to the said person as well. The 1[st] respondent will give reasonable time by 2 weeks to the petitioner, the 1[st] respondent, the 5[th] respondent and the abovesaid other person concerned, to give their written submissions in the matter, and also to produce other materials. This may be done without much delay. Thereafter, the 2[nd] respondent will afford reasonable opportunity of being heard to the petitioner, the 1[st] respondent, the 5[th] respondent and the abovesaid other person W.P.(C) No. 1818 of 2020 ..9.. concerned, and will render a considered decision thereon, in the light of the dictum laid down by this Court in the aforecited Division Bench judgment of this Court in _**Sebastian C. v. State of Kerala and Others [2010 (1) KHC 950 = AIR 2020 Ker.**_ _**75].**_ Decision in this regard may be duly taken by the 2[nd] respondent without much delay, preferably within a period of 2 to 3 months from the date of production of a certified copy of this judgment. Since Ext.P-11 is to be quashed, the consequential proceedings as per Ext.P-12 revenue recovery proceedings will not have any independent existence, and therefore it will stand set aside. With these observations and directions, the above Writ Petition (Civil) will stand disposed of. Sd/- ALEXANDER THOMAS, JUDGE MMG W.P.(C) No. 1818 of 2020 ..10.. ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **EXHIBIT P1 TRUE COPY OF THE RC BOOK OF THE VEHICLE BEARING REG.NO.KL-36-4418 ISSUED BY THE REGISTERING AUTHORITY,NORTH PARAVUR.** **EXHIBIT P2 TRUE COPY OF THE CONTRACT CARRIAGE PERMIT ISSUED BY THE SECRETARY,RTA NORTH PARAVUR DATED 25.6.2015** - **EXHIBIT P3 TRUE COPY OF THE POLICY SCHEDULE CUM CERTIFICATE OF INSURANCE ISSUED BY THE NEW INDIA ASSURANCE CO.LTD,** - **EXHIBIT P4 TRUE COPY OF THE TAX RECEIPT ISSUED BY THE MOTOR VEHICLES DEPARTMENT TO THE PETITIONER'S VEHICLE** - **EXHIBIT P5 TRUE COPY OF RECEIPT DATED NIL ISSUED BY THE MANAGER OF 1ST RESPONDENT** - **EXHIBIT P6 TRUE COPY OF INTIMATION OF NON-USE OF A VEHICLE SENT BY THE PETITIONER** - **EXHIBIT P7 TRUE COPY OF RECEIPT EVIDENCING THE ACCEPTANCE OF THE VEHICLE IN THE YARD OF THE 5TH RESPONDENT.** - **EXHIBIT P8 TRUE COPY OF THE INTIMATION THAT THE VEHICLES HAS BEEN SURRENDERED AND KEPT I THE CUSTODY OF THE 5TH RESPONDENT ON FORM G.** - **EXHIBIT P9 TRUE COPY OF THE MEMO DATED 3.5.2017 SENT BY THE SUB REGIONAL TRANSPORT OFFICER TO THE PETITIONER** W.P.(C) No. 1818 of 2020 ..11.. **EXHIBIT P10 TRUE COPY OF THE LETTER DATED 29.5.2017 SENT BY THE SAM ENTERPRISES TO THE RTO, NORTH PARAVOOR. EXHIBIT P11 TRUE COPY OF THE MEMO SENT BY THE SUB REGIONAL TRANSPORT AUTHORITY,NORTH PARAVUR TO THE PETITIONER DATED 9.10.2019 EXHIBIT P12 TRUE COPY OF DEMAND NOTICE SENT BY THE TAHSILDAR,PARAVUR TALUK TO THE PETITIONER DATED 24.12.2019.**