Kerala Transport Company, Thammanam, Kochi v Regional Transport Officer, Regional Transport Office, Kakkanad, Ernakulam; Deputy Transport Commissioner, Ernakulam; Transport Commissioner, Eas Fort, Thiruvananthapuram; Deputy Tahsildar (Revenue Recovery), Kanayannur Taluk, Ernakulam

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN &** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **FRIDAY, THE 20TH DAY OF JULY 2018 / 29TH ASHADHA, 1940** **WA.No. 857 of 2018 IN RP. 201/2018** **AGAINST THE ORDER/JUDGMENT IN WP(C) 15955/2012 of HIGH COURT OF KERALA DATED 21.12.2017 AND AGAINST THE ORDER/JUDGMENT IN RP 201/2018 of HIGH COURT OF KERALA DATED 1.3.2018** ## **APPELLANT(S)/PETITIONER IN WRIT PETITION** **KERALA TRANSPORT COMPANY,** **THAMMANAM, KOCHI - 32, REPRESENTED BY ITS ZONAL MANAGER, M. RAGHAVAN.** **BY ADV.SRI.MILLU DANDAPANI** ## **RESPONDENT(S)/RESPONDENT IN WRIT PETITION:** **1. REGIONAL TRANSPORT OFFICER,** - **REGIONAL TRANSPORT OFFICE, KAKKANAD, ERNAKULAM, KOCHI - 682 030.** **2. THE DEPUTY TRANSPORT COMMISSIONER, ERNAKULAM, KOCHI - 682 030.** **3. THE TRANSPORT COMMISSIONER, EAS FORT, THIRUVANANTHAPURAM - 695 023.** **4. THE DEPUTY TAHSILDAR (REVENUE RECOVERY), KANAYANNUR TALUK, ERNAKULAM, KOCHI - 682 011.** **BY ADV. MOHAMMED RAFIQ, SR.GOVERNMENT PLEADER** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 20-07-2018, ALONG WITH WA NO.864/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WA 857/2018** ## **APPENDIX** ## **APPELLANT'S EXHIBITS** |**ANNEXURE-A1**|**:**|**COPY**|**OF**|**DEMAND NOTICE ISSUED BY THE 4TH RESPONDENT DATED**| |---|---|---|---|---| |**29.5.2018.**||||| |**ANNEXURE-A2**|**:**|**COPY**|**OF**|**REGISTRATION PARTICULAR OF VEHICLE NO.KL-18 1387.**| |**ANNEXURE-A3**|**:**|**COPY**|**OF**|**REGISTRATION PARTICULAR OF VEHICLE NO.KL-17 7184.**| |**ANNEXURE-A4**|**:**|**COPY**|**OF**|**REGISTRATION PARTICULAR OF VEHICLE NO.KL-1-R-8757.**| |**ANNEXURE-A5**|**:**|**COPY**|**OF**|**DATA OF THE VEHICLE NO.KL-17-2163 HAVING CF UPTO**| |**23.5.2019.**||||| |**ANNEXURE-A6**|**:**|**COPY**|**OF**|**DATA OF THE VEHICLE NO.KL-11-Q-9230 HAVING CF UPTO**| |**26.4.2019.**||||| |**ANNEXURE-A7**|**:**|**COPY**|**OF**|**DATA OF THE VEHICLE NO.KL-07-X-9590 HAVING CF UPTO**| |**6.11.2018.**||||| |||||**//TRUE COPY//**| |||||**PS TO JUDGE.**| jg-13/8 ## K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------W.A.Nos. 857 & 864 of 2018 ------------------------------------------Dated this the 20[th] day of July, 2018 ## JUDGMENT ## Ashok Menon, J. The Writ Appeals are directed against the judgment of the learned Single Judge in W.P.(C) Nos.15955/2012 and 15143/2014. Both of which were dismissed vide common judgment dated 21.12.2017. The petitioner, in both appeals, is the Kerala Transport Company (KTC) and W.P.(C) No.15725/2012, which too was heard along with the two Writs, was filed by Bharatiya Vidya Bhavan (BVB), a Trust which runs educational institutions, for which the KTC is running the buses, challenging the demand for tax raised by the respondents denying the petitioner's benefit of reduced rate of tax applicable to the vehicles owned by educational institutions, used solely for the purpose of transporting of students and staff. _WA Nos.857&864 of 2018_ 2 2. The KTC is a company which operates contract carriages as well as stage carriages. However, contract carriages and stage carriages, aged more than 15 years, had to be taken off the route. KTC had a large number of buses, for running of which, large number of employees were also employed in the company. There was no embargo as per the law for more than 15 year old vehicles plying as educational institution vehicles for transporting students. Hence, the KTC transferred some of their buses to BVB on condition that the vehicles would be operated and managed by the KTC on payment of Rs.1400/- per day by the BVB. According to the appellant, the transfer was effected without any sale consideration as part of their social obligation. Transportation fee was collected by the BVB from the students and the daily amount as agreed was paid to the KTC. The mutual agreement between the KTC and BVB was termed as “transfer and management of operation of buses” (TMOB agreement). As per the registration certificate pertaining to the buses, BVB is the registered owner. Even though the buses were all being operated and managed by the KTC, tax at a reduced rate was being levied for the vehicles, being the vehicles belonging _WA Nos.857&864 of 2018_ 3 to the educational institution. An “educational institution bus” is defined under Section 2(11) of the Motor Vehicles Act as thus:- “'Educational Institution Bus' means an omnibus, which is owned by a college, school or other Educational Institution and used solely for the purpose of transporting students or Staff of the Educational Institution in connection with any of its activities.” Clause 7(ii) stipulates the tax applicable for motor vehicles permitted to ply as contract carriages and solely used as educational carriages. The tax applicable for such vehicles having 20 seats including driver is Rs.500/- quarterly, and in respect of the vehicles having more than 26 seats, the quarterly tax is Rs.1,000/-. 3. The two conditions required for a vehicle to be termed as an 'educational institution bus' are, first that it should be owned by an educational institution, and secondly, that it should be used solely for the purpose of use for the students or the staff of the educational institution in connection with any of its activities. Only the vehicles plied with these two requirements would be entitled to reduced rate of tax applicable to educational institutions. 4. BVB had two sets of vehicles. The first set of vehicles were originally owned by the KTC and transferred to BVB by an _WA Nos.857&864 of 2018_ 4 agreement and other set of vehicles were acquired by the BVB with their own fund and both the sets of vehicles were entrusted to the KTC for management and operation. The TMOB was applicable only to the first set of vehicles. In Raghavan v. RTO Kollam, 2001 (2) KLT 204 , a Division Bench of this Court has held that the Regional Transport Authority has power under Section 72(2) to insist for a vehicle of a specified description restricting the age of the vehicle for the grant of permit for such stage carriage. Yet another decision of the Division Bench of this Court, Siddique P.K.A. v. Regional Transport Authority, 2013 (1) ILR 829, held that when it comes to issuance of permit for vehicles owned by educational institutions, there is no specific provision so far as the issuance of permit to a vehicle is concerned. Section 72 deals with stage carriages, Section 74 deals with contract carriages and Section 76 deals with private service vehicles. It was held that in the absence of special provisions under what circumstances a permit could be given, the restriction of age of vehicles under Section 74(4) for use of a contract carriage can be imposed by the Government alone as envisaged under Section 59 of the Act. Hence, restricting the user _WA Nos.857&864 of 2018_ 5 of the vehicles owned by educational institutions as 15 years, is outside the purview of the jurisdiction vested with the Transport Authorities as such conditions are only with reference to Section 74(2)(i) to (viii) and it was declared that the State alone is empowered to prescribe any conditions in pursuance of the powers vested with it as understood from Section 74(2)(xiii). The State Government was also directed to consider the matter in the light of the observations made and lay down necessary directions and conditions in accordance with the procedure. However, so far there has been no steps taken by the State Government to impose any condition regarding the age of the vehicles used as educational institution buses. 5. In view of the above cited decision, it is adequately clear that there is no restriction on the vehicles which is more than 15 years being used as educational institution buses. However, the contention raised by the respondent is that there was no sale of vehicles to the educational institutions and that the appellant was using the provisions of law merely for the purpose of illegally taking advantage of reduced tax liability. This deprived the State _WA Nos.857&864 of 2018_ 6 Government of their revenue, was the cause of action. The learned Single Judge has observed that no sale consideration was passed in this matter and therefore there is no sale in the eye of law and when there is no sale as referable to the Sale of Goods Act, merely because the registration stood in the name of a person that does not confer such person any right of the ownership over the buses. Referring to a decision of the Hon'ble Supreme Court in State of Madras v. Gannon Dunkerley & Co.(Madras) Ltd., AIR 1958 SC 560 , the learned Single Judge observed that to constitute a valid sale, it is essential that there should be an agreement between the parties for the purpose of transfer of title of goods and it must be supported by money consideration, called price and as a result of such transactions, the property must actually pass to the hands of the transferee, and in the absence of any element as stated above, there can be no sale. The learned Single judge also held that there was no transfer of possession of vehicles to BVB from KTC and that it would arise only when there exists any transfer of interest. The KTC continued to be the owner even though there was change of the name of the registered owner in the Registration Certificate. With _WA Nos.857&864 of 2018_ 7 regard to vehicles owned by BVB and entrusted with the KTC for operation and management, there is nothing on record to show that BVB have parted with exclusive possession of those buses to KTC and merely because KTC was operating buses on behalf of BVB, it cannot be concluded that the possession is transferred to BVB. If that be so, BVB is entitled to concessional rate of motor vehicle tax for those vehicles acquired by them, but for those vehicles which originally belonged to KTC and are now as per the Registration Certificate owned by the BVB, no concession could be granted. Thus, the Writ Petitions were partly allowed directing the respondents to issue reduced demand, excluding the additional tax demanded under Section 7 of the Motor Vehicles Act. The petition filed by the BVB was allowed holding that they are not liable to pay higher tax demanded from them for the vehicles, which were earlier owned by them. 6. A reading of Ext.P2 agreement, which is entered into between BVB as the first party and the KTC as second party, would indicate that the first party is the registered owner of five buses described in the schedule and those buses are used for the purpose _WA Nos.857&864 of 2018_ 8 of transporting the students and teachers in various schools conducted by the respondent and wherein the second party has offered to hold those buses on the terms and conditions agreed upon between the parties. What is required under the provisions of the Motor Vehicles Act for a transfer of the vehicle is an intimation in the format to the Regional Transport Officer. Nothing is mentioned regarding the passing of the consideration or price of the vehicle to constitute an effective sale of a vehicle. Once registration formalities are completed, the registered owner becomes the owner of the vehicle. Under Section 2(30) of the Act an 'owner' is defined thus: “30 'owner' means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement.” 7. The respondent would argue that the person in possession of the vehicle as per agreement is also treated as an owner and liability under Section 140 of the Motor Vehicles Act could also be fastened on that owner holding the vehicle as per the _WA Nos.857&864 of 2018_ 9 agreement. In the instant case, as per Ext.P2 agreement, the vehicle is held by KTC only for the purpose of operating it. For all other purposes, the ownership as well as the possession is with the BVB. What Section 2(30) of the Act states is only that, motor vehicle which is the subject of a hire-purchase agreement, or an agreement of lease or an agreement of hypothecation, a person in possession of the vehicle under that agreement would also come within the definition of an 'owner'. The agreement in the instant case does not indicate that the ownership and possession continues with KTC. The agreement clearly states that the ownership has been transferred to BVB and that KTC is in possession of the vehicles solely for the purpose of operating those buses. As far as a gift of movable property is concerned, no document, at all, is necessary and hence, when there is no consideration for transfer of ownership by KTC to BVB, it can only be termed as a 'gift' nevertheless. The ownership of the buses stand transferred to the BVB by virtue of their name being entered as the owner in the Registration Certificate. 8. We are, therefore, of the opinion that the learned Single Judge was not justified in rejecting the Writ Petitions by _WA Nos.857&864 of 2018_ 10 holding that the KTC continued to be the owner in possession of the vehicles, which originally belonged to them, despite the change of name in the Registration Certificate. In view of our finding that BVB is the registered owner of the vehicles, the respondents cannot claim more tax than what is required to be paid for 'educational institution buses' plying solely for the purpose of transporting students and staff of BVB. The respondent does not have a case that the vehicles are being used for any other purposes, other than plying for students and staff of the educational institution. Hence, they are entitled to all tax exemptions/concessions for the vehicles, which would squarely fall under the definition of “educational institution bus” as defined under Section 2(11) of the Motor Vehicles Act. The impugned judgment is set aside and the Writ Appeals are allowed. No order as to costs. Sd/K. VINOD CHANDRAN Judge Sd/ASHOK MENON Judge dkr