Regional Transport Officer, Regional Transport Office, Kakkanad, Ernakulam; Deputy Transport Commissioner, Ernakulam; Deputy Tahsildar (Revenue Recovery), Kanayannur Taluk, Ernakulam v. Kerala Transport Company Thammanam, Kochi-32

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **THURSDAY, THE 11TH DAY OF APRIL 2019 / 21ST CHAITHRA, 1941** **RP.No. 299 of 2019 IN WA. 864/2018** **AGAINST THE ORDER/JUDGMENT IN WA 864/2018 of HIGH COURT** ## **REVIEW PETITIONERS/RESPONDENTS:** **1 REGIONAL TRANSPORT OFFICER REGIONAL TRANSPORT OFFICE,KAKKANAD, ERNAKULAM,KOCHI-682030.** **2 THE DEPUTY TRANSPORT COMMISSIONER, CZ-11,KUNNUMPURAM,KAKKANAD, ERNAKULAM,KOCHI-682030.** **3 THE DEPUTY TAHSILDAR(REVENUE RECOVERY), KANAYANNUR TALUK,ERNAKULAM, KOCHI-682011.** **BY SRI MOHAMMED RAFIQ, SR.GP** ## **RESPONDENT/APPELLANT:** **KERALA TRANSPORT COMPANY THAMMANAM,KOCHI-32, REPRESENTED BY ITS ZONAL MANAGER,M.RAGHAVAN.** **SMT SUMATHI DANDAPANI, SR. SRI MILLU DANDAPANI** ## **OTHER PRESENT:** **THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 11.04.2019, ALONG WITH RP.327/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **THURSDAY, THE 11TH DAY OF APRIL 2019 / 21ST CHAITHRA, 1941** **RP.No. 327 of 2019 IN WA. 857/2018 AGAINST THE JUDGMENT DATED 20.07.2018 IN WA 857/2018 of HIGH COURT** ## **REVIEW PETITIONERS/RESPONDENTS:** **1 REGIONAL TRANSPORT OFFICER, REGIONAL TRANSPORT OFFICE, KAKKANAD, ERNAKULAM - 682 030 2 THE DEPUTY TRANSPORT COMMISSIONER ERNAKULAM, KOCHI- 682 030 3 THE DEPUTY COMMISSINER EAST FORT, THIRUVNANTHAPURAM - 695 023 4 THE DEPUTY TAHSILADAR (REVENUE RECOVERY) KANAYANNUR TALUK, ERNAKULAM, KOCHI - 682 011** **BY SR.GOVERNMENT PLEADER SRI.MOHAMMED RAFIQ** ## **RESPONDENT/APPELLANT:** **KERALA TRANSPORT COMPANY, THAMMANAM, KOCHI - 32, REPRESENTED BY ITS ZONAL MANAGER, M.RAGHAVAN** **ADVS.** **SMT.SUMATHI DANDAPANI, SR. SRI.MILLU DANDAPANI** **THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 11.04.2019, ALONG WITH RP.299/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** _**RP.Nos.299/2019 & RP 327/2019**_ 3 ## **O R D E R** ## **[RP.299/2019, RP 327/2019]** ## Ashok Menon, J. Aggrieved by the judgment dated 20.07.2018 the respondents are before us seeking a review on two grounds, firstly that we had no occasion to consider Annexures A to E documents produced along with the petition and secondly, that despite due diligence, the petitioners could not draw our attention to the binding precedent of the Honourable Supreme Court in _**Vasantha**_ ## _**Viswanathan & others v. V.K.Elayalwar & others, (2001)**_ _**8 SCC 133**_ , which, according to the revision petitioners, squarely applies to the facts and circumstances of the case in hand. 2. The learned Single Judge had vide common judgment dated 21.12.2017 dismissed three Writ Petitions, W.P.(C) Nos.15725/2012, 15955/2012 and 15143/2014 filed by the Kerala Transport Company (KTC) and Bharatiya Vidya Bhavan (BVB) challenging the demand for tax raised by the respondents denying the writ petitioners the benefit of reduced rate of tax _**RP.Nos.299/2019 & RP 327/2019**_ 4 applicable to vehicles owned by educational institutions, used solely for the purpose of transporting of students and staff of the school. The contention of the review petitioners was that the respondent was engaged in the business of plying contract carriages. They owned stage carriages, which could not otherwise be plied on the road for the reason that they were more than 15 years old. But since there was no embargo in plying those vehicles for educational institutions, those buses were used ostensibly as school buses. A sham document purporting to be an agreement for sale was executed between them allegedly transferring the buses to the BVB; while retaining the possession and actual management and running of the buses with the KTC on condition that Rs.1,400/- per day would be paid by BVB for use of those buses by the students and staff of the School. 3. We had vide our judgment held that BVB is the registered owner of the vehicles, and therefore, the respondent cannot claim more tax than what is required to be paid for 'educational institution buses' plying _**RP.Nos.299/2019 & RP 327/2019**_ 5 solely for the purpose of transporting students and staff of BVB, coming under the definition under Section 2(11) of the Motor Vehicles Act (for short “MV Act”) and set aside the impugned common judgment of the learned Single Judge, who held that no consideration had passed on account of the alleged sale, and therefore, there was no valid sale as contended by the respondent. 4. We heard the learned Senior Government Pleader Sri.Mohammed Rafiq and learned Senior Counsel Smt.Sumathi Dandapani. The documents produced as Annexures A to E as well as the judgment now relied upon by the learned Counsel Sri.Rafiq were also perused and considered. 5. We do not find that there are sufficient grounds for recalling our judgment for the reasons stated here under. Annexure A produced by the learned Government Pleader is the assessment based on the finding of the Director, VACB to the effect that the Department noticed a revenue loss to the tune of Rs.46,63,840/- by way of evasion of tax as a result of _**RP.Nos.299/2019 & RP 327/2019**_ 6 fraudulent transfer of contract carriages to educational institutions. Annexure B is a counteraffidavit filed by the 2[nd] respondent in the W.P. together with copy of report of the VACB referred to above. Annexure C is an order of the learned Single Judge in W.P.(C) No.15725/2012, in which the BVB was directed to place before the Court the records relating to the purchase of School buses and also to report whether they have paid any sale consideration as cash, D.D. or cheque. Annexure D is the vigilance enquiry report dated 31.07.2009. Annexure E is the order of the learned Single Judge in the aforementioned Writ Petitions, wherein the petitioners were directed to state whether the transferee had paid any consideration for transfer of the vehicles. 6. Suggestion of the State, armed with the vigilance report referred to above, is that KTC had deliberately created documents purporting to be transfer of buses, which were being used as contract carriages liable for payment of higher rate of tax to the Government by the educational institutions so as to _**RP.Nos.299/2019 & RP 327/2019**_ 7 take the benefit of Section 2(11) of the MV Act and thus evaded huge amount of tax between 2003 and 2004. It is also pointed out that the Director of BVB has categorically admitted that the institution had not purchased the buses on payment of consideration, and hence, the transaction is fraudulent and the KTC continues to be the owner of those buses with the liability to pay tax at a higher rate prescribed for contract carriages. 7. The Honourable Supreme Court in _**Vasantha**_ ## _**Viswanathan (Supra)**_ held as follows: _“Section 31 of the Motor Vehicles Act, 1939 lays down that where the ownership of any motor vehicle registered under Motor Vehicles Act is transferred, the transferor and transferee both are required to report the fact of transfer to the Registering Authority so that particulars of transfer of ownership may be entered in the certificate of registration. The transfer is not effected under Section 31 of the Motor Vehicles Act, 1939, but the same simply prescribes procedure for entering the factum of transfer in the registration certificate, which is an act posterior to the transfer. The transfer of vehicles in question would be governed by the provisions of Section 19 of the Sale of Goods Act according to which property in the vehicle would pass to defendant No.1 at such time as the parties to the contract intend it to be transferred.”_ _**RP.Nos.299/2019 & RP 327/2019**_ 8 8. The learned Counsel submits that Section 31 of the Motor Vehicles Act, 1930 and Section 50 of the Motor Vehicles Act, 1988 are _pari materia_ and therefore, the dictum laid down above squarely applies to the present context as well. 9. A reading of _**Vasantha Viswanathan**_ makes it clear that the dispute in that case was between the parties to the contract, the seller and the purchaser, as to the conclusion of the sale, which was under challenge by the plaintiff therein for the reason that sale consideration was not paid as agreed in the agreement. In the agreement referred to in the above cited decision it was stipulated that the sale consideration was neither fixed nor paid, because as per that agreement, the consideration was to be determined after the ownership in the registration book was transferred and that determination had not taken place at all, which would, in effect, nullify the sale of the property under Section 19 of the Sale of Goods Act. 10. The facts and situation in the instant case is not identical to the one in _**Vasantha Viswanathan's**_ _**RP.Nos.299/2019 & RP 327/2019**_ 9 case. The parties of the contract here are not in disagreement. The interpretation of the agreement is what is challenged by the Department. If sale consideration has not been paid, the seller has his right reserved under the Sale of Goods Act against the buyer. He also has a lien over the goods for unpaid sale consideration. But that by itself would not nullify the sale and definitely not at the instance of a third party, such as the Department. It is not for the authorities of the Department or the Vigilance to determine the validity of the sale, as long as parties to the agreement are not in dispute regarding the sale consideration. Nowhere in Section 19 it is stated that sale could be complete only on payment of money as consideration. The agreement does not stipulate payment of such an amount to the KTC. There has been a transfer of the vehicle in the name of BVB and it is not for third parties to challenge the sale on grounds of consideration having not passed. In fact, here even the seller cannot challenge the sale since the agreement did not speak of any consideration. _**RP.Nos.299/2019 & RP 327/2019**_ 10 11. The buses, which were being plied as contract carriages by KTC were rendered useless because of the notification by the Government creating an embargo on plying of buses aged more than 15 years as contract or stage carriages. The buses then had to be scrapped and taken off the roads. KTC could not have succeeded in selling the buses for the purpose of being run as contract carriages or stage carriages in view of the prohibition. However, these buses could be used for the purpose of transporting School students and staff. Hence, it was thought appropriate by the KTC to transfer those buses vide an agreement with the BVB so that those useless and redundant buses could be utilised for the purpose of transporting School students. Expenses would nevertheless have to be incurred for the purpose of running those buses, and it is for that purpose, that payment of Rs.1,400/- per day was stipulated. The school too benefited from the transaction since they were saved from investing large amounts for purchase of stage carriages. The agreement was a prudent measure, which was not prohibited by law _**RP.Nos.299/2019 & RP 327/2019**_ 11 and the fact that it created a lesser tax liability insofar as the operations being for educational purposes cannot be said to be a conscious deliberate act of evasion. As we noticed, otherwise the vehicles would not have generated any tax at all and would have been scrapped for reason of the prohibition of 15 year old buses being used as public stage carriage vehicles. 12. The argument of the learned Government Pleader is that certain clauses in the agreement cannot be implemented because it is against law. The learned Government Pleader points out clause (7) of the agreement in which it is stated that the KTC will be solely responsible for any damage, on account of accident caused to buses, or injury and death caused to any person during the period of its operation and also for any legal proceedings resulting from the rash and negligent running of the buses or conduct or misbehaviour on their part. The vigilance report relied upon by the learned Government Pleader states that Section 140 of the MV Act specifies that the liability _**RP.Nos.299/2019 & RP 327/2019**_ 12 to pay compensation in certain cases is vested with the owner of the vehicle, and therefore, clause (7) of the agreement is against the statutory provisions in Section 140 of the MV Act. The liability of the owner is to be decided by the Motor Vehicles Tribunal as and when it comes up for consideration. It is not for the Vigilance Department to decide whether the liability under Section 140 could be transferred to the KTC by the registered owner by virtue of an agreement, and therefore, for that reason alone, it cannot be said that the agreement is invalid. The liability, though statutorily placed on the registered owner, there is nothing preventing the operator from indemnifying the owner of such statutory liability, which is permissible under law. 13. Similarly, the calculation made by the Vigilance Department regarding the cost of running of the buses and the amount fixed as per the agreement for payment by BVB to KTC also cannot be adjudicated by them. In case of dispute between the parties, it is for the civil court to determine that and not for the _**RP.Nos.299/2019 & RP 327/2019**_ 13 Vigilance Department or Government or a third party to consider those matters. Further the documents produced now, were always in the custody of the Department and there is no cause shown as to why the same were not produced when the writ petitions were originally heard. There is evident an absolute and complete lack of diligence on the part of the Department and there is no explanation offered as to why after employment of due diligence the same were not produced before Court. For that reason also, we fail to find any grounds for review much less an error apparent from the face of the records _**(State of West Bengal v. Kamal Sengupta, (2008) 8 SCC 612)**_ . Hence, we find no reason whatsoever to recall our earlier judgment. The Review Petitions stand rejected. No costs. ## **K.VINOD CHANDRAN** ## **JUDGE** ## **ASHOK MENON** **JUDGE** _dkr_ _**RP.Nos.299/2019 & RP 327/2019**_ 14 ## **APPENDIX OF RP 299/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A** **COPY OF ORDER DATED 10.10.2017 IN WP(C) 15725/12** **ANNEXURE B COPY OF THE VIGILANCE REPORT DATED 31.07.2009** **ANNEXURE C COPY OF ORDER DATED 08.11.2017 IN WP(C) 15725/12** ## **APPENDIX OF RP 327/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A COPY OF LR.NO.E7/(VE/7/2005/EKM) 4017/2005 DATED 29.01.2010 OF THE DIRECTOR, VIGILANCE AND ANTI-CORRUPTION BUREAU ANNEXURE B COPY OF COUNTER AFFIDAVIT FILED BY THE 2ND RESPONDENT IN WP(C) 15955/12 ANNEXURE C COPY OF ORDER DATED 10.10.2017 IN WP(C) 15725/12 ANNEXURE D COPY OF THE VIGILANCE REPORT DATED 31.07.2009 ANNEXURE E COPY OF ORDER DATED 08.11.2017 IN WP(C) 15725/12**