Tata Motors Finance Ltd Vs Transport Authority, Odisha and another

7. The petitioner, being a financer within the meaning of Section 2(8) of the Motor Vehicles Act, 1988, is engaged in the business of hypothecation, leasing or hire-purchase of motor vehicles. In view of the provisions contained under Section 39 of the Motor Vehicles Act, 1988, no person shall drive any motor vehicle and no owner of a motor vehicle shall cause or permit the vehicle to be driven in any public place or in any other place unless the vehicle is registered and the certificate of registration of the vehicle has not been suspended or cancelled and the vehicle carries a registration mark displayed in the prescribed manner. Thereby, restriction has been imposed with regard to plying of a vehicle without any registration number by the person or even owner of a vehicle in a public place. But, proviso to Section 39 authorized a dealer, who is in possession of the vehicle, to ply a vehicle without registration subject to conditions as prescribed by the Central Government. In other words, the restriction imposed to ply a vehicle by a person or owner is not applicable to a dealer who possessed a motor vehicle subject to condition prescribed by the Central Government without any registration. The motor vehicle cannot be driven or caused to be driven or caused to be used in any public place or any other place for any of the parties indicated therein without requisite registration. Section 40 thereof deals with registration where to be made, where as Section 41 deals with registration how to be made. Section 42 deals with special provision for registration of motor vehicles of diplomatic officers, whereas Section 43 deals with temporary registration and Section 44 deals with production of vehicle at the time of registration. Section 45 deals with refusal of registration or renewal of the certificate of registration. Section 191 deals with sale of vehicle in or alteration of vehicle to condition contravening the Act. If any dealer contravenes Chapter-VII or any rule made thereunder, shall be punishable with fine which may extend to hundred rupees. Section 192 deals with using vehicles without registration, which clearly specifies that whosoever drives a motor vehicle or causes or allows a motor vehicle to be used in contravention of the provisions of Section 39 shall be punishable as per the provisions mentioned therein.

8. Chapter-III of the Central Motor Vehicles Rules, 1989 deals with registration of motor vehicle. Under sub-heading "trade certificate", Rule-33 puts a condition for exemption from registration as per the proviso to Section 39, which provides that if a motor vehicle in the possession of a dealer/ manufacturer shall be exempted from the necessity of registration subject to the condition that he obtains a trade certificate from the registering authority having jurisdiction in the area as his place of business in accordance with the provisions of the chapter. Rule-34 deals with trade certificate, which specifically provides that application for grant or renewal of a trade certificate, shall be made in Form- 16 appended to the rules. Clause-5 of Form-16 clearly states the number of certificates required. The validity of the trade certificate granted under Rule-35 shall be in force for a period of twelve months from the date of issue or renewal thereof and shall be effective throughout India as per the provisions under Rule-37. Rule-39 clearly speaks about use of trade registration mark and number shall not be used upon more than one vehicle at a time or upon any vehicle other than a vehicle bona fide in the possession of the dealer in course of his business or on any type of vehicle other than the one for which the trade certificate is issued. Rule- 41 clearly provides that the holder of a trade certificate shall not use any vehicle in a public place under that certificate for any purpose other than the conditions to (a) to (h). The said conditions are in consonance with the provisions contained in proviso to Section 39 of the Motor Vehicles Act, 1988 read with Rule-33 of the Rules, 1989. Except the condition stipulated in clause (a) to (h) of Rule-41, the dealer cannot ply a vehicle in a public place under the trade certificate issued in his favour by the registering authority.

9. As per the provisions contained under Section 51 of the Act, 1988, where an application for registration of a motor vehicle which is held under a hire?purchase, lease or hypothecation agreement is made, the registering authority shall make an entry in the certificate of registration regarding the existence of the said agreement. Similarly, if the ownership of any motor vehicle registered, is transferred and the transferee enters into the said agreement with any person, the last registering authority shall, on receipt of an application in such form as the Central Government may prescribe from the parties to the said agreement, make an entry as to the existence of the said agreement in the certificate of registration. Further any entry made under sub-section (1) or sub-section (2) of Section 51 of the Act, 1988, may be cancelled by the last registering authority on proof of the termination of the said agreement by the parties concerned on an application being made in such form as the Central Government may prescribe. To give effect to such provisions, Rule 60 clearly speaks an application for making an entry of hire-purchase, lease or hypothecation agreement in the certificate of registration of a motor vehicle required under subsection (2) of section 51 shall be made in Form 34 duly signed by the registered owner of the vehicle and the financier and shall be accompanied by the certificate of registration and the appropriate fee as specified in Rule 81. Similarly, for termination of such hypothecation agreement, Rule 61 prescribes the mode of making application to the registering authority for cancellation of such endorsement made in the registration certificate issued by the authority concerned. On perusal of the provisions contained under Section 51 of the Act, 1988 read with Rules 60 and 61 of the Rules, 1989, it is seen that no where it has been prescribed that unless the financer has valid trade certificates the endorsement in the registration certificate and cancellation thereof cannot be undertaken. Rather, it has been made clear that the provisions contained under the Act, 1988 read with Rules, 1989 cast a duty on registering authority to make entry of hypothecation in the registration certificate and, on satisfying the loan, cancel such entry made in the registration certificate. Due to non-entering of hypothecation endorsement by the registering authority in the new registration certificates of the vehicles financed by the petitioner-company, which is a statutory obligation casts on the registering authority to discharge in view of the provisions contained under Section 51 of the Act, 1988 read with Rules 60 and 61 of the Rules, 1989, the vehicles purchased by the respective purchasers on being financed by the petitionercompany are compelled to ply on the road in contravention of the provisions contained under the Act, 1988. Similarly, on repayment of the loan amount, when an application is made by the purchasers, if no endorsement is made by the registering authority for cancellation of hypothecation endorsement entered between the petitioner-company with the purchaser from the registration certificate issued by the authority concerned, that will amount to contravening the provisions contained in the Act, 1988 and Rules, 1989.

10. Mr. B.K. Sharma, learned Standing Counsel for Transport Department contended that the petitioner being a dealer is required to take trade certificate. The same having been suspended, due to non-renewal thereof, the petitioner is prohibited from doing the business. As such, the action of the registering authority, in not entering hypothecation endorsement and cancellation thereof in the certificate of registration, cannot be said to be unjustified. As it appears from the provisions contained for grant of trade certificate, there is no condition precedent for the financers or dealers to have such trade certificate for endorsement of hypothecation and cancellation thereof. Rather, the trade certificate is issued to a dealer for the purpose as specified under Rule 41 of the Rules, 1989, save and except subrule (h) of Rule 41, where it is stated that for removing the vehicle after it has been taken possession of by or on behalf of the financer due to any default on the part of the other party under the provisions of the agreement of hire-purchase, lease or hypothecation. In view of such position, the financer though comes under the definition of dealer and is required to take trade certificate as per Rule 35 of the Rules, 1989, but the purpose of obtaining the trade certificate is very limited, as has been mentioned in Rule 41(h) of the Rules, 1989. There is no provision under the Act, 1988 or the Rules, 1989, which says that a ''dealer'' is only required to have a trade certificate to do its business. The financer also requires the trade certificate under Rule 35 of the Rules, 1989 for the purpose of taking possession of the vehicle, as per the provisions of agreement of hypothecation. This can be illustrated from the fact that if a financer is seizing a transport vehicle, which requires a permit to ply on road and when the said vehicle is seized and taken to a place i.e. the stockyard of the financer for keeping the vehicle and if the said alignment of road, through which the vehicle will be removed to the stockyard, is not permitted under the permit, then the "trade certificate" will come to rescue of the financer, as Section 66 of the Act, 1988 stipulates that no owner of a motor vehicle shall use or permit the use of vehicle without permit on road.

11. Mr. B.K. Sharma, learned Standing Counsel for Transport Department further urged that there are certain outstanding against the vehicle financed by the petitionercompany towards tax and penalty. If that be so, the same can be recovered from the owner and not from the financer. Furthermore, the said issue is altogether different from the issues under consideration by this Court in the present writ petition. Nonpayment of tax and penalty by the owner cannot be a ground not to endorse and cancel the hypothecation in the registration certificate issued by the registering authority. Availability of valid trade certificate and renewal thereof is not a sine qua non for entering and terminating the hypothecation in the certificate of registration issued by the registering authority and, as such, the contention raised to the contrary cannot sustained in the eye of law. The provisions contained under the Act, 1988 and the Rules, 1989 are absolutely clear that the registering authority has to make an endorsement of hypothecation and termination thereof in the certificate of registration. Save and except the provisions contained under Section 51 of the Act, 1988 and the Rules 60 and 61 of the Rules, 1989, there is no other provisions made available to the registering authority to refuse endorsement of hypothecation and cancellation thereof in the certificate of registration. For some plea or other, opposite party no.2 cannot coerce the financer to go for a trade certificate, which is not the condition precedent for endorsing and cancelling the hypothecation in the registration certificate issued by the registering authority.

12. It is apt to refer here the legal maxim "Expressio Unius est exclusion alterius" i.e. if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and any other manner are barred. Similar question had come up for consideration before this Court in Subash Chandra Nayak (supra) and this Court in paragraph-8 observed as follows:

".............the statute prescribed a thing to be done in a particular manner, the same has to adhered to in the same manner or not at all. The origin of the Rule is traceable to the decision in Taylor v. Tailor, (1875) LR I Ch D 426, which was subsequently followed by Lord Roche in Nazir Ahmad v. King Emperor, AIR 1936 PC 253(2). But the said principle has been well recognized and holds the field till today in Babu Verghese v. Bar Council of Kerala (1999) 3 SCC 422, and Zuari Cement Limited v. Regional Director, Employees'' State insurance Corporation, Hyderabad and others, (2015) 7 SCC 690 and the said principles has been referred to by this Court in Manguli Behera v. State of Odisha and others (W.P.(C) No. 21999 of 2014 disposed of on 10.03.2016)"

In view of the above settled position of law, there is no doubt that if an action is required to be undertaken in a particular manner, then that has to be done in that manner or not at all. Therefore, applying the same to the present context, if the statute specifically provides the manner in which the hypothecation endorsement is to be entered into the certificate of registration and the termination thereof, when an application is made, as has been provided under the statute in Rules 60 and 61 of the Rules, 1989 in the prescribed forms, i.e., Forms-34 and 35 along with the fees, then the registering authority cannot have any option than to follow the law as prescribed under the Act, 1988 read with Rules, 1989. As such, the registering authority cannot and could not have refused to make endorsement or terminate the hypothecation in the certificate of registration, because the financer has not renewed the trade certificate for doing its business in the State. The grant of trade certificate to a financer is only confined to Rule 41(h) of the Rules, 1989. Therefore, the financer cannot use trade certificate for any purpose other than specified under the Rule 41(h) of the Rules, 1989. Thus, the action of the registering authority in refusing to make endorsement of hypothecation and cancellation thereof in the certificate of registration, in the name of renewal of trade certificate, amounts to, not only arbitrary and unreasonable exercise of power, but also contrary to the provisions of law.