Bombay High Court Protects Innocent Car Buyer: Registration Restored Despite Forged Import Papers
Court Says Buyer Cannot Suffer for Seller’s Fraud
RTO Must Respect Customs Settlement Commission’s Orders
By Our Legal Correspondent
New Delhi: December 13, 2025:
In a landmark judgment, the Bombay High Court has given relief to an innocent car purchaser whose vehicle registration was cancelled because the car was originally imported using forged customs documents. The Court ruled that a bona fide buyer who has complied with all legal requirements cannot be penalised for fraud committed by others.
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The case highlights the balance between protecting government revenue and safeguarding the rights of genuine citizens who purchase vehicles in good faith.
Background of the Case
- The car in question was imported into India using a fake bill of entry, falsely claiming diplomatic exemption to avoid customs duty.
- Later, the Directorate of Revenue Intelligence (DRI) discovered the fraud and initiated proceedings.
- The matter was taken to the Customs Settlement Commission, which ordered payment of customs duty, interest, and penalties.
- The subsequent purchaser, Imran Humayun Chandiwala, a Mumbai businessman, bought the car in December 2020 after all dues were settled.
- Despite this, the Regional Transport Office (RTO) cancelled the car’s registration, citing Section 55(5) of the Motor Vehicles Act.
Court’s Observations
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Justice N.J. Jamadar delivered the ruling, making several important points:
- Innocent buyers cannot be punished: The Court said that a person who buys a vehicle in good faith, after paying all dues, should not suffer for fraud committed by previous owners.
- Settlement Commission’s findings are binding: Once the Commission settles a case under the Customs Act, its order is final and cannot be ignored by other authorities.
- RTO acted unfairly: Cancelling registration despite compliance with customs orders was termed disproportionate and unjust.
- Rule of law must prevail: Administrative authorities cannot reopen issues already settled by statutory bodies.
Impact of the Judgment
This ruling has wide implications:
- Protection for genuine buyers: It reassures citizens that they will not lose their property rights due to fraud committed by others.
- Clarity for RTOs: Transport authorities must respect the finality of Settlement Commission orders.
- Strengthening trust in law: The judgment reinforces that courts will protect innocent parties against arbitrary administrative actions.
Reactions
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Legal experts have welcomed the decision, calling it a progressive step in protecting consumer rights. Many believe this ruling will set a precedent for similar disputes involving imported vehicles.
Business communities also see this as a relief, as imported cars often face scrutiny due to past irregularities.
Conclusion
The Bombay High Court’s ruling is a strong message that fraudsters must pay, but innocent buyers must not suffer. By restoring the car’s registration, the Court has upheld fairness, justice, and the principle that administrative authorities cannot override binding legal orders.
This case will likely serve as a reference point for future disputes involving vehicle imports and fraudulent documentation.
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