IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 4TH NOVEMBER 2008 / 13TH KARTHIKA 1930 W.A.No.1182 of 2005(D) ------------------------------------------- AGAINST THE JUDGEMENT IN O.P.NO.19441/1999-M, DATED 08/11/2004 .................... APPELLANT: PETITIONER:- ---------------------------------------- M/S. ICDS LTD., KOTTARAM BUILDING, PALAYAM, TRIVANDRUM, REPRESENTED BY ITS ERNAKULAM BRANCH MANAGER P.V. VITTAPPA RAO. BY ADV. SRI.S.R.DAYANANDA PRABHU SRI.K.S.RAJESH RESPONDENTS: RESPONDENTS:- ---------------------------------------------------- 1. THE REGIONAL TRANSPORT OFFICER, REGIONAL TRANSPORT OFFICE, TRIVANDRUM. 2. N. SHABEEB, S/O. M. NIZAR, MANGULAM HOUSE, MUTTADA, TRIVANDRUM - 695 025. 3. M.SHABEER, S/O. LATE P.C.MOHAMMED SALI, MANGULAM HOUSE, MUTTADA, TRIVANDRUM-695 025. 4. N.S. SHAJI, S/O. SUKUMARAN, T.C.2/1272, POTTAKUZHI, PATTOM, TRIVANDRUM-695 004. R1 BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 04/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- H.L.Dattu,C.J. & A.K.Basheer, J. ------------------------------------------- W.A.No.1182 of 2005-D -------------------------------------------- Dated, this the 4th November, 2008 JUDGMENT H.L.Dattu,C.J. The subject matter of this appeal is under the provisions of the Kerala Motor Vehicles Taxation Act, 1976 (“Act” for short). (2) The appellant calls in question the correctness or otherwise of the orders passed by the learned Single Judge in O.P.No.19441 of 1999, dated 8.11.2004. In the Original Petition filed, the petitioner had called in question the demand notices (Exhibits P9 to P12) issued by the 1st respondent - Regional Transport Officer, Thiruvananthapuram - demanding arrears of tax from the appellant under the provisions of the Act, 1976. (3) The factual matrix lie in a narrow compass. The appellant is engaged in the business of hire purchase and leasing of motor vehicles, machinery, etc. Respondents 2 to 4 had executed hire purchase agreements (Exhibits P1 to P4) and had taken hire of the vehicles. In view of the default committed by respondents 2 to 4 in payment of hire instalments, the appellant had taken possession of the vehicles on 3.11.1998. (4) After taking possession of the vehicles, the appellant had submitted applications (Exhibits P5 to P8) before the 1st respondent, Regional Transport Officer, for issue of duplicate Registration Certificate under WA.No.1182 of 2005-D - 2 - Section 51(5) of the Motor Vehicles Act. Pursuant to the application so made, the Regional Transport Officer has issued the duplicate Registration Certificates to the appellant. With the help of the duplicate Registration Certificate, the appellant has sold the vehicles on 10.5.1999 and 4.6.1999. After sale of the vehicles, the 1st respondent has issued demand notices (Exhibits P9 to P12) demanding arrears of tax under the Act from the appellant. The arrears of tax pertains to the period when respondents 2 to 4 were in possession and ownership of the vehicles. The appellant, without questioning the demand notices so issued before an appropriate appellate forum, had filed Original Petition before this Court. The learned Single Judge, as we have already noticed, has rejected the writ petition, keeping in view the charging provision of the Act and also Section 9 of the Act. (5) Aggrieved by the orders passed by the learned Single Judge, the appellant is before us. (6) This Court, while entertaining the Writ Appeal, had passed an interim order, directing the first respondent to take coercive steps against respondents 2 to 4, to recover the taxes due under the Act for the period when they were the owners of the vehicles and had possession and control over the vehicles. For the reasons best known, respondent No.1 has not complied with the interim directions issued by this Court. The appellant also has not filed any contempt petition before this Court, inter alia, alleging that respondent No.1 WA.No.1182 of 2005-D - 3 - has wilfully and deliberately disobeyed the interim orders passed by this Court. Be that as it may. (7) The facts are not in dispute. Section 3 of the Act is the charging provision. It envisages, that, tax shall be levied on every motor vehicle used or kept for use in the State, at the rate specified for such vehicle in the Schedule. (8) Section 4 of the Act envisages that the tax under Section 3(1) of the Act shall be paid in advance within the period prescribed by the registered owner or a person having possession or control of the Motor Vehicle. (9) Section 5 of the Act provides for exemption from payment of tax under the Act under certain circumstances. (10) Section 9 of the Act is the relevant Section for the purpose of disposal of this Writ Appeal. Therefore the said Section is extracted and it reads as under: “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 tax has transferred the ownership of such vehicle or has ceased to be in possession 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 WA.No.1182 of 2005-D - 4 - 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”. (11) Under this Section, if the liability for payment of tax in respect of any motor vehicle remains unpaid by any person liable for the payment thereof and such person, before payment of 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 is liable to pay tax under the Act. Sub-section (2) of Section 9 of the Act carves out an exception to sub-section (1) of Section 9 of the Act. It says, that, the liability to pay tax under the Act shall not cease to affect the liability to pay tax of the person who has transferred the ownership or has ceased to be in possession or control of such vehicle. (12) Sri.S.R.Dayananda Prabhu, learned counsel appearing for the appellant, would submit, that, since the 1st respondent had issued a duplicate Registration Certificate, the appellant was under the bona fide belief that there are no arrears of tax by the persons who were the owners of the vehicles and, therefore, has effected transfer of the vehicles to the third parties and, therefore, there is no justification for the 1st respondent to proceed against WA.No.1182 of 2005-D - 5 - the appellant. The learned counsel would, further, submit, that, it is expected of the 1st respondent to have proceeded firstly against the hirers and guarantors of the vehicle and thereafter only against the Financier. (13) Having given our anxious consideration to the submissions made by Sri.Prabhu, learned counsel, we are of the opinion, that, the submissions made by the learned counsel is devoid of any merits. (14) The charge under the Act is on the vehicle. The liability is not only on the owner of the vehicle, but also a person who gets the possession of the vehicle. This is clear in view of the language employed under Section 3 read with Sections 4 and 9 of the Act. (15) The appellant was the Financier. Respondents 2 to 4 had executed hire purchase agreements (Exhibits P1 to P4) and had taken the vehicles from the appellant. They had committed default in payment of the hire instalments. In view of the default committed by them, the appellant has taken possession of the vehicle. Since the appellant was in possession and control over the vehicle, the 1st respondent has proceeded to initiate recovery proceedings against the appellant. Merely because the Registering Authority has issued a duplicate Registration Certificate on a request made by the appellant without first satisfying himself that there are no arrears of tax due under the Act, it would not absolve the appellant from payment of tax due under the Act. Secondly, the Act provides for recovery of tax from the owner WA.No.1182 of 2005-D - 6 - of the vehicle or from any person who is in possession or control over the vehicle. Since the appellant has taken possession of the vehicles in view of the default committed by respondents 2 to 4, the 1st respondent has initiated recovery proceedings to recover the taxes due under the Act. (16) The appellant now having paid the tax arrears as demanded in Exhibits P9 to P12, if law permits, it can definitely proceed against the hirers or guarantors of the vehicles to recover the amounts paid by the appellant towards the taxes by resorting to the appropriate proceedings. (17) In view of the above, we are of the opinion, that, the learned Single Judge was justified in rejecting the Original Petition filed by the appellant. (18) Accordingly, we dismiss the Writ Appeal. In the facts and circumstances of the case, the parties are directed to bear their own costs. (19) I.A.No.1679 of 2005 is dismissed. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/dk