IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 27TH JULY 2010 / 5TH SRAVANA 1932 WP(C).No. 10170 of 2008(I) --------------------------------------- PETITIONER(S): ---------------------- SURESH, SURESH NIVAS, NORTH ARYAD P.O., ALAPPUZHA. BY ADV. SRI.P.DEEPAK RESPONDENT(S): -------------------------- 1. THE REGIONAL TRANSPORT OFFICER, ALAPPUZHA. 2. SHRIRAM INVESTMENTS LIMITED, NEAR KRISHNA HOSPITAL, 40/786, CHITTOOR ROAD, ERNAKULAM, REPRESENTED BY BRANCH MANAGER. R1 BY SR.GOVT. PLEADER SRI. MATHE GEORGE VADAKKEL SRI.PHILIP T.VARGHESE FOR R2 SRI.THOMAS T.VARGHESE FOR R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27/07/2010, ALONG WITH WPC NO. 2135 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.10170/2008 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE TEMPORARY PERMIT ISSUED TO KL-03/H 4017 VALID TILL 6/2/2005. P2:- COPY OF THE TEMPORARY PERMIT ISSUED TO KL-03/H 4017 VALID TILL 3.7.2006. P3:- COPY OF THE TELEGRAM ISSUED TO THE PETITIONER AT THE INSTANCE OF THE 2ND RESPONDENT ON 19.2.2005. P4:- COPY OF THE LETTER DTD. 14.3.2005 OF THE 2ND RESPONDENT ACKNOWLEDGING SURRENDER AND DELIVERY OF POSSESSION OF THE STAGE CARRIAGE. P5:- COPY OF THE PROCEEDINGS OF THE SIT RESPONDENT DT. 11..2005. P6:- COPY OF THE ENQUIRY REPORT OF THE JOINT RTO, PERUMBAVOOR, DTD. 5.3.2006. P7:- COPY OF THE DEMAND NOTICE DTD. 10.10.2006. P8:- COPY OF THE CHALLAN EVIDENCING PAYMENT OF RS. 30000/- DTD. 16.11.06. RESPONDENT'S EXHIBITS R2:- COPY OF THE RECEIPT ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER DTD. 20.6.2005. TRUE COPY P.A. TO JUDGE tss P.R.RAMACHANDRA MENON, J -------------------------------------------- WP(C) NOs. 10170 OF 2008 AND 2135 OF 2009 --------------------------------------------- Dated this the 27th day of July, 2010 JUDGMENT The issue involved in both these cases is closely interlinked, in relation to the liability to pay the Motor Vehicles Tax in respect of the vehicle bearing No. KL 13 A 5319. The former Writ Petition has been filed by the registered owner, challenging the liability in respect of the disputed period stating that the possession of the vehicle had already been taken over by the financier and this being the position, the subsequent liability has to be satisfied by none other than the Financier. The contention of the Financier, who has filed the latter Writ Petition (challenging the steps under the Kerala Revenue Recovery Act) is that the possession of the vehicle was returned to the registered owner/petitioner in the other case, pursuant to some agreement executed immediately on taking over the possession for default in satisfying the due amounts. 2. The sequence of events brought to light shows that the petitioner in the former Writ Petition who was the owner of the concerned stage carriage had paid the tax till 31.12.2004. In respect of the next quarter, the registered owner filed 'G form' showing the place of garage at 'Mahim Body Builders’ at Muvattupuzha. Admittedly, there was a hypothecation agreement with the Financier, (the 2nd respondent in the 2 WP(C) No. 10170/2008 & 2135/2009 said Writ Petition and the petitioner in the other Writ Petition) on 19.02.2005. The registered owner obtained Ext.P3 telegram from the Financier, asking to clear the arrears in respect of the amount borrowed or to surrender the vehicle. Pursuant to this, the petitioner applied for and obtained a permit as borne by Ext.P5 dated 11.03.2005 for towing the vehicle to the yard of the Financier as shown therein, i.e., to the premises of one Mr.Vijayan, retired Superintendent of Police. Based on Ext.P5 permit issued by the 1st respondent, the petitioner took the vehicle and surrendered the same at the concerned premises, whereupon the 2nd respondent/Financier issued Ext.P4 receipt dated 14.03.2005 accepting delivery at the premises as aforesaid. 3. Even after the surrender of vehicle as above, it is the case of the registered owner, that he used to file 'G forms' in respect of the period from 01.04.2005 till 31.12.2006. With regard to the period from 01.01.2005 to 28.02.2005, ‘Exemption’ was granted to the petitioner. In all the G forms in respect of the 7 quarters from 01.04.2005 till 31.12.2006, the place of garage shown was at the premises of Mr.Vijayan, where the vehicle was surrendered (pursuant to Ext.P3 telegram and based on Ext.P5 permit) obtaining Ext.P4 receipt. The case of the registered owner is that without any intimation to the registered owner or the registering authority, the 3 WP(C) No. 10170/2008 & 2135/2009 Financier caused the vehicle to be dismantled and as a natural consequence, when the inspection was conducted at the instance of the 1st respondent, the vehicle was not found at the garage; on which event, the joint RTO, Perumbavur filed a report in this regard on 25.03.2006 as borne by Ext.P6. Pursuant to the said report, requisition was made by the departmental authorities leading to issuance of Ext.P7 revenue recovery notice demanding tax from the period 01.03.2005 to 31.03.2006 demanding a sum of Rs.2,05,725/- plus interest and collection charges. The registered owner came to know that the G forms preferred by the petitioner were rejected on receipt of Ext.P7, which made him to approach this Court by filing WP(C) 28138/2006 (wherein the Financier is not a party) wherein an interim order was passed by this Court subject to the condition that the petitioner satisfied a sum of Rs.30,000/-, which is stated as complied with as evident from Ext.P8 receipt and the matter is still pending. It is contended that the factum of dismantling of vehicle was not known to the registered owner and it was for this reason that appropriate pleadings and prayers were not incorporated in WP(C) 28138/2006 and the Financier was never made a party. On getting information the registered owner filed the present Writ Petition, WP(C)10170/2008, impleading the Financier as the 2nd respondent and disputing liability to pay the tax with a specific 4 WP(C) No. 10170/2008 & 2135/2009 prayer to proceed against the Financier in tune with the relevant provisions of law, since the possession of the vehicle had already been taken over by the Financier. 4. When the matter came up for consideration before this Court on 28.03.2008, an interim order was passed, whereby the 1st respondent was directed to recover the arrears of tax due for the vehicle from the Financier, if the vehicle was dismantled without notice to the registering authority and without cancellation of the RC; simultaneously staying the recovery proceedings against the petitioner/registered owner. 5. When the recovery proceedings were pursued by the revenue/departmental authorities against the Financier, pursuant to the above interim order, the same was subjected to challenge by filing WP(C) 2135/2009 stating that, after surrender of the vehicle by the registered owner, there was some negotiation, based on which a settlement was arrived and as per the terms of the settlement, the registered owner paid a sum of Rs.1,15,000/- to the Financier, whereupon the custody of the vehicle was released to the registered owner, although the registered owner failed to honour the commitment with regard to the liability to satisfy the balance payment by way of instalments. The delivery in respect of the above transaction stated as effected on 20.06.2005 is sought to be 5 WP(C) No. 10170/2008 & 2135/2009 substantiated by producing Ext.P1 in WP(C) 2135/2009 contending that the vehicle has been dismantled by none other than the registered owner himself. The Financier does not have any liability to satisfy the tax arrears of the vehicle as it has been re-possessed by the registered owner; which forms the sum and substance of the contentions raised in the Writ Petition filed by the Financier. 6. The averments raised by the Financier in the Writ Petition have been sought to be rebutted by filing a statement by the 1st respondent and also by filing a counter affidavit filed by the 3rd respondent/registered owner. The registered owner has specifically disputed the alleged execution of Ext.P1 delivery note or as to the alleged story set up with respect to the settlement effecting payment of Rs.1,15,000/-. The re- possession of the vehicle from the Financier as per Ext.P1 document produced in writ petition 2135/2009 is stated as nothing but a concocted document. Somewhat similar stand has been taken by the 1st respondent as well, in so far as the liability of the Financier (who has taken over the possession) is concerned; simultaneously adding that specific demand notice was issued to the Financier, before proceeding with the coercive steps, which has been duly served as borne by the postal acknowledgment card produced along with the statement. The contents of the counter 6 WP(C) No. 10170/2008 & 2135/2009 affidavit filed by the registered owner and the statement filed by the 1st respondent have been sought to be rebutted by the Financier by filing a reply affidavit. 7. The learned counsel appearing for the registered owner submits with reference to the materials on record, that the factum of surrender of the vehicle to the Financier stands admitted. The sequence of events leading to the surrender of the vehicle including the telegram sent by the Financier, Ext.P5 towing permit obtained by the registered owner from the 1st respondent in accordance with relevant provisions of law, Ext.P4 receipt dated 14.03.2005 issued by the Financier on surrender of the vehicle etc. are sought to be highlighted further contending that even after the alleged date of re-possession of the vehicle (which is stated as on 20.06.2005), the petitioner continued to submit G forms for the period from 01.04.2005 till 31.12.2006 showing the place of garage as the very same premises belonging to one Vijayan, who is stated as the authorised person of the Financier. If the version of the Financier is true, there was absolutely no need for the registered owner to have submitted the G forms showing the place of garage as the premises of the Financier, as mentioned above. It is also pointed out by the learned counsel that no date is mentioned in Ext.P1 delivery receipt, but for showing the delivery stated as effected on 7 WP(C) No. 10170/2008 & 2135/2009 20.06.2005. Further, the said document though issued in the letter head of the Financier in Chennai, it does not bear any seal and signature of the authorised officer of the Financier, which position is contrary to the other documents referred as borne by Ext.P4 receipt issued by the concerned ‘Branch’, when the possession was surrendered. Referring to the above documents, the learned Government Pleader also contends and submits that Ext.P1 delivery not stated as effected by the financier is not liable to be considered as a genuine or proper document to hold that the possession already taken over by the Financier was given back to the registered owner, to shift the liability from the shoulders of the Financier. 8. The learned Government Pleader further submits that the legal position stands settled and declared by virtue of the decisions reported in N.P.R. Finance Ltd. Vs. State of Kerala [2002 (1) KLT 591], Sebastian C. Vs. State of Kerala [2010 (1) KHC 950] and in Motor and General Finance Ltd. Vs. Dy. Transport Commissioner [2010 (2) KLT 1032] holding that the Financier is very much liable to satisfy the tax liability to the State, when the possession is taken over. 9. The learned counsel for the Financier submits that the Financier was constrained to file WP(C) 2135/2009 only because of the interim order passed by this Court in the other case on 28.03.2008 8 WP(C) No. 10170/2008 & 2135/2009 directing the respondent to proceed against the Financier, if the vehicle was dismantled without notice to the RTO and without cancellation of the registration certificate. Referring to the contention raised in the Writ Petition, it is stated, since there is a case for the Financier that the possession of the vehicle was given back to the registered owner on the strength of Ext.P1, the matter requires to be adjudicated, with regard to the ‘liability’; without which no coercive proceedings by way of RR are liable to be sustained against the Financier. 10. It is true, that the provisions under the Kerala Revenue Recovery Act cannot be invoked to realise any amount before quantification of the liability. But in the instant case, the question is whether any such quantification is required to be proved, in view of the admitted facts or at least the undisputed extent. It is very much admitted by the Financier that the registered owner pursuant to Ext.P3 telegram sent by the Financier obtained Ext.P5 towing permit and the vehicle was surrendered at the concerned premises leading to issuance of Ext.P4 receipt on 14.03.2005. In other words, the surrender of the vehicle by the registered owner and the taking over of possession on 14.03.2005 by the Financier stand admitted. This being the position, the liability to satisfy the tax in respect of subsequent period, from the date of taking over the possession 9 WP(C) No. 10170/2008 & 2135/2009 is not a fact which requires to be proved on the basis of any evidence to be adduced. The only remaining question is whether the case put forth by the Financier that the vehicle was subsequently handed over back to the registered owner on the strength of Ext.P1 on 20.06.2005 is liable to be accepted or not. The correctness/genuineness of the said document is seriously disputed from the part of the registered owner, as well as by the departmental authorities. Reference is also made to the contents of ‘paragraph 3’ of the WP(C) 2135/2009, wherein it has been stated by the Financier as follows: “Thereafter a settlement was reached between the petitioner and the 3rd respondent and the 3rd respondent paid a sum of Rs.1,15,000/- to the petitioner on 20.06.2005 and obtained the release of the vehicle from the petitioner. As per the terms of the settlement, the 3rd respondent was bound to pay the balance amount due to the petitioner in instalments that has been agreed upon between the parties. True copy of the vehicle delivery receipt given by the 3rd respondent to the petitioner is produced herewith and marked as Ext.P1. However, after obtaining release of the vehicle from the custody of the petitioner, the 3rd respondent appears to have dismantled the vehicle. The 3rd respondent has also refused to pay the balance amount payable by him to the petitioner.” From the above, there was a settlement, according to the Financier, whereby the balance amount after effecting payment of a sum of Rs.1,15,000/- was agreed to be satisfied by the registered owner. But what was the balance amount; how many instalments were stipulated; what 10 WP(C) No. 10170/2008 & 2135/2009 were the due dates; what will be the consequence if the commitment was not honoured etc. are not discernible from the pleadings raised or the documents produced by the Financier. So also, no copy of the settlement deed, if any, is produced before this Court to ascertain such vital factual particulars. The learned counsel for the Financier submits that, there was no written agreement, but for ‘oral arrangement’. This Court finds it very difficult to accept the said proposition. There is considerable force in the contentions raised from the part of the registered owner as well as the departmental authorities. Since the taking over the possession by the Financier on 14.03.2005 is admitted vide Ext.P4 receipt and since the tax liability till 31.12.2004 has been satisfied by the registered owner, who has been granted exemption from 01.01.2005 till 28.02.2005 and further since the registered owner has paid a sum of Rs.30,000/- pursuant to the interim order passed by this Court in WP(C) 28138/2006 as borne by Ext.P8 receipt produced in WP(C) 10170/2008, the remaining/subsequent liability after admitted taking over of the possession on 14.03.2005 vide Ext.P4 receipt can only be on the Financier, in view of the law declared by this Court. This however, is a fact which could be rebutted by the Financier, if the case mooted by the Financier is sustainable, with regard to the re- entrustment of the possession back to the registered owner on 20.06.2005 11 WP(C) No. 10170/2008 & 2135/2009 based on Ext.P1 in WP(C) 2135/2009. This is a fact which requires to be established by the Financier and the ‘burden of proof’ naturally shifts from the registered owner, to the Financier, who has admitted the taking over of the possession of vehicle with effect from 14.03.2005. 12. In the above circumstances, the balance liability as stated to be realised by the departmental authorities vide Ext.P7 RR notice is to be satisfied by the Financier; i.e., the 2nd respondent in WP(C) 10170/2008 and the petitioner in WP(C) 2135/2009. The Financier is at liberty to proceed against the registered owner, if the possession of the vehicle had actually been given back to the registered owner as contended; by filing appropriate proceedings before the competent Civil Court, raising appropriate pleadings and adducing proper evidence. It is made clear that the relative liability between the ‘registered owner’ and the ‘Financier’ is left upon, to be decided by the appropriate Court depending upon the appropriate pleadings and evidence. Both the Writ Petitions are disposed as above. P.R.RAMACHANDRA MENON JUDGE dnc