IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 691 of 2007(G)
1. NISAMUDHEEN, S/O. HASANKOYA,
... Petitioner
Vs
1. THE JOINT REGIONAL TRANSPORT OFFICER,
... Respondent
2. THE RECOVERY OFFICER,
For Petitioner :SRI.K.V.GOPINATHAN NAIR
For Respondent :SRI.JOY THATTIL ITOOP, SC, EPF ORGANISA
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :27/07/2009
O R D E R
S. SIRI JAGAN, J
...............................................
W.P(C) No. 691 of 2007
.................................................
Dated this the 27th day of July, 2009
J U D G M E N T
The 2nd respondent, the Recovery Officer of the Employees’
Provident Fund Organisation, attached a DCM Toyota Mini
Lorry, 1990 model, belonging to a company which defaulted
payment of contributions under the Employees’ Provident Funds
and Miscellaneous Provisions Act and Rules and Regulations
thereunder for recovery of arrears of contributions. The same
was sold in public auction. The petitioner participated in the
auction and purchased the vehicle paying the amount quoted by
him. The 2nd respondent issued necessary certificates in this
regard and handed over the vehicle to the petitioner along with
all documents. The petitioner submitted an application for
transfer of ownership of this vehicle under Rule 57 of the Central
Motor Vehicles Rules before the 1st respondent. He produced
Exts.P2, P3 and P5 certificates received form the Provident Fund
Organisation in accordance with the said rule. But by Ext.P6, the
1st respondent directed the petitioner to pay arrears of motor
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vehicle tax under the Kerala Motor Vehicle Taxation Act, in
respect of the vehicle in question. Aggrieved by the said action,
the petitioner has filed this writ petition seeking the following
reliefs:
“i) to call for the records leading to the case and
quash Exhibit P6 by the issuance of a writ of certiorari or
any other appropriate writ, direction or order;
ii) to issue a writ of mandamus or any other
appropriate writ, direction or order directing the first
respondent to effect the transfer of ownership of the
vehicle covered by Exhibits P3 and P5 without insisting
clearance of arrears of tax if any before the auction sale,
forthwith, in the interest of justice;
iii) to issue an interim direction directing the first
respondent to transfer the ownership of the vehicle
covered by Exhibits P3 and P5 in favour of the petitioner
without insisting clearance of arrears of tax if any before
the auction sale, provisionally, pending disposal of the Writ
Petition;”
2. The contention raised by the petitioner is that he
purchased the vehicle in public auction and transfer of
ownership of the vehicle purchased in public auction is governed
by Rule 57 of the Central Motor Vehicles Rules, 1989, which
does not prescribe any condition regarding payment of arrears of
motor vehicle tax in respect of the vehicle.
3. The 2nd respondent has filed a statement in which all the
statements of the petitioner are admitted. The 1st respondent
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would contend that under Section 9(1) of the Kerala Motor
Vehicles Taxation Act, the transferee of a motor vehicle in
arrears of Motor Vehicle Tax is liable to pay the tax. According
to him sale by public auction is also a transfer of ownership to
which Section 9(1) is applicable and therefore the petitioner is
liable to pay the arrears of tax.
4. I have considered the rival contentions in detail.
5. Section 11(2) of the Employees Provident Fund and
Miscellaneous Provisions Act, 1952, reads thus:
“1 *** *** *** ***
2. Without prejudice to the provisions of sub-section (1), if
any amount is due from an employer [whether in respect of
the employee’s contribution (deducted from the wages of
the employee) or the employer’s contribution], the amount
so due shall be deemed to be the first charge on the assets
of the establishment, and shall, notwithstanding anything
contained in any other law for the time being force, be paid
in priority to all other debts.”
6. Even assuming that, Section 9(1) of the Kerala Motor
Vehicle Taxation Act would be subject to Section 11(2) of the
Employees Provident Funds and Miscellaneous provisions Act,
1952, in so far as the same is a Central Act and the Kerala Motor
Vehicles Taxation Act is only a State Act. The section contains a
non-obstante clause also and operates notwithstanding anything
W.P(C) No. 691 of 2007 -4-
contained in any other law for the time being in force. It would
be a travesty of justice if the persons participating in public
auction conducted for realisation of first charge in respect of a
movable asset is to pay off other creditors after paying the value
of the vehicle, that too when he has not even been apprised of
any other charge in the property. When the charge under the
Employees Provident Funds and Miscellaneous Provisions Act,
1952 overrides all other charges, a sale in exercise of that
charge must be deemed to be free from all other charges. Only
if the sale proceeds are in excess of the amounts secured by the
charge, any other creditor can lay any claim in that respect, that
too only against the balance amounts of the sale proceeds
remaining after satisfying the first charge. I am of opinion that
Section 9(1) would be applicable only to voluntary transfer by
the original owner and not to distress sale for realisation of
statutory charge by instrumentalities of State, especially for
recovery of statutory dues. In fact the transfer in this case is not
by the owner, but by the Provident Fund Organisation who has
compulsory taken over the vehicle and has sold the same. If the
contention of the respondents is accepted by virtue of Section
W.P(C) No. 691 of 2007 -5-
9(2) the Provident Fund Organisation would also be liable to pay
the arrears of tax, which interpretation would lead to anomalous
results, which has to be avoided. That is exactly why a separate
procedure is prescribed in Rule 57 of the Central Motor Vehicles
Rules, for transfer of ownership of vehicle purchased in public
auction. Further in respect of voluntary transfer, when the tax is
recovered from the transferee he can proceed against the
transferor for realisation of the same. But in case of public
auction he may not be able to.
7. Apart from the same, Rule 57 of the Central Motor
Vehicles Rules, 1989 does not contemplate discharge of arrears
of vehicles tax also for transfer of ownership of vehicle
purchased in public auction. Rule 57 reads thus:
“57. Transfer of ownership of vehicle purchased in
public auction.- (1) The person who has acquired or
purchased a motor vehicle at a public auction conducted by
or on behalf of the Central Government or a State
Government, shall make an application in Form 32 within
thirty days of taking possession of the vehicle to the
registering authority accompanied by-
(a) the appropriate fee as specified in Rule 81;
(b) the certificates of registration and insurance;and
(c) the certificate or order confirming the sale of the
vehicle in his favour duly signed by the person authorised to
conduct the auction; and
(d) certified copy of the order of the Central
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Government or State Government authorising the auction of
the vehicle.
(2) Where the vehicle auctioned is a vehicle without
any registration mark, or with a registration mark which on
verification is found to be false, the registering authority
shall, subject to the provisions of Section 44, assign a new
registration mark to the vehicle in the name of the
Department of the Central Government or State
Government auctioning the vehicle and thereafter record
the entries of transfer of ownership of the vehicle giving the
name and address of the person to whom the vehicle is sold.
[Provided that motor vehicle in the name of the
Central Government or State Government shall not be
transferred by the concerned registering authority without
verifying the proceeding of the auction or disposal of the
concerned vehicle]”
For that reason also, I am satisfied that the 1st respondent cannot
now proceed against the vehicle in question for realisation of
arrears of vehicle tax in respect of the vehicle. Their remedy lies
in proceeding against the original owner who was in default.
8. The learned Government Pleader relies on the decision
of this court in Abraham Joesph v. Regional Transport
Officer, Kottayam ILR 1976(1) Kerala 256, in support of his
contention that a purchaser in revenue auction is liable for
arrears of tax due on the vehicle prior to the purchase. That is a
case were the sale of the vehicle is subject to other
encumbrances thereon. I have already held that since the sale
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herein is in enforcement of a first charge under Section 11(2), it
must be deemed to be free from all encumbrances on the vehicle.
Otherwise Section 11(2) has no meaning, if the other creditor
viz. the State Government can still proceed against the
purchaser for realisation of the arrears of vehicle tax on the
vehicle, especially when the purchaser is not put on notice
regarding such arrears and he bonafide purchases the same
believing that there is no other liability in respect of the same. It
is not as if the 1st respondent has no other remedy for realisation
of arrears of vehicle tax. Their remedy against defaulter owner is
still open.
9. For all the above reasons I am satisfied that the
petitioner is entitled to the reliefs prayed for.
Accordingly the writ petition is allowed and the 1st
respondent is directed to transfer the ownership of the vehicle in
the name of the petitioner, as expeditiously as possible, at any
rate, within one month from the date of receipt of a copy of this
judgment, if all other conditions under Rule 57 of the Central
Motor Vehicles Rules are satisfied. The condition in the
registration certificate of the vehicle incorporated as per interim
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order dated 15.2.2007 to the effect that vehicle shall not be
transferred to 3rd parties without permission of the 1st
respondent shall be cancelled by the 1st respondent, on
production of the same.
S. SIRI JAGAN, JUDGE
rhs