2012 (9) TMI 487 - HC - Indian Laws

Motor Vehicles Tax Act, 1974 - Compensation to the plaintiffs - plaintiffs purchased a Truck Bearing No. 3386 in public auction held by defendant no. 4 on 3rd June, 1986 by paying full amount for which the plaintiffs had bidded - truck was seized by Customs Authorities on 30th August, 1982 on the ground that contraband was being carried in the said truck - Directorate of Transport had informed that the Customs Authorities have informed that the vehicle was seized by them on 30th August, 1982 and that transferee is liable to pay the outstanding taxes. It was also stated that the vehicle could not be transferred unless no objection certificate was produced from the Union Bank of India, Panaji since the vehicle was under hire purchase agreement with the bank Held that - Plaintiffs ought to have paid the taxes claimed by the Department under protest. In my considered opinion, in view of the admitted position that NOC from the financier was not obtained at the time of seeking transfer of the vehicle in the name of plaintiff no. 1, no fault can be found with respondent no. 2 in not transferring the vehicle in favour of plaintiff no. 1 - mere fact that defendant nos. 1 and 2 have not challenged that part of the decree by itself would not be sufficient to grant relief of compensation in favour of the plaintiffs solely on the ground that the relief of registration of vehicle in favour of the plaintiffs has been granted by the trial Court - as it rejected the prayer for compensation cannot be faulted - appeal stands dismissed

Issues Involved:
1. Entitlement to mandatory injunction for vehicle registration.
2. Entitlement to compensation for non-registration of the vehicle.
3. Liability of the defendants to pay taxes and obtain NOC from the financier.
4. Validity of the trial court's findings and the appellate court's authority to review them.

Issue-Wise Detailed Analysis:

1. Entitlement to Mandatory Injunction for Vehicle Registration:
The plaintiffs, partners of a registered firm, purchased a truck in a public auction held by defendant no. 4. The truck, previously registered under a hire purchase agreement with Union Bank of India, was seized and later confiscated by Customs Authorities. The plaintiffs requested the Directorate of Transport to register the vehicle in their name, which was denied due to outstanding taxes and lack of NOC from the bank. The trial court granted the mandatory injunction for registration, holding that the financier lost its rights after the vehicle's confiscation. However, the appellate court found this interpretation erroneous, stating that the financier's rights under the hire purchase agreement do not terminate upon confiscation and that the Directorate of Transport was justified in requiring an NOC.

2. Entitlement to Compensation for Non-Registration of the Vehicle:
The plaintiffs sought compensation for losses incurred due to the non-registration of the vehicle. The trial court rejected this claim, citing a lack of cogent evidence to prove damages. The appellate court upheld this decision, emphasizing that the plaintiffs failed to provide necessary documentation and did not fulfill legal requirements, such as paying outstanding taxes and obtaining an NOC. Consequently, the plaintiffs were not entitled to compensation as the defendants' actions were lawful.

3. Liability of the Defendants to Pay Taxes and Obtain NOC from the Financier:
The appellate court highlighted Section 31A of the Motor Vehicles Act, 1939, which mandates that the registering authority must obtain an NOC from the financier for vehicles under a hire purchase agreement. Additionally, Section 8 of the Goa, Daman and Diu Motor Vehicles Tax Act, 1974, holds the person in possession of the vehicle liable for unpaid taxes. The plaintiffs, having taken possession of the vehicle, were responsible for paying these taxes. The court found that the plaintiffs' failure to comply with these requirements justified the defendants' refusal to register the vehicle.

4. Validity of the Trial Court's Findings and the Appellate Court's Authority to Review Them:
The appellate court reviewed the trial court's findings under Order XLI, Rule 22 of the Civil Procedure Code, which allows respondents to challenge adverse findings without filing a separate appeal. The court determined that the trial court's interpretation of the financier's rights and the plaintiffs' entitlement to compensation was legally incorrect. The appellate court emphasized its authority under Order XLI, Rule 33 of the Civil Procedure Code to correct such errors and pass appropriate orders, even if the appeal only concerns part of the decree.

Conclusion:
The appellate court dismissed the appeal, upholding the trial court's decision to deny compensation. The court affirmed that the plaintiffs were not entitled to compensation due to their failure to meet legal requirements for vehicle registration, including paying outstanding taxes and obtaining an NOC from the financier. The court also clarified the legal provisions regarding the rights of financiers and the responsibilities of vehicle owners under hire purchase agreements.

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