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Judgment
G. Satapathy, J.
The petitioner by way of this Writ Petition invokes the extraordinary jurisdiction of this Court under Article 226 & 227 of the Constitution of India to declare the actions of OP Nos. 1 & 2 as completely illegal and unsustainable in the eye of law with regard to imposition of tax of Rs.1, 08,000/- and penalty of Rs.1, 98,000/-, all total Rs.3,06,000/- in connection with the vehicle bearing Regd. No OD-02CN-5473 and to direct OP No.2 to change the ownership of the vehicle in the name of the writ petitioner from the name of the previous owner-OP No.4-cum-Santosini Mohanty by waiving out the aforesaid tax and penalty due on the said vehicle (Ashok Leyland Flat Bed Trailer).
The precise facts in background are that one Santosini Mohanty, the OP No.4 had purchased the aforesaid vehicle by taking loan from the State Bank of India on hire purchase agreement with due hypothecation, but when OP No.4 could not clear up the outstanding dues of the State Bank of India including the interest, incidental expenses, cost and charges amounting to Rs.1,12,21,850/- as on 31.01.2026, the State Bank of India repossessed the vehicle and published a sale notice giving a final opportunity to OP No.4 to clear up the entire loan amount with further stipulation of selling the vehicle on failure of clearing the dues, but pursuant to such sale notice, the OP No. 4 did not take any steps to clear up the loan dues as indicated and thereby, the vehicle was put to e-auction and the writ petitioner being found to be successful bidder in the e-auction and on deposit of e-auction sell price of Rs.18,03,240/- beside GST @ 18% paid on it, the OP No.3 wrote a letter to the in-charge of Parking Stock Yard to release the vehicle in favour of the writ petitioner. Accordingly, the registered owner had signed on Form No.35 i.e. notice on termination of agreement of hire purchase/lease/hypothecation and thereafter, OP No.3 submitted Form No.H containing the signature of the writ petitioner to the RTO, Bhubaneswar through e-Mail, but when the petitioner approached OP No. 2 for change of ownership of the vehicle, OP No.2 issued a demand for payment of tax and penalty amounting to Rs.3,06,000/- as due against the said vehicle, however, the writ petitioner claims himself not legally liable for payment of the aforesaid tax and penalty, which was due on the vehicle before taking possession of it by him. The petitioner has accordingly, approached this Court in this Writ Petition for the relief indicated supra.
Heard, Mr. Sanjib Kumar Bhanjadeo, learned counsel for the writ petitioner and Mr. Pravakar Behera, learned Standing Counsel for Transport Department in the matter and perused the record.
After having considered the rival submissions upon perusal of record, there appears no dispute about purchase of vehicle by OP No.4 taking loan from State Bank of India on a hire purchase agreement with due hypothecation and she had failed to clear up the loan dues and as a consequence thereof, the vehicle in question was repossessed by the State Bank of India. It is also not in dispute that the vehicle was sold in an e-auction to the writ petitioner, but when the writ petitioner applies for change of ownership, OP No. 2 demanded tax and penalty due against the vehicle, but it is claimed by the petitioner that since the vehicle was not used by him prior to taking possession thereof in an e-auction, he is not legally liable to pay the tax & penalty. Admittedly, Sec.51(5) of the Motor Vehicles Act, 1988 which governs the provision regarding change of ownership of motor vehicle purchased on hire purchase agreement, reads as under:-
“51(5).Where the person whose name has been specified in the certificate of registration as the person with whom the registered owner has entered into the said agreement, satisfies the registering authority that he has taken possession of the vehicle [from the registered owner] owing to the default of the registered owner under the provisions of the said agreement and that the registered owner refuses to deliver the certificate of registration or has absconded, such authority may, after giving the registered owner an opportunity to make such representation as he may wish to make (by sending to him a notice by registered post acknowledgement due at his address entered in the certificate of registration) and notwithstanding that the certificate of registration is not produced before it, cancel the certificate and issue a fresh certificate of registration in the name of the person with whom the registered owner has entered into the said agreement: Provided that a fresh certificate of registration shall not be issued in respect of a motor vehicle, unless such person pays the prescribed fee: Provided further that a fresh certificate of registration issued in respect of a motor vehicle, other than a transport vehicle, shall be valid only for the remaining period for which the certificate cancelled under this sub-section would have been in force.”
In this case, the ownership of the vehicle is yet to be changed and it still stands in the name of OP No.4 and thereby, the petitioner has to approach the authority concerned i.e. the RTO, Bhubaneswar in consonance with Sec.51(5) of the Motor Vehicles Act, 1988.
Since the liability to pay the tax and penalty is one of the issues in this case, this Court considers it proper to refer Sec.12 of the Orissa Motor Vehicles Taxation Act, 1975 (in short, “the Act”) which governs the liability of the successors to pay arrears and the same reads as under: -
“12(1). If the tax leviable in respect of any motor vehicle unpaid by any person liable for payment thereof and such person before having paid the 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 shall be liable to pay the said tax to the Taxing Officer.
2.Nothing contained in this section shall be deemed to [affect] the liability of the person who has transferred the ownership or has ceased to be in possession or control of such vehicle, for payment of the said tax.”
This Court also considers it proper to refer to Sec.13 of the Act, which reads as under:-
“[13. penalty for failure to pay-(1) If the tax due in respect of any motor vehicle has not been paid as specified in [Sections 4 and 4-A], the registered owner or the person having possession or control thereof shall, in addition to payment of tax due, be liable to pay penalty which may extend to 3[twice the tax due] in respect of that vehicle to be levied by such officer by order in writing and in such manner as may be prescribed.
1-A. Notwithstanding anything contained in Sub-section (1), if the tax due in respect of any vehicle plying under a National permit scheme or a Zonal permit scheme is not paid as specified in the said scheme or otherwise, the registered owner or the person having the possession or control thereof shall, in addition to payment of tax due, be liable to pay the penalty specified in the said scheme or otherwise in respect of that vehicle in such manner as may be prescribed.]
[xx xx xx]
2.The penalty imposed under Sub-section (1) shall be without prejudice to the liability, if any, that may be incurred under any of the other provisions of this Act or the rules made thereunder but no such penalty shall be imposed without giving the party concerned a reasonable opportunity of being heard.”
In a matter relating to liability to pay the tax and penalty, it is considered beneficial to refer to the following few decisions: -
In Orissa State Financial Corporation vs. Transport Commissioner-cum-Chairman, STA and others; (2005) 11 SCC 440, wherein a more or less a similar question arose for consideration, the Apex Court has held as under: -
“7 xxx xxx. Thus, U/S.12 of the Act, the liability to pay tax remains that of the previous owner or of the person to whom the vehicle is transferred. The tax may also be recovered from a person who has possession or control of the vehicle. In this case the appellants only had possession and control of the vehicle from 01.03.1996 to 21.06.1996. However, we find that for that period they had given “off road intimation” to the first respondent authority. Thus, for this period by virtue of Sec.10 of the Act, no tax is payable. The question then remains as to who has to pay the tax for the remaining period mentioned above. In our view, the High Court was absolutely wrong in directing the appellants to pay the tax. Under law, the liability remains that of the previous owner and/or the person who purchased the vehicle. Merely because in the agreement it had been intimated by the appellant that the 2nd respondent will not be liable for prior dues does not discharge the statutory liability of the 2nd respondent. xxx xxx xxxx xxx xxx xxxx.
8.The 1st respondent (Transport Authority) is at liberty to proceed in accordance with law and recover either from the previous owner or the 2nd respondent (auction purchaser) or the person who is in the possession of the vehicle”.
In Sri Rabindra Kumar Jena vs. Managing Director, OSFC & 3 others, 93 (2002) CLT 670, a Division Bench of this Court has held as under:-
“Sec.12 of the Act has imposed as statutory obligation on the purchaser to pay the arrear tax, if any due, and the conditions stipulated in the agreement/ communication cannot help the purchaser in shifting liability and fixing the same on the Corporation”.
On a cumulative consideration of the provisions of law and conspectus of the decisions referred to above, there is no quarrel over the position of law that an auction purchaser of vehicle like the petitioner in this case is liable to pay the arrear tax even during the period, when the previous owner was in possession of the vehicle and for the period he remains in possession thereof, but the claim of the petitioner includes for exemption from paying the tax when the vehicle was on off-road. In connection with the aforesaid claim of the petitioner, this Court considers it proper to refer to the decision in Rajkishore Rout vs. R.T.O.-cum-Taxing Authority, Balasore; 1992 (I) OLR 63, wherein a Division Bench of this Court has held that “the liability to pay tax on every motor vehicle being dependent upon the use of the vehicle or keeping the vehicle for use within the State as contemplated in Section 3 of the Act and the vehicle not having been used for the period in question, there was no liability of the petitioner to pay the tax as required U/S. 3. There has been no lack of bonafides on the part of the petitioner in not giving an off-road intimation in the prescribed form and under the circumstance, the petitioner could not have any other intimation that the one given by him on 31.10.1989 since he had not got possession or control over the registration certificate as well as other valid documents which were taken away along with the vehicle by the State Bank of India”.
In the circumstance, this Court is of the considered opinion that the intimation regarding keeping the vehicle “off-road” has to be issued by the Bank to the concerned RTO for the period the vehicle was re-possessed by it, but it is claimed that the bank authority has intimated such fact to the RTO vide an e-Mail on 01.09.2026 and therefore, the concerned RTO has to take a decision on it. In this case, the petitioner has not approached the concerned RTO for the aforesaid relief for exempting him from paying the tax or penalty during the period when the vehicle remains off-road and thereby, the petitioner is at liberty to approach the concerned RTO with appropriate application within 07 days hence and thereafter, the RTO concerned may pass appropriate order in accordance with law for change of ownership of the vehicle U/S.51(5) of the M.V. Act and payment of tax and penalty in terms of Sec.12 & 13 of the Act, but right now the prayer as advanced for the petitioner is not cognizable by this Court in exercise of extraordinary jurisdiction of Article 226 & 227 of the Constitution of India.
In the result, the Writ Petition stands accordingly, disposed of, but the petitioner is granted with liberty to approach the RTO/Appropriate Authority concerned in terms of the observation made by this Court in the preceding paragraph and in case the petitioner approaches such authority with appropriate application, the same shall be disposed of in accordance with law within 30 days of receipt of such application together with the copy of this order and the petitioner be communicated with result thereof within 07 days of passing of such order. Pending I.A. No. 17657 of 2026 stands disposed of.