Govt Obligated To Disclose All Statutory Restrictions On Re-Registration Of Vehicles Auctioned By It: Kerala High Court

The Court observed that the obligation of the government flows from the constitutional mandate of fairness, transparency and non-arbitrariness embedded in Articles 14 and 298 of the Constitution of India.

Justice Mohammed Nias C P, made the observation while delivering the judgement in a writ petition filed by an auction purchaser who purchased a LMV Motor car which originally belonged to Kerala Forest Department, through e-auction.

The case arose when the registering authority declined to endorse the transfer of ownership in the name of the petitioner citing Rule 52 A of the Central Motor Vehicles Rules, 1989.

According to Rule 52 A of the Central Motor Vehicles Rules, 1989, the certificate of registration of a government vehicle expires after fifteen years from the date of its initial registration and cannot be renewed thereafter.

The vehicle in question was registered on 21.05.2008 and the fifteen years expired on 20.05.2023. The auction was conducted on 17.01.2024 and the petitioner purchased the vehicle for an amount of Rs. 3,36,301/-

The petitioner contended that embargo in Rule 52A applies only to the renewal of the registration certificate of vehicles owned by the Central Government, State Government, or their instrumentalities and not to the transfer of ownership to a private person after such vehicle is disposed of by public auction.

The Court noted that the auction of the vehicle was conducted after the expiry of initial registration and Rule 52 A of the Central Motor Vehicle Rules, imposes absolute statutory prohibition on renewal or continuation of the registration of any government vehicle. According to sub-rule (2) of 52A, vehicles can only be disposed of through a Registered Vehicle Scrapping Facility after the fifteenth year and cannot be registered for road use by a private purchaser.

“The fact remains that the auction was conducted after the statutory expiry of registration, at a time when the law expressly prohibited re-registration or road use of such a Government vehicle, and therefore, the petitioner was never legally capable of obtaining transfer of ownership, notwithstanding the auction.” the bench observed.

The court further observed that when a State enters into a commercial transaction, it is held to a higher standard of conduct than a private seller as it carries an implicit assurance that the sale is lawful, valid and free from undisclosed defects.

“Therefore, when auctioning vehicles, whether confiscated, abandoned or condemned, or otherwise, the Government is under a positive duty to ensure full and honest disclosure of every impediment that may affect the purchaser's ability to re-register, use, or lawfully enjoy the property.” Court added.

Citing the decision in Union of India V Hindustan Development Corporation [(1993) 3 SCC 499], the court noted that non-disclosure of statutory bars or defects affecting te-registration is not a mere contractual lapse as it can amount to arbitrariness under Article 14, abuse of public power, and violation of consumer rights.

“The Government also has a duty to act as a model litigant and model seller. Government entities are to be reminded that they must conduct themselves as model litigants and, by extension, as model sellers. A model seller must disclose all defects known or reasonably discoverable, refrain from suppressing legal or factual impediments and ensure that no citizen is placed at a disadvantage due to its superior knowledge of statutory prohibitions.” Court observed.

The Court thus directed that all the departments, Public Sector Undertakings, autonomous bodies, and auctioning agencies, including MSTC and any other Government-authorised platforms, shall ensure that every auction notice for disposal of condemned Government vehicles mandatorily specifies: (i) the year of purchase/initial registration, (ii) a clear statement that the vehicle has completed or is nearing completion of fifteen years, (iii) the statutory bar under Rule 52A of the Central Motor Vehicles Rules, 1989 prohibiting renewal or fresh registration after the fifteenth year, and (iv) that such vehicles are fit only for scrapping and cannot be registered for road use.

With the direction to include all details and statutory restriction in every notice of auction and tender in future, the Court disposed of the matter.

The Court held that prayed for re-registration and refund cannot be granted but the petitioner has the liberty to claim for compensation before the competent civil court.

Case Title: Jibin Shaji v Kerala Forest Department and Ors.

Case No: WP(C) 13262/ 2025

Citation: 2025 LiveLaw (Ker) 752

Counsel for Petitioner: V Vishal Ajayan, Francis Thenamparambil

Counsel for Respondent: O M Shalina (DSGI), Sangeeth CU, T V Vinu