(1.) This is an appeal by the State of Maharashtra against the judgment and order of a Division Bench of the High Court at Bombay.
(2.) The first respondent is a financier and supplies vehicles on hire purchase basis. In 1984 it entered into four hire purchase agreements with the third respondent. Thereunder, the third respondent obtained on hire purchase from the first respondent four passenger vehicles. The vehicles were registered in the name of the third respondent alone under the Motor Vehicles Act, 1939. But the registration certificates bore the endorsement that the third respondent held the vehicles as registered owner under hire purchase agreements with the first respondent. The four vehicles were operated by the first respondent as public carriers under permits issued by the Regional Transport Authority, Bombay under the provisions of the Motor Vehicles Act. The name of the first respondent was not entered on these permits. The third respondent committed defaults in payment of instalments under the hire purchase agreements. Consequently, the four vehicles were resumed by the first respondent. The first respondent then filed applications before the Regional Transport Officer for fresh registration certificates in respect of the said vehicles in its name under the provisions of Section 31(A)(5) of the Act. There was correspondence between the Regional Trnasport Officer and the first respondent which indicated that the third respondent had not paid arrears of passenger tax in respect of the said vehicles. The first respondent was called upon to clear the arrears and a penalty had been levied. The first respondent denied its liability. Thereupon, the Regional Transport Officer declined to issue fresh registration certificates to it.
(3.) In consequence, the first respondent filed a writ petition before the High Court at Bombay. The learned single Judge who heard the writ petition declined relief in respect of the tax which the first respondent was required to pay. In so far as the penalty was concerned, he directed that the first respondent should first be given the opportunity of hearing. In appeal, the learned Single Judge's judgment was reversed. The Division Bench, on a construction of the relevant provisions, found that the first respondent was not liable to pay the arrears of passenger tax and, therefore, the penalty.