The Bombay High Court ruled that the registration of the vehicle in the name of the second buyer (petitioner) could not have been cancelled on the sole premise that the initial registration in the name of the erstwhile buyer was obtained by making a false representation and based on forged documents.
Referring to the provisions of Sections 127C(5) and 127H of the Customs Act, 1962, the Court clarified that once the order by the Settlement Commission is passed, the determination therein cannot be reopened in any proceedings under the said Act, save as otherwise provided by the said Act, or under any other law.
Therefore, the determination by the Settlement Commission about the import of the car by evading the customs duty, to the extent it reflects upon the role of the petitioner, who, while purchasing the imported vehicle, has later on made the reparation for the illegal acts of his vendor, who used forged bill of entry to evade customs duty, is of significant consequence.
A Single Judge Bench of Justice N.J. Jamadar observed that the certificate of registration obtained based on a false bill of entry would cease to operate upon discovery of the fraud. However, in the meantime, if the vehicle had changed hands and came to be registered in the name of an innocent purchaser who pays the customs duty, interest & fine, as ordered by the Settlement Commission, then the vehicle ought to be registered under the provisions of Section 40 of the Motor Vehicles Act, 1988, lest the consequences of fraudulent action would befall an innocent purchaser.
Therefore, taking recourse to the doctrine of proportionality, the Bench quashed the order passed by the Joint Transport Commissioner, Maharashtra State, approving the order passed by the Registering Authority, thereby cancelling the Certificate of Registration in respect of the imported Nissan Car under Section 55(5) of the Motor Vehicles Act, 1988.
Briefly, a Nissan petrol car, initially registered with RTO Manipur, came to be transferred to RTO Mumbai, and the vehicle was purchased by the petitioner for a consideration of Rs. 1.22 crores, vide transfer of ownership of the motor vehicle. Subsequently, it transpired that the said car was fraudulently imported in the name of a diplomatic officer, by dishonestly availing the benefit of exemption from payment of customs duty. The DRI, therefore, seized the said vehicle in August 2021, which was provisionally ordered to be released in January 2022, by the order of the Deputy Commissioner of Customs (Import), subject to execution of a bond to the tune of Rs. 32.35 crores and bank guarantee of Rs. 70.85 lacs.
Later, the Central Excise and Service Tax Settlement Commission settled the customs duty at Rs. 66 lacs and interest of Rs. 35.77 lacs and the car was confiscated. However, the petitioner was given an option to redeem the same upon payment of a fine of Rs. 5 lacs. The Commission also granted immunity from the penalty and prosecution under Section 127H of the Customs Act, 1962, subject to payment of duty, interest and fine. The petitioner therefore paid the customs duty, interest and fine imposed by the Commission, resulting in the release of the car.
In the meantime, the Anti-Corruption Bureau registered the offences in connection with the registration of the said car based on the forged bill of entry against the then Sub-Regional Transport Officer, and the vehicle was again seized by the ACB in June 2024. The Special Judge, however, ordered the return of the car to the petitioner upon executing a bond in the sum of Rs. 75 lacs. Thereafter, in January 2025, the Deputy RTO and the Registering Authority cancelled the registration of the petitioner’s car, on the strength of a bogus bill of entry.
The Appellate Authority also concurred with the view of the Registering Authority and opined that just because the conduct of the petitioner was not blameworthy, it would not alter the basic fact that the registration of the vehicle was obtained based on forged documents.
Appearances:
Advocates Cherag Balsara and Yogesh Patil, for the Petitioner
AGP Abhishek Bhadang, for the Respondent
