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Can state governments prescribe fee for reserving and allocating special registration numbers for vehicles? Supreme Court answers

The Supreme Court's judgment was delivered in an appeal filed by the State of Madhya Pradesh against the decision of Madhya Pradesh High Court.

Shruti Mahajan

The Supreme Court on Wednesday held that state governments possess the power to levy relevant fees for reservation of distinctive marks or number plates for registration of vehicles (State of MP & Ors v. Rakesh Sethi & Anr).

In the judgment rendered by the Bench of Justices L Nageswara Rao and S Ravindra Bhat, the Court has held that the service to reserve and allocate special and distinctive marks for registration of motor vehicles is a separate service. Thus, the state government's authorized wing for this service is empowered to charge and levy special fee for the same.

The Court's judgment reads:

"This court therefore, holds that the assignment of “distinctive marks” i.e. registration numbers to motor vehicles (which includes the power to reserve and allocate them, for a specific fee) is a distinct service for which states or their authorities (such as the registering authorities, in this case) are entitled to charge a prescribed fee."

The Court was considering an appeal filed against the decision of the Madhya Pradesh High Court, by which Rule 55A of the State Motor Vehicles Rules of 1994 was quashed. The High Court had found this Rule to be in contravention to the legal framework set out in the Central Motor Vehicles Rules of 1989 as well as the Motor Vehicles Act of 1988.

Recording the conclusions and findings of the High Court, the Supreme Court's judgment records,

"The reasoning of the High Court, in its impugned judgment is that the field of prescribing the fee for an application for registration has been exclusively conferred upon the Union Government, thus excluding from its sweep any State power to claim any manner of fee or amount as part of that task."

The Supreme Court, however, took a different view, and held that the Rule is not in excess of the powers conferred upon the state by the Central Act or the Rules. The Court said that the High Court did not consider the scope of Section 211 of the Motor Vehicles Act, which confers upon state governments the power to prescribe fee.

"...there are certain services and functions for which the State is empowered to levy fees. It is precisely to cover these contingencies, i.e. where the service is rendered or some function performed, that the State is empowered by a residual provision (much like the Central Government with which it shares the power concurrently) to levy fees."

Supreme Court

The Court opined that assignment of numbers is an important step in the process of registration of vehicles and that the State is "entitled to indicate its choice or manner of assigning by prescribing a particular set of procedures for the assignment of numbers".

This, the Court said, was in light of Section 211, which shows that the Parliament, while enacting this statute, intended for contingencies not to be covered under any specific power to levy fees. This provision, being a "residual" one, confers on state the power to charge fee for certain functions performed.

The Court further elaborated that many people choose to opt for "fancy numbers" or auspicious numbers for their vehicles, and as such reservation of such numbers is a service that is being provided by the state authorities. These authorities may very well render this service on collecting the prescribed fee and make the allotment of such numbers on a first-come-first-served basis subject to relevant regulatory conditions and requirements, the judgment states.

The Court added,

"...the generality of the power under Section 65(1) to frame rules, in the opinion of this Court is sufficient along with Section 211, to conclude that the State Government has the authority to prescribe a fee for reserving certain numbers or distinguishing marks to be assigned as registration numbers."

While allowing the appeal filed by the State of Madhya Pradesh, the Supreme Court said that the High Court's finding that the State was not "competent" to make the legislation concerning such prescription of fee can "at best be characterized as misconceived."

The Court concluded, "the impugned rule was within the ambit of the powers delegated to the state, and directly related to performance of its functions under Section 41(6), for which it could legitimately claim a fee, as was done through Rule 55A."

Befor parting, the Court expressed its gratitude for Senior Advocate Manoj Swaroop, who was the amicus curiae in the case. Advocate Saurabh Mishra appeared for the Madhya Pradesh government.

Read Judgment:

State of MP vs Rakesh Sethi.pdf
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