State Governments Entitled To Prescribe Fee For Reserving Certain Numbers To Be Assigned As Registration Numbers For Motor Vehicles: SC [Read Judgment]

The Supreme Court has held that the State Governments have the authority to prescribe a fee for reserving certain numbers or distinguishing marks to be assigned as registration number.

The bench comprising Justices L. Nageswara Rao and S. Ravindra Bhat observed that 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 against the judgment of Madhya Pradesh High Court which quashed Rule 55A of the Motor Vehicles Rules, 1994  framed by the state on the ground that the said rule was ultra vires the state's power under the Motor Vehicles Act, 1988 and the Central Motor Vehicle Rules, 1989. Allowing the appeal filed by the State, the court held that Rule 55A of the MP Rules is not  in excess of the powers conferred upon the state, by the Act or the Central Rules.

In this case, the Registering Authority in Madhya Pradesh rejected vehicle owner's claim for allotment of registration number 'MP-KL-4646' on the ground that he had not paid the required fee prescribed for allotment of that number. This made him approached the High Court challenging the state's authority to prescribe special fee.

The bench observed 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. It observed:

The assignment of numbers by the registering authority, as seen earlier, through an official/agency or department notified by the State Government, cannot be seen as a mere step – albeit at the fag-end of the registration allotment process. In fact, though it is the culmination of the allotment process, it is nevertheless an important step. The state, in the opinion of this Court, is entitled to indicate its choice or manner of assigning by prescribing a particular set of procedures for the assignment of numbers. Thus, for instance, the assignment of the concerned "code" - to the individual registering authorities followed by the assignment of numerics may follow a predetermined pattern which may be district wise, state government department wise (in the case of publicly owned vehicles), different sequences for buses and heavy vehicles and so on. If such a predetermined choice can be made by prescribing the mode of assignment, it is both regulatory and at the same time indicative of State policy. Per se, the Court cannot brush aside the element of service which may be involved – especially if the general public or a sub-section of it, wishes to choose particular numbers for various considerations. Such "fancy" numbers or "auspicious" numbers may well therefore have to be set apart having regard to the peculiar socio-cultural needs of the people of the state. It is in such an event that the availability of such numbers and their reservation as a choice and the power of their assignment assumes importance. In the impugned Rule 55A  in the present instance, introduced in 2001 through amendment by the State of M.P., prescribes four different fees – ₹15000/- for the registration marks 1 to 9 in any series prevalent within the jurisdiction of the registering authority; and ₹ 12000/- for reservation of marks from 10 to 100 in any series within the jurisdiction of the registering authority. For reservation of large series of numbers indicated in Rule 55A(c), ₹ 10000/- and ₹ 2000/- for reservation of any other number or numbers within 1000 from the last number assigned in the serial order.

Senior Advocate Manoj Swarup, who was appointed as the Amicus Curiae in this case, had submitted that the state Governments are not empowered to charge any additional fee for registration, otherwise than as provided under the Motor Vehicles Act. While allowing the appeal, the bench observed thus:

An overall reading of the M.P. Rules and the Act therefore clearly establishes that besides the express authorization to levy fees or collect amounts, both the Central Government and the State Government are empowered – in fact duty bound to extend certain services in the performance of such duties. Both these bodies, i.e. the Central and State Governments would therefore, be acting within their authority to charge or levy fees..
...If there are any further doubts on this issue, 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. It has not been shown how the setting apart of or reservation of some numbers – here, a fraction of the large potential batch of numbers which the registering authority can otherwise assign to vehicles, is per se arbitrary or unreasonable.

The court also disagreed with the view of the High Court that the state was not competent to make the legislation. The court said: 

The use of that expression, at best can be characterized as misconceived. In the present case, the state of M.P. derived its powers to frame the concerned rules, through the provisions of the Motor Vehicles Act itself. The question, therefore, of repugnance as properly understood, did not arise; rather it was a case whether the state government, as one of the delegated authorities, was empowered through Parliamentary law to frame the rule that it did. At best, the issue that arose was whether the offending rule (Rule 55A) was ultra vires the Act or the Central Rules. In the opinion of this court, 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.

Case details

Case no.: CIVIL APPEAL NO. 7074 OF 2008

Case name: STATE OF M.P. & vs. RAKESH SETHI 

Coram: Justices L. Nageswara Rao and S. Ravindra Bhat 

Counsel: Adv Saurabh Mishra,Sr. Adv Manoj Swaroop (Amicus) 

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