After Red Fort blast: HC slams govt over lax rules on used car dealers

The court pointed to the recent Red Fort blast, noting that the 11-year-old car used in the explosion had changed hands four times but continued to be registered in the name of its original owner, who was left to face the fallout.

The Delhi high court on Wednesday came down sharply on the Delhi government for failing to put in place an effective mechanism to regulate the sale and transfer of used vehicles, flagging how gaps in the system can have grave consequences. The court pointed to the recent Red Fort blast, noting that the 11-year-old car used in the explosion had changed hands four times but continued to be registered in the name of its original owner, who was left to face the fallout.

The court issued notice to the Delhi government and fixed January 21 as the next date of hearing.

A bench of chief justice DK Upadhyay and justice Tushar Rao Gedela said an “illegal market” in registered used vehicles was creating serious problems and repeatedly exposing original owners to legal and social consequences for incidents they had no role in.

“The illegal market of used registered vehicles is causing a lot of problems. Did you get to know about the registered bomb blast? The car (has) changed four hands, but the original owner had not changed. Thus, this man (original owner) goes to the slaughterhouse. What is this? You’ll take a call when two-three more bomb blasts take place?” the bench said.

At least 12 people were killed on November 10 when a car packed with explosives detonated near the Red Fort. The vehicle, a Hyundai i20, was allegedly driven by a suicide bomber who bought it used. Following the blast, Delhi Police detained two men who were former owners of the car, even though they had sold it years earlier.

The court’s observations came while hearing a petition filed by the NGO Towards Happy Earth Foundation, which has sought directions to the Centre and the Delhi government to ensure effective implementation of Rules 55A to 55H of the Central Motor Vehicle Rules, which lay a framework for the authorisation, obligations, liabilities and record-keeping requirements of dealers involved in the sale of registered, used vehicles.

The NGO’s counsel argued that the implementation of the rules on the ground has created widespread difficulties for dealers and sellers due to the absence of a proper reporting mechanism between dealers, complicated authorisation procedures and the requirement of GST registration even for small dealers. He submitted that while the rules prohibit anyone from operating as a dealer of registered vehicles without valid authorisation, only a limited number of dealers across the country have been able to secure such approval.

As a result, he said, most used-vehicle dealers, including many in Delhi, continue to operate without licences because of the practical and operational hurdles involved.

He said the rules recognise only the first transfer to an initial authorised dealer, even though most used vehicles pass through multiple dealers before reaching the final buyer.

Bansalalso pointed out that the requirement for dealers to obtain separate authorisation from each registering authority disadvantages small dealers exempt from GST, makes dealers liable for incidents involving vehicles in their custody, and lacks clarity on automatic transfer of insurance, leaving them exposed to risk without adequate protection.

Considering the contention, the court issued notice to the Delhi government and fixed January 21 as the next date of hearing. “Mr Delhi government, please file a counter affidavit... We will not grant any more dates,” the court said.