In a move to curb malpractices and black marketing, the Arvind Kejriwal Government has issued an order to prevent direct transfer of permit and vehicle to a new buyer in case of default of loans.

This was done in light of various representations related to the procedure being followed for transfer of auto rickshaws after repossession by financiers like banks and Non-Banking Financial Companies (NBFCs) in the eventuality of loan defaults.

In a statement, the Delhi Government said that the provisions made under Section-51 of the Motor Vehicle Act 1988 and Rule-61 of the Central Motor Vehicle Rules 1989, clearly lay down rules regarding the vehicles’ repossessed by the financiers (NBFCs/banks) from the Registered Owner on account of default in payment of loan towards the vehicles under hypothecation.

“In such cases the said vehicle shall be transferred in the name of the financiers (NBFCs/banks)  on production of relevant orders of the Court/Arbitrator.

This reiterates the provision that a direct transfer of the vehicle and permit to another buyer is not legally permissible. The department has further clarified that the loan arrangement is only in respect of the vehicle and not the permit/letter of intent issued to the original owner,” the statement said.

In case the registered owner is unable to produce any evidence to the contrary, the Registration Certificate (RC) of the original registered owner will be cancelled on default of loan and a fresh RC shall be issued in the name of the financiers.

The statement said that the permits issued against such vehicles shall be deemed to be surrendered to the Transport Department and such repossessed vehicles can be sold by the financer to the auction purchaser following due process and legalities. Even in such cases, the permit will not be transferred or deemed to be transferred in favour of the auction purchaser.

According to Transport Department officials, the department is in the process of preparing guidelines to ensure that other transport/non-transport vehicles also comply with the same.

The department will also share the list of such surrendered permits and registration of vehicles in the name of financiers with the enforcement branch to check for any unauthorised playing.

Delhi Transport Minister Kailash Gahlot said, “Despite an Act and Rule mandating the same, a lot of genuine loan defaulters are being harassed by financiers. Our Government believes in fighting against all such types of corruption and end malpractices.

This is especially crucial in a post-Covid scenario where auto drivers are bearing the brunt of heavy loans and inability to repay them. I am hopeful that this measure, along with strict enforcement by the department will bring down such malpractices and bring relief to a lot of auto drivers.”