Auto-rickshaw permits cannot be directly transferred to new buyer in case of loan defaults: Delhi govt

New Delhi, Jun 21 (PTI) The Delhi government has restricted transfer of auto-rickshaw permits to a new buyer directly in case of loan defaults, in a move aimed at curbing black-marketing of these vehicles by financiers, according to an official statement.

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 in the eventuality of loan defaults, the statement added.

Citing the provisions made under Section-51 of the Motor Vehicles Act, 1988 and Rule-61 of the Central Motor Vehicles Rules, 1989, it said that they clearly lay down rules regarding the vehicles repossessed by the financiers 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," it 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 financiers, it added.

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 financier 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," it stated.

The purchaser, who must be a resident of Delhi having an Aadhaar card, can then approach the department to get the vehicle transferred in his/her name, it added.

"While the financier has the right to retain the vehicle, the original allottee of a surrendered permit shall retain the right to get another auto-rickshaw registered against that permit within six months of date of surrender, after which the department will have the right to issue a fresh LOI (letter of intent) to another person," it said.

The department is also in the process of preparing guidelines to ensure that other transport and non-transport vehicles also comply with these guidelines.

The department will also share a list of such surrendered permits and registration of vehicles in the name of financiers with the Enforcement Branch to check for any unauthorised plying.

Transport Minister Kailash Gahlot in a statement 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-19 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,” he said.