SC: State Governments have Authority to Prescribe a Fee for Reserving Registration Number for Motor Vehicles

On August 26, the Hon’ble Supreme Court held that the states can charge a prescribed fee for the assignment of “distinctive marks” i.e. registration numbers to motor vehicles as a distinct service.

Facts of the Case

The registering authority in Madhya Pradesh rejected the allotment of registration number ‘MP-KL-4646’ by a vehicle owner. This was on the ground that he had not paid the prescribed fee for allotment of that number. The vehicle owner approached the High Court challenging the state’s authority to prescribe a special fee under Rule 55A of the Motor Vehicles Rules, 1994 (State Rules). He contended that the said rule was ultra vires the state’s power under the Motor Vehicles Act, 1988 and the Central Motor Vehicle Rules, 1989. The High Court accepted his contentions. It quashed the Rule framed by the Madhya Pradesh State Government.

The State Government filed an appeal challenging the said Judgment.

The Issue in the Instant Matter

Whether Rule 55A was ultra vires the State’s power under the Motor Vehicles Act or the Central Rules to prescribe a fee for allotment of a registration number.

Court’s Observation

The Bench comprising Justices L. Nageswara Rao and S. Ravindra Bhat observed:

1. The State can, to indicate its choice or manner of assigning, prescribe a particular set of procedures for the assignment of numbers.
2. An overall reading of the M.P. Rules and the Act establishes that besides the express authorization to levy fees or collect amounts, both the Central Government and the State Government can (in fact are duty-bound) to extend certain services in the performance of such duties. Both these bodies, i.e. the Central and State Governments would be acting within their authority to charge or levy fees.
3. In the event of any doubt, the generality of the power under Section 65(1) to frame Rules 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 assigned as registration numbers. The setting apart of or reservation of some numbers is per se not arbitrary or unreasonable.
4. Rule 55A was within the ambit of the powers delegated to the State, and directly related to the performance of its functions under Section 41(6), for which it could legitimately claim a fee.

Court’s Decision

The SC held that the assignment of “distinctive marks” i.e. registration numbers to motor vehicles are a distinct service for which states or their authorities can charge a prescribed fee. Rule 55A of the MP Rules is not more than the powers conferred upon the State by the Motor Vehicles Act or the Central Rules.

The appeal filed by the state of MP was thereby allowed and the impugned judgment of the High Court was set aside.

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