In all these writ petitions a common issue arises and hence they are taken up together for consideration and disposed by this common judgment.
2. The issue involved in these writ petitions is with regard to the liability of a person, who purchases a vehicle from another, to discharge the liability of the erstwhile owner under the Kerala Motor Transport Workers Welfare Fund Act, 1985, (hereinafter referred to as '1985 Act', for short), and pertaining to the period when the vehicle was under the ownership and control of the erstwhile owner. The cause of action for the writ petitions arose when the purchasers of the vehicles approached the taxation authorities under the Kerala Motor vehicle Taxation Act for remitting the tax in respect of the vehicles purchased by them. At that stage, the taxation authorities insisted on proof of payment of welfare fund dues under the Kerala Motor Transport Workers Welfare Fund Act 1985, as a precondition for accepting the tax dues in respect of the vehicle. This demand was made by the taxation authorities in terms of Section 4 (7) of the Kerala motor Vehicle Taxation Act, 1976, the validity of which has been upheld by a Division Bench of this Court in Siraj v. Regional Transport Officer [2007 (3) KLT 929]. Section 8 of the 1985 Act, as is stood prior to its amendment through the Amendment Act of 2005, provided for the determination of amounts that were due, inter alia, from an employer under the Act and Section 10 of the Act spelt out the procedure for proceeding against the said employer for recovery of the same. By the amendment Act of 2005, which came into force on 07.06.2005, Section 8 of the Act was substituted with a new provision, and a new Section 8A was inserted in the Act, which read as follows:
“8A. Production of receipt of remittance of welfare fund contribution- Notwithstanding anything contained in any other law for the time being in force, every registered owner or person having possession or control of a motor vehicle in respect of a motor transport undertaking liable to pay contribution (other than autorickshaws covered under the provisions of the Kerala Autorickshaw Workers Welfare Fund Scheme, 1991) shall, at the time of making payment of tax under the Kerala Motor Vehicles Taxation Act, 1976 (19 of 1976), produce before the Taxation Officer the receipt of remittance of the contribution to the fund due upto the preceding month”
Section 10 was also amended, by substituting a new Section in place of the earlier one, and the amended provision reads as follows:
“10. Mode of recovery of moneys due from the employer, employee and self-employed person-(1) The amount of arrears for which demand notice has been issued under sub- section (1) of Section 8, shall be recovered together with interest thereon at the rate of 9 per cent per annum in the same manner as an arrear of public revenue due on land.
(2) Notwithstanding anything contained in any other provisions of this Act or in any other law for the time being in force, where an employer transfers his vehicle before paying any amount due under this Act in respect of the vehicle, the liability wherefore accrued before the date of the transfer, such amount shall be a charge on the vehicle so transferred”.
3. The effect of the amendment brought about by the Amendment Act of 2005 was that, from 07.06.2005, the production of receipt of remittance of welfare fund contribution became an essential precondition for making payment of tax in respect of the vehicle, under the Kerala Motor Vehicle Taxation Act, 1976. Further, the arrears of amounts due from employers came to be recognised as a charge on the vehicle, in the event of a transfer by the employer of vehicles that were owned by him, and in respect of which there were amounts due under the 1985 Act. The resultant position was that, in respect of transfer of vehicles, effected by persons who had defaulted on payment of their dues under the 1985 Act, prior to 07.06.2005, the liability to pay the dues would continue to be with the transferor and would not pass with the vehicle to the transferee of the vehicle. For those transfers effected after 07.06.2005, however, the liability of the transferor under the 1985 Act, came to be recognised as a charge on the vehicle, by virtue of the amended Section 10 of the Act, and consequently, would pass on to the transferee of the vehicle for the purposes of recovery under the 1985 Act. The legality of the insistence, by the authorities under the Kerala Motor Vehicle Taxation Act, for a clearance, by the owner of the vehicle, of the welfare fund dues of the erstwhile owner, would, therefore, have to be examined in the light of the above statutory changes and the enquiry would have to be as to whether the transfer of the vehicle took place before the date of the amendment to the Kerala Motor Transport Workers Welfare Fund Act, 1985 or after that date. In my view, in cases where the transfer of the vehicle was effected prior to 07.06.2005, the liability of the erstwhile owner of the vehicle in respect of the amounts due under the 1985 Act would continue to be with him and the authorities would not be justified in proceeding against the transferee for realisation of those dues. In the case of transfers effected after 07.06.2005, however, the transferee of the vehicle would be liable to discharge the liability of the erstwhile owner of the vehicle in respect of the latter's dues under the 1985 Act. No doubt the transferee, in such cases, would have a right to proceed against the erstwhile owner for realisation of the amounts paid on his behalf. The rights of the parties in these writ petitions would, accordingly, have to be determined on the basis of the above legal position and accordingly, the writ petitions are disposed with the following directions:
1. In those cases were the transfers of the vehicles have been effected prior to 07.06.2005, the liability to discharge the welfare fund dues under the 1985 Act would continue to be with the erstwhile owner of the vehicle and accordingly, the authorities under the 1985 Act would have to proceed against such owners for realisation of the dues. As a consequence, the insistence by the Motor Vehicles Taxation Authorities, for discharge of liabilities of the erstwhile owner, as a precondition for accepting tax from the subsequent owner, would have to be declared as illegal and I do so.
2. In cases were the transfer of the vehicle has been occasioned after 07.06.2005, the liability of the erstwhile owner of the vehicle, in respect of the dues under 1985 Act, would be a charge on the vehicle and go along with the vehicle to the transferee of the vehicle. Accordingly, the transferee of the vehicle would be liable to discharge the dues of the erstwhile owner under the 1985 Act. In such cases the action of the authorities under the Kerala Motor Vehicle Taxation Act insisting on a clearance of the erstwhile owner's dues, by the subsequent owner, as a condition for accepting tax from him, is held to be legal and valid and the notices, if any issued in that regard, are sustained.
3. In cases covered by (2) above, wherever the transferee has effected payment of dues pertaining to the erstwhile owner, it shall be open to the said transferee to proceed against the erstwhile owner, for realisation of the amounts paid on behalf of the erstwhile owner and in discharge of the latter's liability under the 1985 Act.
4. The demands that have been made against the petitioners, which have been held to be legal and valid in this judgment, shall be satisfied by the petitioners within a period of one month from the date of receipt of a copy of this judgment. As it is noticed that, during the pendency of the writ petition, the petitioners have all been permitted to effect payment of Motor Vehicle tax by way of interim orders of this Court and, therefore, no further directions are required in that regard.
With these direction the writ petition are disposed of.
A.K.JAYASANKARAN NAMBIAR JUDGE mns