Section 51(5) requires proof of lawful repossession; registering authorities cannot adjudicate disputed ownership or possession.

The petitioner, a non-banking finance company, financed respondent No. 4’s purchase of vehicle No. CG-09-JE-8987, which was hypothecated in its favour and recorded as such in Form 36.

Following alleged default in repayment of monthly instalments, the petitioner claimed to have repossessed and sold the vehicle through open auction pursuant to the financing agreement.

It thereafter applied under Section 51(5) of the Motor Vehicles Act, 1988, for transfer of registration in its favour.

The District Transport Officer allowed the application on 19.03.2021 and directed issuance of a fresh Registration Certificate in favour of the petitioner.

Respondent No. 4 appealed, and the appellate authority set aside that order on 16.09.2021 in Appeal Case No. 7/2021.

The petitioner challenged the appellate order under Article 226 of the Constitution.

Whether the registering authority was justified in exercising power under Section 51(5) of the Motor Vehicles Act, 1988, and directing issuance of a fresh Registration Certificate in favour of the financier.

Whether the appellate authority’s order setting aside the order of the registering authority suffered from jurisdictional error, perversity, illegality, or violation of natural justice warranting interference under Article 226.

Whether an appeal under Section 57 of the Motor Vehicles Act was maintainable against an order passed under Section 51(5).

Section 51 of the Motor Vehicles Act, 1988 governs vehicles subject to hire-purchase, lease, or hypothecation agreements, and Section 51(5) permits alteration or cancellation of registration and issuance of a fresh Registration Certificate in favour of a financier only when the statutory preconditions are established, including lawful taking of possession from the registered owner due to default and refusal or inability to produce the Registration Certificate after the prescribed opportunity of hearing.

Section 2(30) recognises a financier in possession under such an agreement as an “owner” for the purposes of the Act, but the financier must follow the procedure under Section 51 to obtain a fresh Registration Certificate.

Mahindra and Mahindra Financial Services Ltd. v. State of U.P., (2022) 4 SCC 366, was relied upon for this principle.

The registering authority’s jurisdiction under Section 51(5) is limited and cannot be used to adjudicate disputed ownership, possession, legality of repossession, or validity of sale.

Judicial review under Article 226 is supervisory, not appellate, and interference is warranted only for patent illegality, perversity, jurisdictional error, or breach of natural justice.

The petitioner also relied on Durga Shankar Mehta v. Thakur Raghuraj Singh, (1954) 2 SCC 20, Anant Mills Co. Ltd. v. State of Gujarat, (1975) 2 SCC 175, and Vishnu Kumar Gupta v. State of M.P., SLP (Crl.) No. 13891/2025, for the principle that a right of appeal must arise from express statutory authority; however, this contention was not decided.

The Court held that the existence of a hypothecation agreement and the financier’s assertion of default were insufficient to invoke Section 51(5).

The registering authority was required to record legally sustainable satisfaction, based on objective material, that the vehicle had been lawfully repossessed from the registered owner pursuant to default under the agreement.

In the present case, respondent No. 4 disputed the default, alleged forcible repossession, and had initiated criminal proceedings.

Further, the District and Sessions Judge had recorded that the vehicle was forcibly taken on 23.03.2020 without notice, thereby casting serious doubt on the foundational fact of lawful repossession.

The petitioner also failed to produce satisfactory evidence of service of default notices, lawful surrender or repossession, the alleged auction, and the subsequent sale.

Since these matters involved disputed civil and criminal rights beyond the limited administrative scope of Section 51(5), the District Transport Officer exceeded its jurisdiction in directing alteration of the registration.

The appellate authority therefore correctly set aside that order, and no ground for interference under Article 226 was established.

It held that the petitioner had failed to establish the statutory and factual foundation necessary for alteration of the vehicle’s registration under Section 51(5), particularly lawful repossession following default.

The question of maintainability of the appeal under Section 57 was left undecided.

There was no order as to costs.