(A) OVERVIEW

The Hon’ble Supreme Court vide its Order dated 24.10.2018 had said that no motor vehicle conforming to the emission standard Bharat Stage­ IV (for short “BS-IV”) shall be sold or registered in the entire country with effect from 01.04.2020.

The Hon’ble in its Order dated 24.10.2018 observed that every vehicle sold after the cut-off date of 01.04.2020 is bound to cause more pollution and, therefore, the manufacturers cannot be permitted to sell any non BS ­ VI compliant vehicle on or after 01.04.2020. The Apex Court vide its order dated 13.04.2017, had clearly held that

“when the health of millions of our countrymen is involved, notification relating to commercial activities ought not to be interpreted in a literal manner.” We have to give a purposive interpretation to notifications specially those dealing with public health issues and even more so, when health not only of the citizens at present but also the citizens in the future is involved”.

The Federation of Automobile Dealers Association (“Association”) filed an application (bearing nos. 195132 and 195136/2019) for impleadment and modification of  Apex Court’s order dated 24.10.2018. However, the Apex Court vide its order dated 14.02.2020 rejected the plea filed seeking extension of the 01.04.2020 deadline by one more month to sell BS-IV norms compliant vehicles across the country on the ground that there is a slowdown in the automobile industry.

(B) SLOWDOWN IN AUTOMOBILE SECTOR

We all are aware that the year 2019 was one of the worst years for the automobile industry with falling sales and piling inventory. Due to low demand had led to a massive slowdown in the auto sector of the country which is the fourth largest in the world. Despite various discounts offered by the dealers in last couple of months, buyers sentiment were missing around ahead of the ban on sale of BS-IV vehicles from 01.04.2020.

Prime Minister Narendra Modi on Tuesday announced unprecedented 21-day nation-wide lock down urging citizens with folded hands to follow the directives to prevent further spread of Covid-19.

The Association once again approached the Apex Court due to a massive drop in retail numbers resulted by the Covid-19 outbreak by moving an application seeking an urgent hearing since 31.03.2020 approaching fast.

(C) ORDER DATED 27.03.2020

The Hon’ble Apex Court convened the hearing through Video Conferencing amid lock down across the country and allowed sale of 10 per cent unsold BS-IV stock for 10 days post lockdown. Key points of the order dated 27.03.2020 are as under:

(i)        Sold vehicles be registered by the concerned authorities by 30.04.2020 (as per the Association there are two-wheelers, passenger cars and commercial vehicles which have been sold but not registered throughout India);

(ii)       It has been directed to furnish details of the purchasers by way of affidavit on e-mail within 7 days from 27.03.2020;

(iii)     No sale and registration of unsold inventory of BS-IV vehicles in Delhi and NCR Region;

(iv)      In the remaining part of the country, not beyond 10% of the unsold vehicles (numbers were given by the Association during the course of hearing) are permitted to be sold to make up the good of six days which were available before the lock-down;

(v)       Sale of such vehicles to be done within a period of 10 days of the lifting of the lock-down operating in the concerned cities and not beyond it;

(vi)      An affidavit is to be filed within seven days of the sale which shall include the number of vehicles sold alongwith other particulars for instance engine and chassis numbers of vehicles before the registration;

(vii)     It has also been mentioned that only those vehicles shall be permitted to be registered about which affidavit is filed;

(D) OUR COMMENTS

The automobile sector has been facing a slowdown over the last one year and due to Covid-19, the companies including Maruti Suzuki, Hyundai, Toyota, Hero MotoCorp (liked to go one step ahead as it halted production across all its global manufacturing facilities, including India, Bangladesh and Colombia along with the GPC at Neemrana in Rajasthan), Honda Motorcycle and Scooters had already halted their production even before the Prime Minister Narendra Modi announced unprecedented 21-day nation-wide lock down.

The Finance Minister has given a package of 1.70 Lakh Crore for the poor to help them fight with the battle against Corona Virus. The RBI on Friday has also introduced various relief measures in order to reduce the financial difficulties arising due to Covid-19 including 3-month moratorium on term loans and equated monthly instalment payments.

Undoubtedly, the Apex Court in its order dated 24.10.2018 made it clear that any non BS ­ VI compliant vehicle on or after 01.04.2020 cannot be permitted to sell. However, considering the present circumstances, when the Central Government has already granted various reliefs in last 2-3 days, three to four weeks’ time could have been granted to sell the unsold inventory and that too without any condition.

Furthermore, it has been directed that the sold vehicles should be registered with the concerned authorities by 30.04.2020, which would be a great challenge for the public at large. It is the buyers, who have to get their respective vehicle registered with the concerned authority. Considering the present circumstances, it would be difficult to get all sold vehicles registered by 30.04.2020.

Also, there is no clarity with regard to the time limit for registration of 10 per cent vehicles which will be sold after the lockdown period. This is very much clear that the deadline for registration of new BS-IV vehicles which are to be sold, will certainly be after 30.04.2020 in view of the fact that 10 day has been granted to sell such vehicles followed by 7 day time to file an affidavit with requisite particulars.

We can anticipate that the Central Government will introduce some relief measures for the manufacturing sector including automobile sector, which has faced an unprecedented slowdown in 2019.

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