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Kerala High Court
M/S Madras Hire Purchase Finance vs State Of Kerala on 29 July, 2025
2025:KER:56132
W.P.(C).Nos.26015 & 26909 of 2015
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
TUESDAY, THE 29TH DAY OF JULY 2025 / 7TH SRAVANA, 1947
WP(C) NO. 26015 OF 2015
PETITIONERS:
1 P.VIMALCHAND BOKADIA
PROPRIETOR, M/S.MAHAVEER INVESTMENT,
NO.6, CHANDRAPPA MUDALI STREET, SOWCARPET,
CHENNAI - 600 079.
2 ABHISHEK NAHAR
NO.54, ERULLAPAN STREET, SOWCARPET,
CHENNAI - 600 079.
3 NORATMAL SISODIA
NO.31, CHANDRAPPA MUDALI STREET,
SOWCARPET, CHENNAI-600 079.
4 DHANRAJ RATHI
NO.13, MANGAPPAN STREET, SOWCARPET,
CHENNAI-600 079.
BY ADV SMT.MEERA V.MENON
RESPONDENTS:
1 REGIONAL TRANSPORT OFFICER,
PALAKKAD - 678 001.
2 COMMISSIONER OF TRANSPORT,
TRANSPORT COMMISSIONERATE,
THIRUVANANTHAPURAM -695 001.
BY SR.GOVERNMENT PLEADER - ADV.RASMI.K.M.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 29.07.2025, ALONG WITH WP(C).26909/2015,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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W.P.(C).Nos.26015 & 26909 of 2015
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
TUESDAY, THE 29TH DAY OF JULY 2025 / 7TH SRAVANA, 1947
WP(C) NO. 26909 OF 2015
PETITIONERS:
1 M/S MADRAS HIRE PURCHASE ASSOCIATION
HAVING OFFICE AT HEERACHAND GOUTHAMCHAND NAHAR,
CHAMBER,GOLDEN COMPLEX,128,(NEW NO.220),
N.S.C.BOSE ROAD, 4TH FLOOR, CHENNAI-600 079,
REPRESENTED BY ITS SECRETARY, MR.VISHAL LODHA,
AGED 29, S/0 LATE PREM PRAKASH LODHA.
2 RAJESH SINGHVI
AGED 46 YEARS
S/O.BADALCHAND SINGHVI, PROPRIETOR,
SREERAJ FINANCE, 43, AUDIAPPA NAICKEN STREET,
SOWCAR PET,CHENNAI-79.
BY ADV SHRI.VARGHESE C.KURIAKOSE
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY SECRETARY,
DEPARTMENT OF MOTOR VEHICLES,
SECRETARIAT,THIRUVANANTHAPURAM-695001.
2 THE TRANSPORT COMMISSIONER
TRANSPORT COMMISSIONERATE,
STATE OF KERALA,
TRANS TOWERS,THIRUVANANTHAPURAM-695001.
OTHER PRESENT:
ADV RASHMI K M, SR.GP
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 29.07.2025, ALONG WITH WP(C).26015/2015, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
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W.P.(C).Nos.26015 & 26909 of 2015
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[CR]
S.MANU, J.
--------------------------------------------------
W.P.(C).Nos.26015 & 26909 of 2015
-------------------------------------------------
Dated this the 29th day of July, 2025
JUDGMENT
First petitioner in W.P.(C)No.26909/2015 is an association
of individuals engaged in financing of motor vehicles. It is a
society registered under the Tamil Nadu Societies Registration
Act, 1975. Second petitioner is a member of the 1 st petitioner
and he is doing hire-purchase finance business. Petitioners in
W.P.(C)No.26015/2015 are also persons engaged in financing
for motor vehicles.
2. Since the reliefs sought in these writ petitions are
virtually the same, these cases were heard together.
3. Petitioners are aggrieved by Circular Nos.13/2011
dated 13.06.2011, 14/2011 dated 28.06.2011 and 19/2015
dated 22.07.2015 issued by the Transport Commissionerate,
Thiruvananthapuram. In the first circular issued on 13.06.2011
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W.P.(C).Nos.26015 & 26909 of 2015
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the Transport Commissioner stated that the actions to be taken
by the Motor Vehicles Department when motor vehicles are
being registered and hire-purchase agreements are terminated
are explained in Section 51 of the Motor Vehicles Act, 1988 and
Rules 60 and 61 of the Motor Vehicle Rules, 1989.
Endorsements are being made under Section 51 without
examining the credentials of the financing companies. Such
practices were causing difficulties to the vehicle owners and also
to the Department. The Department sought advice of the
Reserve Bank of India as to who all can be considered as
financiers. The Reserve Bank opined that financial institutions
as defined under Section 45-I(c) of the RBI Act, 1934 (including
Hire-purchase Companies registered under the Companies Act,
1956) have to apply for registration under Section 45-IA of the
RBI Act to carry on business as non-banking financial company.
Therefore, the Transport Commissioner directed that at the time
of making endorsements with respect to hire-purchase
agreements and hypothecation agreements it must be insisted
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W.P.(C).Nos.26015 & 26909 of 2015
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that certificate of registration provided under the Reserve Bank
of India Act shall be produced. It was clarified that these
directions would not apply in the case of institutions already
functioning in the banking sector. Further, it was directed that
the instructions shall be followed with effect from 01.07.2011.
4. By Circular No.14/2011 dated 28.06.2011, it was
clarified that Circular No.13/2011 was modified to the effect that
in the absence of certificate of registration under the RBI Act,
production of license obtained under the Kerala Money Lenders
Act, 1958 would suffice. Circular No. 19/2015 was issued on
22.07.2015, directing that endorsements regarding
hypothecation, in addition to the financing institutions
mentioned in the previous circulars, can also be made for Co-
operative Banks under the control of the Reserve Bank of India,
Co-operative Societies under the Co-operative Societies Act, and
Hire-purchase Institutions registered under the Hire-purchase
Act of 1972.
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W.P.(C).Nos.26015 & 26909 of 2015
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5. Petitioners contend that they are not providing loans
or receiving any deposits. They are involved only in hire-
purchase transactions. Hence, they contend that they are not
money lenders as contemplated under Section 2(7) of the
Kerala Money Lenders Act. Under the law governing hire-
purchase, the owner of the motor vehicle will be the hire-
purchase finance company/institution, and the registered owner
will be only a hirer under the hire-purchase finance
company/institution. This ownership will be specifically
incorporated in the agreement of the hire-purchase though the
vehicle will be used by the hirer. When registration is done, an
endorsement will be made in the registration certificate
regarding the nature of the claim of the financier as provided
under Section 51(1) of the Motor Vehicles Act, 1988. Under the
said provision, making an entry in the certificate of registration
is required when the vehicle is held under a hire-purchase, lease
or hypothecation agreement. Petitioners contend that the
circulars issued by the Transport Commissioner are improper
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W.P.(C).Nos.26015 & 26909 of 2015
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and illegal as the instructions issued are not in tune with the
provisions of Section 51 of the Motor Vehicles Act. It is further
contended that the reliance placed by the Transport
Commissioner on the advice received from the Reserve Bank
was also inappropriate. Petitioners also contend that even if the
advice received from the Reserve Bank was legally correct that
was not relevant for the purpose of Section 51 of the Motor
Vehicles Act.
6. Counter affidavit was filed on behalf of the 2 nd
respondent. It was stated in the counter affidavit that the Motor
Vehicles Department received large number of complaints
regarding closure of establishments conducting hire-purchase
and hypothecation business. Registered owners were unable to
revoke the endorsements from registration certificates even
after paying the entire agreed amount to the financier. Large
number of applications were pending before different offices of
the Department on account of letters issued to the firms for
confirmation of payment of agreed amounts being returned
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W.P.(C).Nos.26015 & 26909 of 2015
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unserved due to closure of offices of the firms. Several firms
involved in the business were avoiding registration under the
relevant laws to evade from the clutches of law. In the
judgment of this Court in W.P.(C)No.17402/2011 it was held
that any activity of financing carried on within the State would
be illegal in so far as no license had been obtained under the
Money Lenders Act, 1958 and Reserve Bank of India Act, 1934.
The Circulars are not in conflict with the provisions of Motor
Vehicles Act. They were issued to reduce the sufferings of the
vehicle owners and general public. Hence, the 2nd respondent
contended that the Circulars are not liable to be set aside by
this Court.
7. Heard Sri.Varghese C. Kuriakose, learned counsel
appearing for the petitioners in W.P.(C)No.26909/2015, learned
counsel for the petitioners in W.P.(C)No.26015/2015 and
Smt.Reshmi.K.M., learned Senior Government Pleader appearing
for the respondents.
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W.P.(C).Nos.26015 & 26909 of 2015
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8. Sri.Varghese C.Kuriakose relied on a judgment of the
Karnataka High Court in Karnataka Hire Purchase
Association and etc. v. Commissioner for Transport in
Karnataka, Bangalore and another [AIR 2011 Kar.101]
rendered on 07.02.2011 in a batch of writ petitions challenging
a similar Circular issued by Transport Commissioner of
Karnataka. Court held that the Circular was in conflict with
Section 51 of the Motor Vehicles Act and it was quashed. He
contended that Section 51 of the Act does not contain any
stipulation that registration of the financier shall be verified
before making endorsements. The Transport Commissioner was
therefore incompetent to restrict the scope of the provision by
issuing a circular. He contended that even if it is conceded that
the circular was issued in public interest the same cannot be a
reason to sustain the circular as it is obviously not in tune with
the provisions of Section 51. Learned counsel further submitted
that it is trite law that the authorities under an enactment
cannot issue administrative circulars which are in the nature of
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W.P.(C).Nos.26015 & 26909 of 2015
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overriding the provisions of the Act. He relied on the judgment
of the Hon’ble Supreme Court in Kerala Financial Corporation
v. CIT [(1994) 4 SCC 375]. The learned counsel further
submitted that hire-purchase agreements are well recognized as
lawful arrangements. He referred to the judgments of the
Hon’ble Supreme Court in Charanjit Singh Chadha v. Sudir
Mehra [(2001) 7 SCC 417] and Magma Fincorp Ltd. (M/s.)
v. Rajesh Kumar Tiwari [(2020) 10 SCC 399] in this regard.
The learned counsel therefore submitted that the Transport
Commissioner by issuing the impugned Circulars has virtually
attempted to interfere with the right of the petitioners to engage
in business. Learned counsel appearing for the petitioners in
W.P.(C)No.26015/2015 adopted the contentions of Sri.Varghese
C.Kuriakose.
9. The learned Senior Government Pleader
Smt.Reshmi.K.M. submitted that the issue raised by the
petitioners is already decided against them by this Court. She
referred to the judgment of a learned Single Judge of this Court
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W.P.(C).Nos.26015 & 26909 of 2015
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in W.P.(C)No.18477/2011 rendered on 15.01.2015. She
contended that in the said judgment this Court disallowed the
prayer of a financier to effect endorsements, who had no license
to carry on financing activities either under the Reserve Bank of
India Act or under the Kerala Money Lenders Act. Further, this
Court observed that any activity of financing carried on within
the State would be illegal, insofar as no license had been
obtained under the 1958 Act. She further submitted that the
Transport Commissioner issued impugned circulars for the
reasons explained in the counter affidavit. Difficulties were faced
by several persons on account of closure of business or offices
by the financing companies and the department was not able to
process requests made by the purchasers who had paid the
entire amounts as per the agreements to the financing
companies as letters issued for verification were being returned
since the offices of some of the companies were closed. She,
hence submitted that the circulars were issued with the
objective of ameliorating the grievance of several persons who
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W.P.(C).Nos.26015 & 26909 of 2015
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entered into agreements with financing companies and
institutions which were not having proper licenses and
registration. She also submitted that in the light of the
judgment of this Court cited by her, the judgment of the
Karnataka High Court pointed out by the learned counsel for the
petitioner may not be followed.
10. I have appreciated the rival contentions. Section
51(1) of the Motor Vehicles Act, 1988 reads as under: –
“51. Special provisions regarding motor
vehicle subject to hire-purchase agreement,
etc.–(1) Where an application for registration of a
motor vehicle which is held under a hire-purchase,
lease or hypothecation agreement (hereafter in
this section referred to as the said agreement) is
made, the registering authority shall make an
entry in the certificate of registration regarding the
existence of the said agreement.”
11. Under Section 51, there is no stipulation that entries
in the certificate of registration under Section 51(1) can be
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W.P.(C).Nos.26015 & 26909 of 2015
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made only if the financier is having a registration under any
particular law. Section 51(1) speaks only about an entry to be
made in the certificate of registration when an application for
registration of a motor vehicle which is held under a hire-
purchase, lease or hypothecation agreement is received. No
provision in the Rules is also brought to the notice of the Court
which adds any further qualifications or requirements for
making an entry as provided under Section 51(1).
12. It is also relevant to note that the Transport
Commissioner has not mentioned any provision of law which
authorises him to issue a circular which insists for production of
proof of registration or license under the Reserve Bank of India
Act or Kerala Money Lenders Act. The Transport Commissioner
by issuing the impugned circulars was essentially making an
attempt to incorporate some requirements which are not there
under Section 51(1) of the Motor Vehicles Act or under any
provisions of the Rules made thereunder.
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W.P.(C).Nos.26015 & 26909 of 2015
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13. The attempt made by the Transport Commissioner
virtually amounted to re-writing of the provisions of Section
51(1) by incorporating conditions for making endorsements in
registration certificates. The same is impermissible. Provisions
of a statute cannot be tinkered with and ambit of the statutory
provision enlarged or curtailed by executive orders and
instructions. I therefore agree with the view adopted by the
Karnataka High Court in Karnataka Hire Purchase
Association and etc. v. Commissioner for Transport in
Karnataka, Bangalore and another [AIR 2011 Kar.101].
14. The clarification obtained by the Transport
Commissioner from Reserve Bank of India was pointed out by
the learned Senior Govt. Pleader. The RBI had stated in their
letter to the Commissioner that all financial institutions including
hire- purchase companies shall obtain registration under the
provision of the RBI Act, failing which they cannot do business
as a non banking financial company. Failure to obtain
registration would attract penal consequences also. However the
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W.P.(C).Nos.26015 & 26909 of 2015
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said clarification given in the context of the RBI Act and
regulatory regime under the RBI also cannot vindicate the
issuance of impugned circulars in a manner reducing the ambit
of the Section 51(1) and imposing conditions which lack
statutory imprimatur.
15. Though the objective and purpose of issuing the
impugned circulars were in public interest and can be
considered as laudable, the Transport Commissioner was not
competent to issue such circulars which amounted to meddling
with the provisions of the Act. If the Government desire to
incorporate such requirements also for making entries in the
registration certificates, proper course open to it is to
appropriately amend the Act or the Rules. Operation of
unscrupulous financiers may be leading to several issues as
pointed out in the counter affidavit. Restricting the persons and
companies lacking credentials from involving in financing of
vehicles may be necessary. Enforcement of the statutory
provisions governing the field is indispensable. However the
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W.P.(C).Nos.26015 & 26909 of 2015
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said purposes shall be achieved through legally sustainable
methods, necessarily in coordination with the other competent
departments of the Government.
16. The learned Special Government Pleader had placed
heavy reliance on the judgment of this Court in W.P.
(C)No.18477/2011. It is clearly discernible from the said
judgment that this Court did not consider the validity and
sustainability of any of the circulars in that case. It appears that
such a challenge was not pressed by the petitioner in the said
writ petition and therefore this Court had no occasion to analyse
the validity of the circulars. In these writ petitions, validity of
the circulars is under challenge. Therefore, the said judgment in
a writ petition filed by some others cannot stand in the way of
the petitioners herein challenging the validity of the circulars.
17. In the result, these writ petitions are allowed.
Circular Nos.13/2011 dated 13.06.2011, 14/2011 dated
28.06.2011 and 19/2015 dated 22.07.2015 issued by the
Transport Commissioner, restricting endorsements of hire
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W.P.(C).Nos.26015 & 26909 of 2015
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purchases in registration certificates of motor vehicles are
quashed as they are in conflict with the provisions of Section
51(1) of the Motor Vehicles Act, 1988.
Nonetheless, it will be open to the Government to address
the issues pointed out in the counter affidavit in support of the
decision taken by the Transport Commissioner in a lawful
manner and incorporate remedial provisions into the statutory
framework.
Sd/-
S.MANU
JUDGE
skj
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W.P.(C).Nos.26015 & 26909 of 2015
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APPENDIX OF WP(C) 26015/2015
PETITIONER’S EXHIBITS
Ext.P1 COPY OF RETURN FILED BY THE 1ST PETITIONER
DT.31-10-2014
Ext.P1(a) COPY OF RETURN FILED BY THE 2ND PETITIONER DT.
13.4.2015
Ext.P1(b) COPY OF RETURN FILED BY THE 3RD PETITIONER
DT.29.09.2014
Ext.P1(c) COPY OF RETURN FILED BY THE 4TH PETITIONER DT.
17.07.2015
Ext.P2 COPY OF REGISTRATION CERTIFICATE OF VEHICLE
NO.KL-10/AH-6688 DT.23.08.2011
Ext.P2(a) COPY OF REGISTRATION CERTIFICATE OF VEHICLE
NO.KL-57/C-8448 DT. 24.01.2011
Ext.P2(b) COPY OF REGISTRATION CERTIFICATE OF VEHICLE
NO.KL-49/A-11 DTD. 01.09.2008
Ext.P2(c) COPY OF REGISTRATION CERTIFICATE OF VEHICLE
NO.KL-58/E-653 DT. 22.11.2010
Ext.P3 COPY OF CIRCULAR NO.13/2011 ISSUED BY THE 2ND
RESPONDENT DT. 13.06.2011
Ext.P3(a) COPY OF CIRCULAR NO.14/2011 ISSUED BY THE 2ND
RESPONDENT DT. 28.06.2011
Ext.P3(b) COPY OF CIRCULAR NO.19/2011 ISSUED BY THE 2ND
RESPONDENT DT. 22.07.2015
RESPONDENTS’ EXHIBITS:
EXT.R2(a) COPY OF THE LETTER
No.DNBS(T)No.668/02.07.008/2010-11 dated
15.12.2010.
EXT.R2(b) COPY OF W.P.(C)No.18477/2011.
EXT.R2(c) COPY OF THE JUDGMENT OF W.P.(C)No.18477/2011
DTD.15.01.2015.
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W.P.(C).Nos.26015 & 26909 of 2015
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APPENDIX OF WP(C) 26909/2015
PETITIONER’S EXHIBITS
EXT.P1 TRUE PHOTOSTAT COPY OF THE CERTIFICATE OF
REGISTRATION ISSUED BY REGISTRAR ASSIGNING
REGISTRATION NO.S12/1992
EXT.P2 TRUE COPY OF THE INCOME TAZX RETURNS
SUBMITTED BY THE 2ND PETITIONER TOT HE
INCOME TAX DEPARTMENT FOR THE ASSESSMENT
YEARS 2014-15
EXT.P3 TRUE PHOTOSTAT COPY OF THE CIRCULAR NO.1 0F
2011 DATED 31.01.2011
EXT.P4 TRUE PHOTOSTAT COPY OF THE HIRE PURCHASE
AGREEMENT ENTERED ON 27.02.2015 BY THE 2ND
PETITIONER WITH A CUSTOMER BY NAME
MR.LUSHAMANUL HAKKIM
EXT.P5 TRUE PHOTOSTAT COPY OF THE REGISTRATION
CERTIFICATE BOOK PERTAININNG TO KL-55C-688
EXT.P6 TRUE PHOTOSTAT COPY OF THE CIRCULAR
NO.13/2011 DATED 13/06/2011
EXT.P7 TRUE PHOTOSTAT COPY OF THE CIRCULAR
NO.14/2011 DATED 28.06.2011
EXT.P8 TRUE PHOTOSTAT COPY OF THE ADVISE GIVEN BY
RESERVE BANK OF INDIA
EXT.P9 TRUE PHOTOSTAT COPY OF THE TRANSLATED
VERSION OF THE LETTER WAS ISSUED IN
MALAYALAM
EXT.P10 TRUE PHOTOSTAT COPY OF THE MEMORANDUM DATED
16.06.2015 ADDRESSED TO THE HON’BLE MINISTER
EXT.P11 TRUE PHOTOSTAT COPY OF THE COMMUNICATION
DATED 25.06.2015 ISSUED FROM THE OFFICE OF
THE HON’BLE MINISTER
EXT.P12 TRUE PHOTOSTAT COPY OF THE MEMORARANDUM
DATED 09.07.2015 SUBMITTED BY THE IST
PETITIONER BEFORE 2ND RESPONDENT
EXT.P13 TRUE PHOTOSTAT COPY OF THE CIRCULAR
NO.19/2015 DATED 22.07.2015
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W.P.(C).Nos.26015 & 26909 of 2015
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EXT.P14 TRUE PHOTOSTAT COPY OF THE COMMUNICATION
DATED 30.07.2015 WAS SUBMITTED BY THE 1ST
PETITIONER TO THE 2ND RESPONDENT
EXT.P15 TRUE PHOTOSTAT COPY OF THE TRANSLATED
VERSION OF THE HAS COMMUNICATION DATED
23.07.2006 ISSUED BY TRANSPORT COMMISSIONER
OF THE STATE OF KARNATAKA
EXT.P16 TRUE PHOTOSTAT COPY OF THE TRANSLATED
VERSION OF CIRCULAR DATED 14.08.2006 ISSUED
BY TRANSPORT DEPARTMENT.
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