Supreme Court directs Delhi High Court to hear petition seeking probe into 'auto finance mafia'

A petition filed in the Supreme Court alleges that Delhi governments have allowed finance firms to essentially indulge in black-marketing of three-wheelers, raising costs for commuters.

Terming it a matter of "public importance", the Supreme Court has directed the city high court to hear a petition which seeks a probe into Delhi's alleged "auto finance mafia" that sells illegal permits and new three-wheelers at exorbitant prices and turns many of them benami.

The plea filed by Rakesh Agarwal of NGO Nyaya Bhoomi claims successive governments ruling the Capital were hand in glove with some financing firms, selling new auto rickshaws worth Rs 1,85,000 at Rs 4,50,000.

Agarwal had raised the issue before Delhi High Court in 2010. But the court dismissed his petition on technical grounds saying that there was an internal dispute in the name of Nyaya Bhoomi and this fact was not stated in the PIL.

It had arisen due to some dispute between Agarwal who was the secretary of the NGO then and its president, it said. The dispute was finally decided in Agarwal's favour by the lower court last year.


"Having heard Rakesh Agarwal, the secretary of the appellants, and learned additional solicitor general for Delhi government's transport department, we are satisfied that the issue raised by the appellants is of public importance, and therefore needs to be adjudicated on merits," a bench headed by Chief Justice J S Khehar said in a recent order.

Agarwal alleged that as part of the 'nexus' between the 'finance mafia and the government', an old auto is sold to a private financier along with permit who then sells it at three times its official price to another auto driver.

This causes black-marketing of the three-wheelers which raises the cost of operating an auto, eventually leading to overcharging of customers.

Also, the transfer of ownership is not registered with the transport department, effectively turning the auto benami, or anonymous. In the event of a crime committed using such a vehicle, the driver or the owner cannot be traced.

"90% of all autos in Delhi are sold on finance from the finance mafia who give as much as Rs 3.5 lakh of loan per auto clearly demonstrating the black-marketing aspect. The financiers do not restrict their role to just financing but effectively control the autos by indulging in buying and selling of autos along with permits. This is a violation of the Supreme Court's order of 16.12.1997 which termed the trading in permits as illegal," Agarwal alleged.

"The price charged by the TSR-financiers for a TSR (three-wheeled scooter rickshaw) is well above Rs 5 lakh along with permit in comparison to the on-road price which is around Rs 1.25 lakh. The difference in price is the illegal premium amount charged for the permit which is, admittedly, traded. In hundreds of recovery cases registered in various district courts of Delhi, the TSR-financers have admitted to having sold second-hand TSRs for value in excess of Rs 3,00,000," he said.

Explaining further, he said when a person wants to sell his auto, his only option is to approach one of the TSR-financiers because no sale and purchase takes place without their involvement.

The seller is made to sign various blank documents, forms and stamp papers including those that will facilitate transfer of permits. These documents often come in a bound format, mostly in duplicate and triplicate, and constitute what is known in the trade as a "File."

The vehicle is sold along with loan to another auto driver without registering such a sale or transfer with the authorities.

The transport department continues to hold the name and address of the original owner. This turns the TSR or permit benami. Since by virtue of the custody of the "File", the control of the TSR lies with the financier, he exploits the auto-driver or new owner to the hilt.

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