Karnataka HC Restores Cancellation of Mercedes-AMG G63 Registration Obtained on Fabricated Documents

A Division Bench set aside a Single Judge order that had quashed the seizure of a Rs. 1.97 crore SUV re-registered at a fraction of its value, evading over Rs. 78 lakh in road tax.

A Division Bench of the High Court of Karnataka, led by Chief Justice Vibhu Bakhru and Justice K.S. Hemalekha, on 28 July 2026 allowed the State's intra-court appeal and set aside an order passed by a Single Judge that had quashed the seizure of a Mercedes-Benz AMG G63 and directed its release to the vehicle's registered owner. The Single Judge had held that the officer who seized the vehicle lacked the authority to do so under the Karnataka Motor Vehicles Taxation Act, 1957, and had separately set aside the subsequent cancellation of the vehicle's registration as an act of contempt of court proceedings. The Division Bench disagreed with both conclusions. It found that the seizing officer held the statutory rank required under Section 11A of the KMVT Act, that the registration had been obtained on prima facie fabricated documents, and that no court order restrained the transport authorities from exercising their functions when the cancellation order was passed.

The Dispute Before the Division Bench

The respondent, Neeraj Kumar Sharma, had filed Writ Petition No. 36250 of 2025 (MV) before a Single Judge, seeking to quash an Investigation Report dated 15 June 2025 bearing CR No. 214476, prepared by the Regional Transport Officer, Mysore West, and the Senior Inspector of Motor Vehicles, and directing the transport authorities to release his vehicle, a Mercedes-Benz AMG G63 bearing registration No. KA20MH0888.

The Single Judge allowed the writ petition on 24 March 2026. It quashed the investigation report, directed that the vehicle be released forthwith to the respondent, and also set aside a separate order dated 16 January 2026 by which the RTO, Udupi, had cancelled the vehicle's registration certificate under Section 55(5) of the Motor Vehicles Act, 1988.

The State of Karnataka, the Joint Commissioner of Transport, the Regional Transport Officer, Mysore West, and the Senior Inspector of Motor Vehicles filed Writ Appeal No. 1203 of 2026 under Section 4 of the Karnataka High Court Act, challenging the Single Judge's order on every point. The appeal was argued for the State by Sri K.S. Harish, Principal Government Advocate, and for the respondent by Sri H. Pavan Chandra Shetty.

A Vehicle With a Tangled History

The vehicle in question, a Mercedes-Benz AMG G63 bearing chassis number WDB4632722X261301 and engine number 15798460107755, was originally purchased by one Nihal Ahmed from T.V. Sundaram Iyengar and Sons Pvt. Ltd., Bengaluru, on 31 December 2016, for Rs. 1,96,95,000/-. HDFC Bank Ltd. financed Rs. 1,95,15,000/- of that sum, and a temporary registration was issued by the RTO, Electronic City, Bengaluru, in January 2017.

Nihal Ahmed subsequently sold the vehicle to third parties without the bank's knowledge. The vehicle reached Himachal Pradesh and was registered as HP-97-6063 with the RTO, Indora, using fabricated documents that added an extra character to the chassis number so that the original temporary registration did not appear on the VAHAAN portal. The Indora authority cancelled that registration on 10 February 2021, recording the reason as “FAKE DOCUMENT”.

Nihal Ahmed filed an FIR at Ashok Nagar Police Station, Bengaluru, in January 2022 (Crime No. 0016/2022) when the buyers failed to pay the remaining loan instalments. The Delhi Police separately registered Crime No. 0073/2023 at the Crime Branch, New Delhi, in March 2023, and in the course of that investigation found the vehicle plying in Delhi under yet another allegedly fabricated registration, PB-05-AH-8877. The vehicle was placed in police custody under the Delhi proceedings.

HDFC Bank, holding the hypothecation, simultaneously pursued recovery before the Debt Recovery Tribunal, Bengaluru, in OA No. 529/2019. The DRT found the bank entitled to Rs. 1,41,62,583/- and issued Recovery Certificate No. 127/2020. The Delhi CMM at Dwaraka Courts eventually released the vehicle to HDFC Bank by order dated 15 March 2024, subject to an indemnity bond of Rs. 1,00,00,000/-.

In August 2024, Nihal Ahmed wrote to HDFC Bank requesting a one-time settlement at Rs. 62,50,000/- and asking that an NOC be issued to the respondent, Neeraj Kumar Sharma, who he said would complete the formalities on his behalf. The bank received Rs. 62,50,000/- and issued NOCs dated 3 October 2024, confirming the loan agreement had been terminated and requesting removal of the hypothecation entry. After the CMM permitted sale of the vehicle, the respondent obtained a temporary registration on 10 January 2025.

How the Vehicle Was Re-Registered — and What the State Alleged

The temporary registration certificate described the vehicle's model as “BENZ GLA 200 CDI” instead of “Mercedes-Benz AMG G63”. On 18 January 2025, the Additional Commissioner of Transport (Administration), Bengaluru, directed the Mangaluru transport authorities to verify the vehicle's history before registering it. On the basis of documents submitted by the respondent on 12 February 2025 — including Form No. 20, Form No. 21 (sale certificate), Form No. 22 (road-worthiness certificate), a tax invoice, insurance certificate, GST certificate, Aadhaar card, and temporary registration particulars — the vehicle was registered as KA20MH0888.

The State's case was that the registration was secured through fabrication. The vehicle was described as a GLA 200 CDI and its value was stated at Rs. 32,15,000/- instead of its actual purchase price of approximately Rs. 1,96,95,000/-. As a result, lifetime road tax paid was Rs. 12,69,376/- against an estimated liability of Rs. 78,31,161/- inclusive of penalty — a shortfall of roughly Rs. 65 lakh. The registration certificate itself recorded the number of cylinders as “0”, while the engine capacity was listed as 3982 CC — a specification inconsistent with the GLA 200 CDI, which uses a 4-cylinder diesel engine of approximately 2143 CC.

The Division Bench examined the sale certificate in Form 21. It was purportedly issued by Mercedes-Benz India Pvt. Ltd. showing the vehicle as a GLA 200 CDI with 3982 CC displacement and 8 cylinders — a combination the bench found internally inconsistent. The accompanying tax invoice, dated 8 November 2017, reflected a unit price of Rs. 21,72,297.29. Mercedes-Benz India Pvt. Ltd. confirmed that neither that sale certificate nor the tax invoice had been issued by it, and that no such vehicle had been sold to the respondent.

On 12 June 2025, a Special Checking Squad was constituted under the in-charge RTO, Mysore West, to check high-end vehicles evading tax in Mysuru jurisdiction. On 15 June 2025, the squad found the vehicle parked outside the residence of one Nithin K. Shetty at Vijayanagar, Mysuru. Physical inspection confirmed that the engine and chassis numbers matched those of the original Mercedes-Benz AMG G63. The vehicle was detained under Rule 27-A of the Karnataka Motor Vehicles Taxation Rules, 1957, read with Section 11A of the KMVT Act, and handed to the SHO, Vijayanagar Police Station, Mysore, for safe custody. The Lokayukta Police, Udupi, also registered Crime No. 07/2025 against certain RTO officials, and four officials were placed under suspension on 26 June 2025.

Without responding to notices issued to Nihal Ahmed and Nithin K. Shetty, the respondent directly filed the writ petition seeking to quash the investigation report and obtain release of the vehicle.

Why the Single Judge's Reasoning Did Not Hold

The Single Judge had quashed the investigation report on a single ground: that Sri N. Ranjith, the Senior Inspector of Motor Vehicles who led the squad, was not an “authorised officer” under Section 11A of the KMVT Act and Section 207 of the MV Act. The Single Judge read the official memorandum of 12 June 2025 as conferring only the limited task of submitting a report, not the power to seize a vehicle.

The Division Bench rejected that reading. Section 11A(1) of the KMVT Act empowers any officer of the Motor Vehicles Department not below the rank of Inspector of Motor Vehicles, as empowered by the State Government, to seize and detain vehicles where tax has not been paid. Sri Ranjith held the rank of Senior Inspector of Motor Vehicles — a rank above the statutory minimum. The official memorandum constituted the squad for special enforcement tasks, which the bench held inherently carried the statutory seizure power. The bench found that the memorandum did not curtail any statutory authority; it could not be read as conferring only a reporting function to the exclusion of powers that flowed directly from the statute.

The Division Bench also disagreed with the Single Judge's characterisation of the investigation report itself. The report was, in substance, a preliminary factual narration noting the outcome of physical inspection. The bench found no basis to quash such a report, particularly given the strong prima facie evidence of tax evasion through misrepresentation of the vehicle's model and value.

On the registration cancellation, the Single Judge had held that the RTO, Udupi's order dated 16 January 2026 — passed while the writ petition was pending — amounted to flagrant disregard of court proceedings. The Division Bench found that conclusion unsustainable. There was no stay or interim order in force at the time. The concerned RTO had issued two show-cause notices to the respondent in November and December 2025; both were returned unserved, with the postal endorsement indicating no such person at the given address. Mercedes-Benz India Pvt. Ltd. had confirmed the sale certificate and tax invoice were not genuine. On those facts, the transport authority was exercising its statutory function under Section 55 of the MV Act, not attempting to pre-empt court proceedings.

The Respondent's Claim of Bona Fide Purchase

Before the Division Bench, the respondent's counsel argued that the respondent was a victim and bona fide purchaser. The bench examined the factual record on that claim carefully. The respondent said he had purchased the vehicle from HDFC Bank. However, the bench found no document on record to establish that HDFC Bank sold the vehicle to the respondent. The NOCs issued by the bank only confirmed that the loan agreement had been terminated and that the hypothecation was to be removed; they did not evidence any sale transaction.

The material on record pointed in a different direction: Nihal Ahmed had written to the bank seeking a one-time settlement at Rs. 62,50,000/- and the bank received exactly that sum. The bench inferred that the respondent had provided those funds for Nihal Ahmed to close his loan account, resulting in the bank issuing its NOC. The respondent was also unable to produce any sale document executed by either Nihal Ahmed or HDFC Bank establishing transfer of ownership to him. Against that, the documents on which the KA20MH0888 registration was obtained — the Form 21 sale certificate and the tax invoice purportedly from Mercedes-Benz — were ex facie false and confirmed as such by the manufacturer.

Outcome

The Division Bench allowed Writ Appeal No. 1203 of 2026 and set aside the Single Judge's order dated 24 March 2026 in its entirety. The quashing of the investigation report dated 15 June 2025 was reversed. The direction to release the vehicle to the respondent was set aside. The order restoring the registration certificate of the vehicle was also set aside, leaving intact the RTO, Udupi's cancellation order dated 16 January 2026 passed under Section 55(5) of the Motor Vehicles Act, 1988. The judgment was authored by Chief Justice Vibhu Bakhru and concurred in by Justice K.S. Hemalekha.