When the Federation of Automobile Dealers Associations of India (FADA) approached the Supreme Court of India seeking permission to allow automobile dealers to sell soon-to-be obsolete BSIV vehicles beyond March 31, the expectation was the court will throw them a lifeline.
The FADA had petitioned the court on March 17 and the case was heard on March 27. In the ten intervening days, the country saw the imposition of a nationwide lockdown, to add to already dwindling footfalls into auto showrooms amid the outbreak of COVID-19 in the country.
The judgment the court delivered reminded one of a wailing baby being fed a pacifier. At worst, the judgement seemed to be a reluctant afterthought, and a measured response to pleas seeking relief from an unanticipated pandemic at best. In both cases, it has left the industry with more questions than answers, clutching at straws to minimise losses arising from a few hundred thousand unsold BSIV units.
What was the SC's judgement on BSIV deadline extension?
There were two parts to the Supreme Court’s judgement. The easy part: the FADA had submitted to the court that there were over 1,20,000 BSIV units which were sold, but stuck in the registration process due to showroom staff and customers’ inability to complete paperwork amid the lockdown restrictions, and RTOs in certain places being shut. The court took cognizance of the unexpected turn of events, and has “ordered that sold vehicles be registered by the concerned authorities by 30.04.2020”. However, the court has asked for the FADA to furnish details of purchasers of the vehicles via an affidavit by April 3, and also later the details of registration of the vehicles.
The second part is mystifying: The judgement delivered by Justice Arun Mishra said: “In Delhi-NCR region, we are not allowing sale and registration of these vehicles anymore. However, in the remaining part of the country, due to the situation which has arisen due to lockdown, it is ordered that not beyond 10 percent of the vehicles, except with the dealers in Delhi and NCR region, are permitted to be sold out of the aforesaid number of vehicles to make up the good of six days which were available before the lockdown has been ordered in the country”. The court has ordered that these sales must be completed in ten days after the quarantine is lifted and the engine and chassis number of all such vehicles should be provided to the court by FADA. Only the vehicles whose names are on the affidavit shall be allowed to be registered.
How will it be implemented?
The FADA had estimated that there were close to 7.27 lakh unsold BSIV units in a survey it conducted between March 12-14. The case was heard only on March 27, which means there were far fewer in the system at the time of going to court. The task before the FADA right now is to collate these numbers once again and submit them to the SC. The priority before FADA members is to furnish details of all sold but unregistered vehicles and present them to the court by April 3.
This is a complicated task given the constraints of the lockdown. Collecting and validating the data, and putting it forth in the right format before the court is a challenge the association is currently addressing.
Now to the bigger question – since the court’s order does not specify a methodology to calculate the 10 percent units which are allowed to be sold in ten days post-lockdown, the association is seeking an opinion from its counsel on the best approach to this calculation. Seeking a clarification from the court, according to sources, is not the most feasible option as the court is not likely to grant an immediate hearing for the case.
In that event, which vehicles get registered and which ones don’t? The FADA may have to make that assessment based on the data it receives from its dealer members and the decision may be made based on whether the dealer is a member of the FADA and whether they shared accurate numbers to the FADA database. There is no clarity at the moment as to whether the order extends to non-FADA members as well.
So who stands to benefit?
Larger dealerships with relatively higher unsold inventory and higher propensity for expediting paperwork. OEMs with fewer leftover BSIV units will naturally be better placed, but the judgment will aid those with higher inventories to minimise losses.A clearer picture will emerge when the FADA submits its affidavit to the SC later this week, and along with that, hopefully some more answers.
An earlier version of this story mentioned that there were over 1,200 BSIV units which were sold, but stuck in the registration process instead of 1,20,000. The error is regretted.
