Coronavirus LockDown: Supreme Court marginal relief to auto sector, allows sale of 10% unsold BS4 inventory sales in India

he government had set a deadline of March 31 for all automakers to switch from BS4 to BS6 emission norms. The notification had prescribed that sale and registration of BS4 vehicles will not be allowed beyond the March 31 deadline.

Only vehicles, which will have their chassis and engine number details on the affidavit FADA sent to the court, will be allowed to be registered.

However, the order hasn’t stated how to determine which of these 72,000 vehicles, in which region could be sold and which dealership will get the right to sell how many.

It is unclear what will be done in the event if the number of vehicles sold exceeds this 10 percent figure – which ones will get registered and which ones wouldn’t.

The SC has subjected the marginal relief to certain riders. While allowing the sale of 10 percent unsold BS4 inventory, the apex court directed that this sale would have to take place within 10 days from when the nationwide lockdown due to coronavirus is lifted.

It added that there would be no sale of BS4 vehicles in Delhi-NCR and directed that all BS4 vehicles sold will need to be registered within 10 days post sale. Although it added that BS4 vehicles purchased before the lockdown can be registered once the restrictions are relaxed.

FADA made an urgent appeal before the apex court to relax the deadline by 30 days post the lifting of the lockdown. It cited Force Majeure circumstances and argued that the lockdown had kept dealers from selling existing inventory.

The automobile body argued that the lockdown had translated into over 15,000 unsold BS4 commercial vehicles and over 12,000 unsold BS4 passenger vehicles. The number of unsold BS4 two-wheelers was pegged at over 7 lakh.

It pleaded before the SC that these figures of unsold inventory accounted for over Rs 7000 crore. Not allowing sale of these vehicles would cause a number of bankruptcies and job losses, beyond the obvious losses, the association argued.

However, the apex court bench led by Justice Arun Mishra was unimpressed. Justice Mishra shot back at FADA saying, “You just want to take advantage of the lockdown announced by the government. We understand the psychology of businesses and dealers. We understand the frailty of humans.”He chided the FADA counsels observing, “We need to learn to sacrifice to save the country’s environment. There’s no point extending the BS4 deadline further as it would only burden the environment further. We can’t keep extending deadlines in the name of coronavirus.”