Delhi HC Directs Report on Unregulated Second-Hand Vehicle Market

The Delhi High Court has directed the city government to submit a comprehensive report on its failure to regulate used-vehicle dealers. The court linked this regulatory gap to significant national security risks, specifically citing the recent use of an untraced second-hand car in a terror incident near the Red Fort.

A Division Bench consisting of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela was hearing a public interest litigation (PIL) concerning the non-implementation of essential safety rules for vehicle transfers.

The High Court expressed grave concern over how vehicles are permitted to change hands multiple times without any official record of ownership transfer. The bench pointed out that an 11-year-old vehicle involved in the November 10 bomb blast near the Red Fort had been resold four times over several months. Despite these transactions, the car remained registered in the name of the original owner, who was then forced to face the legal consequences of an act they were not involved in.

The bench questioned the administration's delay in addressing these loopholes, suggesting that the current system leaves innocent citizens vulnerable to being wrongly targeted in criminal investigations. The court emphasized that the government should not wait for further security breaches before enforcing accountability in the resale market.

The PIL, filed by the Towards Happy Earth Foundation, highlighted that while the Central Government introduced Rules 55A to 55H of the Central Motor Vehicles Rules (CMVR) in December 2022 to fix this exact issue, their implementation on the ground has been near-zero. The rules require registration of dealers as "authorised dealer", treating dealer as the "deemed owner" while the vehicle is in their custody, and all purchases and sales to be updated on VAAHAN portal.

The petitioner argued that in reality, most vehicles pass through a chain of multiple dealers before reaching a final buyer. Because the current system only recognizes the first transfer to an authorized dealer, the tracking chain breaks immediately if subsequent dealers are unregistered. The court was informed that while thousands of used-car dealers operate in Delhi, not a single one has been registered under this formal framework

The bench has now listed the matter for January 21, 2026, directing the Delhi Government to file a detailed counter-affidavit.

Case Title: Towards Happy Earth Foundation Vs. Union of India & Ors.

Bench: Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela

Order Dated: 17.12.2025