Full Text
HIGH COURT OF DELHI
Date of Decision: 12th December, 2024
M/S UPGRID SOLUTIONS PRIVATE LIMITED AND ANR .....Petitioners
Through: Mr. Jayant Mehta, Mr. Rupesh Gupta, Ms. Kritika, Ms. Jasleen Virk, Advocates
Through: Ms. Harshita Nathrani, Advocate for Mr. Sameer Vashisht, ASC (Civil) for
GNCTD
Transport Department, GNCTD
JUDGMENT
1. For the grounds and reasons stated in the application, the application is allowed and with the consent of the counsel, the main writ petition is called on the board by today itself.
2. The present application is disposed of.
3. The Petitioners are engaged in the business of issuing, leasing, distributing and swapping rechargeable Lithium-ion battery systems for evehicles, under the trade name “Battery Smart”. These Lithium-ion batteries, certified by the Automotive Research Association of India[1], incorporate advanced features such as — fast charging, Internet of Things (IoT) integration, Global Positioning System (GPS) tracking, and Controller Area Network (CAN) functionalities — designed specifically for electric and battery-operated vehicles. According to the Petitioners, they manage the country’s largest and fastest-expanding battery-swapping network for electric two and three-wheelers. Their service model is intended to encourage EV adoption by reducing downtime and costs through swift and convenient battery swaps.
4. The Petitioners’ grievance arises from a sweeping action undertaken by the Respondents, of impounding several e-rickshaws, which are equipped with the Petitioners’ Lithium-ion batteries. These batteries, provided on a lease-based swap model, form a crucial part of the e-rickshaw ecosystem. The Respondents state that the impounded e-rickshaws have been scrapped and destroyed by them as per legal norms. However, the Lithium-ion batteries have been recovered and now proposed to be disposed of through public auction.
5. The Petitioners claim that they retain ownership of the Lithium-ion batteries, which were never sold to the e-rickshaw owners, but merely leased out to them. On these grounds, they insist that the Respondents must return the batteries intact to the Petitioners, rather than disposing them. In this regard, the Petitioners made a representation dated 06th September, 2024, to the Respondents, voicing their concerns and protesting against the “ARAI” unwarranted destruction and proposed disposal of their leased batteries. When the Respondents failed to address these legitimate concerns, the Petitioners were left with no choice but to approach this Court through the present writ petition.
6. The Respondents have argued that the e-rickshaws, along with their integrated components, had been impounded for non-compliance with the Motor Vehicles Act, 1988 — particularly the absence of valid registrations and fitness certificates. They maintained that since these e-rickshaws were impounded as a complete unit, any release of parts, including the batteries, independently is impermissible. Recognizing the gravity and novelty of the issue, on 28th October, 2024, this Court issued the following interim directions: “W.P.(C) 12992/2024
3. Respondent No. 1 has filed their counter affidavit declining the Petitioners’ request for release of batteries of e-rickshaws seized by the Respondent. Referencing the order dated 13th January, 2017 passed by this Court in 312/2017, leading to the seizure of the erickshaws, the Respondent has argued that the e-rickshaws had been seized on account of lack of requisite registration under the Motor Vehicles Act, 1988. They highlighted that the batteries were seized along with the e-rickshaws as a single unit and not independently, stating that the if the e-rickshaws were to be released under the Act, they would be released along with the batteries.
4. In the present case, the e-rickshaws were seized in August,
2024. None of the owners of the e-rickshaws have come forward for release of the vehicles. The Petitioners’ apprehension is that the Respondents are in the process of destroying the batteries of the seized e-rickshaws. Mr. Jayant K., counsel for the Petitioners, explains that the batteries are given to e-rickshaw owners on a lease-based swap model. Under this arrangement, the batteries are charged at swapping stations installed by the Petitioners. The erickshaw owners visit the said stations to swap batteries on a regular basis, entitling the Petitioners to a certain amount per every swap.
5. Mr. Jayant further asserts that the requirement of registration under the Motor Vehicles Act is with respect to the e-rickshaws and not the batteries. He states that if the batteries seized by the Respondents are released, the Petitioners would ensure that the same are only leased to registered e-rickshaw owners. He asserts that the Petitioners are willing to give an undertaking to the said effect. He also highlights that the batteries in question are state of the art equipped with GPS, facilitating the traceability of all the erickshaws by way of a mobile phone application. Mr. Jayant further states that the Petitioners have the records for the e-rickshaws equipped with their batteries, and will be able to furnish the documents verifying the same.
6. The Court has considered the aforesaid submissions of the Petitioners. In view of the foregoing, it is directed that Mr. Bhupinder Singh, Nodal Officer (Scrapping Cell), Transport Department, GNCTD, shall remain present in Court on the next date of hearing, in order to enable the Court to arrive at a possible resolution on the aforesaid issue.
7. Re-notify on 19th November, 2024.”
7. The Petitioners countered these assertions by explaining their innovative lease-based battery swapping model. Under this arrangement, the e-rickshaw owners never “owned” the batteries; they merely used them on a subscription basis. The Petitioners also emphasized that the licensing and registration requirements under the Motor Vehicles Act apply to vehicles and not on the batteries per se. Nevertheless, the Petitioners offered to give a suitable undertaking that henceforth, only registered and fitness compliant erickshaw owners would receive their leased batteries. Accordingly, on 19th November, 2024, after hearing the submissions of the Nodal Officer of Transport Department, GNCTD, the Court passed the following order granting further interim directions:
impounded on regular basis. He informs the Court that the vehicles are impounded if they are plying either without registration or without valid fitness certificates, which is required to be taken periodically from the Transport Department by the vehicle owner. He states that for the initial two-year period, there is no requirement of fitness certificate however, thereafter it is required to be renewed on yearly basis.
3. The e-rickshaws fall within the definition of “motor vehicles” as prescribed under the Motor Vehicles Act, 1988[2] and are necessarily required to be registered with the Transport Department, before being allowed to operate on public roads. The pertinent question that arises for consideration, is whether the Lithium-ion batteries, which are allegedly leased by the Petitioners to the e-rickshaw owners, can be segregated from the e-rickshaw.
4. On this aspect, the Court had enquired from Mr. Jayant K. Mehta, Senior Counsel for the Petitioner regarding the applicable regulations and rules. In response, Mr. Mehta states that he will examine this issue and address arguments, on the next date of hearing.
5. In the meantime, Respondents shall not dispose of the Lithiumion batteries in question, recovered from the e-rickshaws impounded from the Petitioner, without leave of the Court.
6. List on 9th December, 2024.” [Emphasis added]
8. In the foregoing background, Mr. Jayant Mehta, Senior Counsel for the Petitioners argues that the makes the following submissions: 8.[1] The Ministry of Road Transport and Highways[3] (MVL Section), has issued a communication dated 12th August, 2020, regarding the sale and registration of electric vehicles without batteries. This communication clarifies that the vehicles without batteries can be sold and registered on the basis of type approval certificate issued by the Test Agency. Thus, the impounding of the e-rickshaws does not necessary entail that the batteries installed in the e-rickshaws, cannot be segregated. 8.[2] As per Rule 3(k) of the Battery Waste Management Rules, 2022, notified by the Ministry of Environment, Forest and Climate Change, an “Motor Vehicles Act” “end of life battery” is defined as a ‘battery which have been used, completed its intended use and is not meant for refurbishment’. Therefore, the batteries in question cannot be categorize as ‘end of life batteries’ as defined in the said Rules. Although, the batteries may have deteriorated substantially on account of the impounding action of the Respondents, however, the batteries still have life and can be utilised by the Petitioner by leasing out to the other certified e-rickshaws owners. 8.[3] The Government has introduced the ‘Draft Batter Swapping Policy’ which recognises battery swapping under the broader umbrella of Battery as a Service (BaaS) business models, whereby EVs can be purchased without the battery, thus lowering the upfront costs by paying a regular subscription fee to the service providers for battery services throughout the vehicle timeline. Therefore, the business model of the Petitioners is such that the erickshaw owners have taken the batteries on lease basis and the same were being swapped from time to time, as per the agreement between the Petitioners and e-rickshaw owners. 8.[4] In light of the above regulations, clearly, the battery is a separate unit which can be segregated from the e-rickshaws. Thus, the destruction of the batteries would not only cause substantial economic loss to the Petitioners but would also greatly contribute to generating e-waste. 8.[5] The Petitioners have documents to identify the batteries which can be scrutinized by the concerned Sub Divisional Magistrate. All these batteries were leased under specific contracts and are identifiable through invoices, contracts and the GPS tracker/scanners.
9. Ms. Harshita Nathrani, counsel for the Respondents, strongly opposes “MoRTH” the instant writ petition and submits that: 9.[1] The communication dated 12th August, 2020, issued by MoRTH, which provides for sale and registration of electric vehicles without batteries, specifically refers to a type approval certificate issued by the Test Agency. However, there is no such type approval provided with respect to the e-rickshaws which have been impounded. It must be noted that currently registration of electric vehicles without batteries is not being done in Delhi. The e-rickshaws that have been impounded for scrapping are unregistered electric vehicles, which were operating on the roads without any valid fitness/approval certificates and were in violation of the Motor Vehicles Act.
9.2. Leasing batteries to unregistered and unfit vehicles is hazardous to public safety. The Petitioner’s action of leasing batteries to e-rickshaws which did not have valid registration or certification of roadworthiness can be harmful for public welfare and can be seen as contributory to the illegal operation of such unregistered vehicles. Moreover, law enforcement agencies are not bound to act as per the provisions of contracts between private parties. 9.[3] In case, the Petitioners have suffered any loss on account of leasing the batteries to the e-rickshaw owners, their remedy lies in seeking damages from the lessees by initiating appropriate legal action. The remedy of seeking release of the said batteries through writ proceedings under Article 226 of the Constitution, is not an appropriate one. 9.[4] The scrapping process undertaken by the Respondents allows for the Petitioner to participate in the public auction of their batteries and purchase the same by placing their bids. Analysis and findings
10. E-rickshaws which offer environmental benefits, have emerged as a preferred choice for accessible and affordable last-mile connectivity. In addition to their utility in reducing carbon footprints, e-rickshaws play a significant role in generating livelihoods and augmenting incomes for drivers, many of whom belong to economically disadvantaged sections of society. However, the Court acknowledges the legitimate concerns of the State regarding the unchecked proliferation of e-rickshaws. These vehicles, while beneficial, require proper regulation to ensure public safety and environmental compliance. Consequently, the drive to impound unregistered or non-compliant e-rickshaws aligns with the State’s regulatory mandate. As noted in the earlier order, the impounding action in the present case stems from the lack of registration or the necessary fitness certificates for the vehicles in question.
11. However, the critical issue before the Court is not the validity of the impounding itself but rather the question of whether the batteries in these impounded e-rickshaws can be segregated and whether the Petitioner’s ownership rights over the batteries can be preserved.
12. The Court is also mindful of the fact that e-rickshaw batteries, being rechargeable and integral to the vehicle’s operation, play a central role in powering the electric motor and supporting the electrical systems of the vehicle. Therefore, it is undeniable that the Lithium-ion batteries in the erickshaws are an essential and functional component of the vehicles. However, the Court cannot ignore that batteries are being identified as separate from the e-rickshaws for regulatory and ownership purposes. The notification dated 12th August, 2020 issued by the MoRTH have expressly permitted such segregation, allowing the sale of electric vehicles independent of their batteries. The said notification is as follows: “No, RT 11036/72/2017- MVL Government of India Ministry of Road Transport and Highways (MVL Section) Transport Bhawan, 1, Parliament street, New Delhi 110001 Dated: 12th August, 2020 To,
I. The Principal Secretaries / Secretaries, Department of
II. The Transport Commissioners of nil the States and Union
Territories. Subject: Sale and Registration of Electric Vehicles without batteries -reg Sir / Madam, The Government Is striving to create an ecosystem to accelerate the uptake of electric mobility In the country. It Is time to come together to work Jointly to achieve the broader national agenda to reduce vehicular pollution and oil Import bill. This will not only protect the environment and reduce the oil Import bill but also provide opportunities to sun rise Industry. 2. For the promotion of electrical two wheelers and three wheeler vehicles, there are recommendations brought to the notice of the Ministry to delink the cost of battery (which accounts for 30 - 40% of the total cost) from the vehicle cost. Vehicles could then also be sold. In the market without the battery. This will make the upfront cost of the electrical 2 wheeler (2W) and 3 wheelers (3W) to be lower than ICE 2W and 3W. The battery could be provided separately by the OEM or the energy service provider.
3. Attention Is drawn to the relevant FORMs under Central Motor Vehicles Rules, 1989, viz. FORM - 21 (Sale certificate), FORM - 22 (Road worthiness certificate Issued by the manufacturer) and FORM - 22 - A (Road worthiness certificate Issued for Motor vehicles where fabrication of the body Is done separately), required for the registration of Motor Vehicles under Rule 47 (Application for registration of Motor Vehicles), clearly specify Engine number /Motor number (In case of battery operated vehicles).
4. The prototype of the electrical vehicle, and the battery (regular battery or the swappable battery) is required to be type approved by the test Agencies specified under Rule 126 of the Central Motor Vehicles Rules, 1989.
5. In view of the above, It Is clarified that vehicles without batteries can be sold and registered based on the type approval certificate Issued by the Test Agency. It is further clarified that there Is no need to specify the Make / Type or any other details of the Battery for the purpose of Registration. Yours Faithfully Dr. Piyush Jain Director (MVL)” [Emphasis Added]
13. In light of this regulatory framework and the evidence adduced by the Petitioner, it is clear that the batteries in question are not inherently tied to the impounded e-rickshaws.
14. The Respondents have argued that vehicles cannot be registered without batteries and they have no such policy. However, even assuming this to be correct, the assertion does not preclude the Petitioners from establishing their ownership over the batteries in question, especially when the batteries were provided under a lease and swapping model as demonstrated by the Petitioners. The Petitioners’ leasing agreements clearly delineate the separation of ownership, which must be acknowledged. The Petitioners under specific leasing agreements have established that they had leased the batteries to the owners. This contractual arrangement establishes the distinct ownership rights of the Petitioner vis-à-vis the batteries. The distinct ownership of the batteries remains intact even if the vehicles in which they were installed, were unregistered. The Court must, therefore, address the specific rights of the Petitioner as the rightful owner of these batteries while balancing the regulatory objectives.
15. It is pertinent to note that the Respondents now intend to dispose of the batteries recovered from the impounded e-rickshaws through a public auction. They have further argued that there is no legal provision mandating the return of any component of the impounded vehicles. In the opinion of the Court, these arguments are untenable for several reasons. First, it has already been established that the batteries have been segregated and preserved, while the e-rickshaws themselves have been destroyed. The fact that the Respondents are preparing to auction these batteries demonstrates that the batteries are not being treated as ‘end-of-life batteries’ under the Battery Waste Management Rules, 2022.
16. Second, the Court cannot ignore the environmental implications of improper battery disposal. Batteries used in e-rickshaws often contain hazardous materials such as lithium, cobalt, and nickel, which can be detrimental to the environment if not handled properly. Allowing the batteries to be returned to their rightful owner or leasing company would not only mitigate e-waste but also facilitate their proper recycling, contribute to resource conservation and compliance with government policies on waste management and recycling.
17. Third, batteries are a significant and valuable component of erickshaws, and the financial investment made by the leasing company must be protected. The leasing model presented by the Petitioners highlights that the batteries remain the property of the leasing company under the terms of the agreement. Returning the batteries would enable the Petitioners to either reuse them in other vehicles, thereby recovering a portion of their investment.
18. Respondents have argued that the August 2020 MoRTH communication, which contemplates EVs without batteries, hinges upon a type approval certificate. They point out that in absence of type approval certificate, leasing batteries to unregistered and unfit vehicles compromises public welfare. In this regard, it is noted that while the State’s concerns highlight valid regulatory and enforcement considerations, they must be balanced against the Petitioners’ ownership rights and the evolving landscape of EV battery leasing models. The absence of a type approval certificate, while pertinent to the vehicles’ registration, does not extinguish the Petitioners’ proprietary stake in the batteries. Further, through suitable directions we can ensuring that future leases comply fully with all fitness and approval norms which would address the safety concerns pointed out by the Respondents. The remedy of buying back batteries through an auction, as suggested by the Respondents, would be manifestly unfair and economically irrational. It would amount to forcing the Petitioners to bid for what they lawfully own.
19. Further, the Petitioner’s business model of leasing batteries to erickshaw owners is neither prohibited nor contrary to existing regulations; rather, it aligns with the central government’s vision for advancing electric vehicle (EV) adoption in India. The Battery Swapping Policy, though currently at the draft stage, is being actively deliberated as a strategic initiative to address challenges in EV adoption. Ordinarily, EVs are sold with fixed batteries, requiring direct charging through a power supply while housed within the vehicle. This setup has been identified as a significant bottleneck for large-scale EV adoption, primarily due to the lack of reliable and widespread charging infrastructure. The draft policy identifies battery swapping as a viable alternative to fixed battery systems. Battery swapping allows for the exchange of discharged batteries with pre-charged ones, enabling users to charge batteries separately and ensuring minimal downtime for EVs. The Petitioner’s business model based on this approach, promotes operational flexibility and efficiency.
20. In sum, the Court finds that the Petitioner is entitled to reclaim the Lithium-ion batteries leased out by them to the e-rickshaw owners. These batteries, clearly identified as leased property under specific agreements, were never owned by the e-rickshaw operators whose unregistered vehicles have been impounded. The Respondents’ decision to segregate these batteries from the impounded vehicles reflects a recognition of this distinct ownership. Consequently, upon the Petitioner furnishing the requisite documents to substantiate their ownership, the batteries must be returned to them.
21. In light of the foregoing, the present writ petition is allowed with the following directions: 21.[1] The Petitioners shall file an undertaking before this Court, unequivocally stating that henceforth they will lease or supply their Lithiumion batteries only to e-rickshaw owners who can furnish proof of valid registration and fitness certification. 21.[2] The Petitioners’ representative shall appear before the concerned Sub- Divisional Magistrate, along with the requisite documentation for proving their ownership of the batteries. After verification of the documents, the Petitioners shall be allowed to inspect the batteries recovered by the Respondents, in order to identify those batteries which were leased out by them under the specific leasing agreements/contracts. For this purpose, the counsel for the Respondent shall co-ordinate with the counsel for the Petitioners to intimate a date and time for such inspection. 21.[3] The identification of the recovered batteries shall be done by the Petitioner’s representative and in presence of the Respondents. After the inspection and the identified batteries shall be released to the Petitioner, within a period of two weeks from today.
22. With the above directions, the instant writ petition is disposed of, along with pending applications.
23. The next date of hearing fixed, i.e., 20th February, 2025 stands cancelled.
SANJEEV NARULA, J DECEMBER 12, 2024