Auto finance mafia PDF Print E-mail

Auto-finance-mafia own or control more than 90% of autos plying in Delhi. The entire Transport Department acts like a puppet in the hands of these mafias. Such brazenness flows from the patronage they are given by Mr. Sandeep Dikshit, a Member of Parliament and the son of the Chief Minister of Delhi.

The auto-finance-mafia adversely affect the livelihood of approximately one lakh auto drivers and cause suffering to millions of passengers. The vehicle which officially costs Rs.1,3,000 has crossed the market price of Rs.6,00,000 due to the tactics adopted by the auto-finance-mafia.

During a hearing on 09.08.11 on a PIL filed by NyayaBhoomi in the Supreme Court, even the judge was left wondering how such a small vehicle can cost so much. The entire PIL/SLP and the additional documents filed thereafter can be downloaded from the following two links:-

SLP which has the original PIL as part of it (pdf)

Additional documents filed on 13.07.2011 (pdf)

Political Patronage to Auto Finance Mafia

The Supreme Court has declared trading in permits as illegal and benami ownership of vehicles is already illegal under the law. In spite of this, in a letter dated 11.02.10 written to Transport Commissioner, Mr. Sandeep Dikshit made a strong recommendation in favour of benami ownership at the behest of auto-finance-mafia. That recommendation was later adopted verbatim by the Transport Department, giving legal status to tens of thousands of benami autos which are under the control of the auto-finance-mafia.

The entire sequence of events demonstrates the strength of the nexus between the executive, the politicians and the auto-finance-mafia who collusively work in a criminal manner.

Benami Ownership

In a “note for the cabinet” prepared by Transport Department in 2003, the officials have admitted that the auto-finance-mafia alone are responsible for turning 90% of the autorickshaws benami. They have acquired direct and indirect control over almost all autos in Delhi through the mechanism of financing of vehicles and transfer of Permits. A large percentage of such autos are acquired in a benami manner.

The letter dated 11.02.10 written by Mr. Sandeep Dikshit to the Transport Commissioner is an acknowledgement that auto-finance-mafia are holding benami permits. This is the reason Mr. Dikshit is so stressful on the need for transfer of permits without the presence of the permit-holders because the “registered permit-holders” are “not there”. Many of them do not even exist.

The fact of benami permits further stands established from the fact that in hundreds of legal cases instituted by or against auto-finance-mafia in the districts courts of Delhi, it has been clearly spelt out that the loan is advanced to one person whereas the vehicle is registered in another person’s name.

Benami permits also have black money angle. A huge number of benami permits is held by the auto-finance-mafia in the names of their poorly-paid employees living in slums, or in the names of their relatives. Scores of persons living on the periphery of poverty line hold multiple permits “valued” at crores of rupees each. A volunteer of NyayaBhoomi himself is the paper-owner of 8 permits together with vehicles at the behest of an auto-financer but actually earns his living by renting an auto.

Modus Operandi of Auto Finance Mafia

Making a vehicle benami is central to the designs of auto-finance-mafia who trade in permits. They adopt a number of methods to do so.

  1. When a person wants to sell his autorickshaw, his only option is to approach one of the auto-finance-mafia because no sale and purchase takes place without the involvement of a auto-financier. The seller is made to sign various blank documents, forms and stamp papers including those that will facilitate transfer of permits. These documents often come in a bound format, mostly in duplicate and triplicate, and constitute what is known in the trade as a “File.” The vehicle is sold along with loan to another auto driver without registering such a sale/transfer with the Transport authority. Transport Department continues to hold the name and address of the original owner, not the new beneficial owner. This turns the vehicle/permit benami. Since by virtue of the custody of the “File”, the control of the vehicle lies with the auto-financier, he exploits the auto-driver/new-owner to the hilt.
  2. In another commonly used method, the auto-financier, while purchasing a permit together with vehicle from an auto-driver or another auto-financier, transfers the ownership in the names of his poorly paid employees living in slums or in the names of his relatives. Cases of slum-dwellers owning vehicles worth crores of rupees are not uncommon. When a genuine auto-driver buys such a vehicle together with permit, he doesn’t get legal ownership rights, leaving him vulnerable to the exploitative tactics of the auto-finance-mafia.
  3. Most of the forcibly and illegally repossessed vehicles together with permits are effectively controlled by the auto-finance-mafia because of the custody of the File which had been created while advancing the loan. Since the market value of the auto together with permit is well over Rs.6.00 lakhs (August 2011), the monthly installment comes to approx. Rs.15,000/= after paying Rs.1.50 lakhs or more as down payment. Payment of such high installment is not sustainable beyond a few months, with the result that there is a default which leads to repossession of the vehicle through criminal means as well as by making mockery of the law through court procedure by suppressing facts. The result is that the down payment and the installments already paid by the driver stand forfeited/adjusted and the claim for balance stands on the head of the loanee-driver which he is not able to fulfill. Thereafter, the same auto is sold and loaned to another driver to meet the fate accompli.

It is noteworthy that every auto-financier in Delhi is operating illegally by virtue of his failure to be duly registered as required under Punjab Registration of Money-Lender’s Act, 1938.

Smart card based permit scheme

Transport Department had launched the scheme to replace paper-based permits with smart-card based permits w.e.f. 21.10.09. The entire smart-card-based permit scheme is a well-planned act of deception bordering on conspiracy on the part of the Transport Department, and has caused immense loss to the public and the auto drivers without any benefit accruing to anyone.

  1. Transport Department has given in writing that it does not know for what purpose the smart-cards will be used.
  2. Trading in permits continues unabated in spite of the permits being in the form of smart cards. Poor slum-dwellers continue to hold autos worth crores of rupees at the behest of auto-finance-mafia for the purpose of trading in permits along with autos by the latter.
  3. The smart-card permits scheme has not stopped benami ownership. A volunteer of NyayaBhoomi was the paper-owner of 8 permits before the smart-card-permit scheme. He has managed to get smart-cards for all 8 vehicles but owns none. In effect, all 8 of “his” vehicles are still benami in spite of having smart-card-permits. Many smart-cards have been issued to dead men or wrong persons on the basis of impersonation in collusion with Transport Department.
  4. Transport Department has stated in its counter affidavit dated 19.04.10 before Delhi High Court that the smart-cards scheme is meant to ascertain the details of the permit-holders. This contention falls flat in view of thousands of smart-card permits having been issued at non-existent addresses, e.g., Kanchanpuri, Delhi. Kanchanpuri was a slum-cluster situated near Delhi Secretariat and Rajghat. Its residents were shifted out several years ago whereas smart-card-permits with the address of Kanchanpuri have been made by the Transport Department in 2009, 2010 and 2011
  5. Transport Department’s claim further lies in tatters when one looks at the database of permit-holders after the smart-card-permits had been issued. For example, Mr. Sukh Dev Arora, son of Mr. Anand Mohan owns 14 autos/permits but is shown to live at two addresses. Wrong pincode has been captured in all but one addresses. The permit-holder’s spelling is shown in three different ways. Similarly, Mr. B.S. Gupta, son of Mr. G.P. Gupta owns 10 autos/permits which are registered at two different addresses with wrong pincodes. Similar is the case with Mr. Rajinder Kapoor, son of Mr. R.N. Kapoor.
  6. In an affidavit dated 18.02.10, Transport Department has stated before the Supreme Court that the scheme is meant to strengthen enforcement on the ground. However, neither the Transport Department nor any of the other enforcement agencies such as the Traffic Police or Traffic Courts have yet purchased any smart-card permit readers.
  7. That the scheme is ill-conceived is also clear from the fact that nearly 18 months after it was launched, when the permit-holder applies for the renewal of smart-card-permit, he is again given a paper based permit.

It is apparent that the smart-card-permit scheme has served no purpose more than 18 months after it was started (as of August 2011).


The issue of Auto Finance Mafia has many other dimensions which have been comprehensively explained in the writ petition filed in Delhi High Court and the SLP filed in the Supreme Court of India. Links to both these documents together with additional documents are provided below for download.

Transport Department admits and is aware that the high cost of autos is due to the illegal trading in permits and benami ownerships. However, instead of taking steps to check the malaise, it continues to act in sync with the very people who are responsible for widespread illegality within its department. This is nothing but amounts to a Mafia Syndicate in which some powerful politicians, Transport Department officials, and auto-finance-mafia are the partners in crime.

Whilst direct victims of the Mafia Syndicate are the auto drivers, the millions of passengers who travel in autos every day and face poor quality service are no less sufferers.


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