(1) If an inland ¹[mechanically propelled vessel] has been destroyed or has been rendered permanently unfit for service, the owner of the vessel shall, with the least practicable delay, report the fact to the registering authority of the place where the vessel is registered and shall also forward to that authority, along with the report, the certificate of registration of the vessel and thereupon the registering authority shall have the certificate of registration cancelled.
     (2) Any registering authority may at any time require that any inland ¹[mechanically propelled vessel] within the local limits of its jurisdiction may be inspected by such authority as the State Government may, by general or special order, appoint in this behalf and, if as a result of such inspection, the registering authority is satisfied that the vessel is in such a condition that it is not fit to ply in any inland water, the registrering authority may, after giving the owner of the vessel an opportunity of being heard, cancel the registration of the vessel and require the owner thereof to surrender forthwith to the registering authority, the certificate of registration in respect of that vessel, if it has not already been so surrendered.