The department shall cancel a title or registration whenever:

   (1)   A transfer of title is set aside by the court by order or judgment; or

   (2)   Fraud on the department or an agent of the department is discovered by the department; or

   (3)   It is subsequently discovered that the issuance or possession of a title or registration is prohibited by law or that the odometer of a vehicle for which a certificate of title has been issued by the department has been subjected to tampering and return of the certificate of title to the department is considered necessary to make a notation of that information on the certificate.