The former company president, Katsuhiko Kawasoe, and five other executives were arrested on Thursday in the scandal, in a blow to the company's efforts to restore its image and move on with its revival plans.
The transport ministry asked the Tokyo District Court for the fine under a law requiring automakers to report serious vehicle defects and issue recalls for them or else face a penalty of up to ¥200 000 (US$1 800), an official with the ministry's recall response team said.
"They were dangerous weapons on wheels," said Transport Minister Nobuteru Ishihara of the defective autos. "The accident could have been avoided."
Police believe Mitsubishi officials knew about the clutch defect as far back as 1996 but failed to report it, even after a separate cover-up scandal rocked the company in 2000 and forced Kawasoe to resign.
The clutch defect is believed to have led to the October 2002 death of the driver of a Mitsubishi truck who crashed when his vehicle's brakes failed.
The company has acknowledged two other accidents involving injuries linked to the defect, which causes clutch covers to crack. A cracked cover could cause the propellor shaft, which transmits power from the engine to the wheels, to fall off and sever a brake hose.
Police arrested Kawasoe and five other Mitsubishi Motors officials on Thursday, including a former president and vice president of the automaker's truck unit, in connection with the case.
Kawasoe led Mitsubishi from 1997 through 2000, when he resigned after Mitsubishi admitted to systematically covering up quality complaints from customers and defects in its cars. Kawasoe had denied, however, any knowledge of the cover-up that had been going on for decades at his company.
Mitsubishi announced several auto defects and issued recalls for the vehicles affected. But police said on Thursday that Kawasoe and the others chose only to deal with reported problems dating back to March 1998, and ignored the suspected clutch defect reported in 1996.
After years of denial, Mitsubishi Motors only recently acknowledged the clutch defect and another one involving a wheel which is believed to have also caused a fatal accident. Both accidents involved the company's truck division, Mitsubishi Fuso Truck & Bus Corp., which was spun off into a separate company last year.
Prosecutors will decide whether to file official charges against Kawasoe and the other officials. In Japan, professional negligence resulting in injury is punishable by a prison term of up to five years or a fine of up to ¥500 000 ($4 500).