Dear Imran
I am only an intermittent cyclist myself so thank you for alerting me to the fact you can log your bike frame number on a free to use register and that you can buy small electronic security tags to insert into bikes or indeed other “portable” devices that are at risk of being stolen. All bike owners should take note.
Your question “what should I do next” is both legal and practical.
First the legal issues. The basic rule is if a person buys stolen goods, that person does not become the legal owner even if a fair price was paid and the person buying did not know the goods were stolen. In other words, the person who originally owned the goods is still the legal owner.
At this stage we do not know how your bike has ended up in a local bike shop. It would be extraordinary if the bike shop owner was stealing bikes and then selling them in the shop. More likely a third party stole the bike and sold it on to the bike shop. But whatever has happened, you have remained the legal owner of your bike throughout. In legal terms, the title (or ownership) of the bike has not passed from you to a third party. Even if the shop owner paid the thief a fair price for it.
Also, whether the bike shop owner was directly involved in the theft or not, they have been reckless in not establishing whether or not the bike was stolen. Even though I was ignorant of the bike register and frame logging, a bike shop owner should not be, and should have checked it before paying for the bike (assuming that is what happened). All of which means I have zero sympathy for the bike shop owner if (as should happen here) the bike is now claimed by you and taken back.
The same legal principles apply to anyone buying second-hand goods, whatever they may be. If they are stolen goods, paying for them does not always make you the legal owner. This is a very important legal principle, particularly if you are buying an expensive item second-hand, such as a car. Always seek evidence as to “provenance” – history of ownership – namely a record or other evidence of where something has come from and who owns it, or risk having items taken from you and returned to the rightful owner.