REPORTABLE
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IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6924 OF 2005
Pushpa @ Leela & Ors. ... Appellants
Versus
Shakuntala & Ors. ... Respondents
JUDGMENT
AFTAB ALAM, J.
1. Whether in the fact and circumstances of the case the liability to pay
the compensation amount as determined by the Motor Accident Claims
Tribunal was of the purchaser of the vehicle alone or whether the liability of
the recorded owner of the vehicle was coextensive and from the recorded
owner it would pass on to the insurer of the vehicle? This is the short
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question that arises for consideration in this appeal by special leave filed at
the instance of the claimants.
2. The appellants, claimants before the Claims Tribunal are the heirs and
legal representatives of one Prem Chand who died in a motor accident on
May 7, 1994. Prem Chand had hired the truck bearing registration no.HPA-
1435 for carrying some materials and food articles for a wedding in the
family. He got the materials to be transported loaded on the truck by a
labourer, Nikku Ram whom he had engaged for that purpose and took him
along with him on the truck for unloading the consignment at the
destination. According to the claimants, the driver Roop Ram was driving
the truck rashly and at a very high speed. As a result, the truck met with an
accident and at about 6.30-7pm while running on Dhararu Dhar Road near
Bangora, Tehsil Arki, District Solan, in the State of Himachal Pradesh, it
went off the road and overturned leading to the death of all the three persons,
including the driver.
3. The truck had a little history of its own that actually gives rise to the
question set out at the beginning of the judgment. It earlier belonged to one
Jitender Gupta who was its registered owner. Jitender Gupta sold the truck to
Salig Ram on February 2, 1993 and gave its possession to the transferee. On
the date of the sale, the truck was covered by an insurance policy taken out
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by Jitender Gupta from New India Assurance Company Ltd. The insurance
policy was issued on February 25, 1992 and it was due to expire on February
24, 1993. Despite the sale of the vehicle by Jitender Gupta to Salig Ram, the
change of ownership of the vehicle was not entered in its certificate of
registration. After the earlier policy issued by New India Assurance
Company Ltd. expired on February 24, 1993, there was a period when the
truck was not covered by any insurance policy. Later on, however, Salig
Ram took out an insurance policy for the truck from Oriental Insurance
Company Ltd. bearing policy no.31/94/00628. The policy was taken in the
name of Jitender Gupta, the earlier owner of the truck, and it was valid from
December 8, 1993 to December 7, 1994. The accident in which Prem Chand
and Nikku Ram lost their lives took place on May 7, 1994, i.e. during the
period when the policy taken out from the Oriental Insurance Company Ltd.
was subsisting and valid.
4. The heirs and legal representatives of both the deceased, Prem Chand
and Nikku Ram filed separate claim applications before the Motor Accident
Claims Tribunal, Solan, Himachal Pradesh. In both the claim applications
Salig Ram, the transferee was impleaded as respondent no.1, Jitender Gupta,
the original owner of the truck as respondent no.2 and Oriental Insurance
Company Ltd. as respondent no.3. The two claim applications, MAC
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petition no.62-NS/2 of 1994 filed by the heirs and legal representatives of
the deceased Prem Chand (appellants in this appeal) and MAC petition
no.63-NS/2 of 1994 filed by the heirs and legal representatives of the
deceased Nikku Ram (who pursued the matter only up to the High Court and
who have not been able to come to this Court in appeal) were consolidated
and heard together. All the three respondents appeared before the Tribunal
and filed their separate replies resisting the claims of the two claimants. But
none of the respondents led any evidences before the Claims Tribunal.
5. The Claims Tribunal, on the basis of the ex parte evidence adduced on
behalf of the claimants, found and held that both Prem Chand and Nikku
Ram died on May 7, 1994, in the accident caused by truck no.HPA-1435
which was being driven by its driver Roop Ram in a rash and negligent
manner. It also found that Prem Chand and Nikku Ram were not travelling
in the ill-fated truck as unauthorised or gratuitous passengers. The Claims
Tribunal further held that the heirs and legal representatives of Prem Chand
were entitled to a sum of Rs.5,04,000/- for the loss of dependency and
Rs.10,000/- for loss of consortium and Rs.2000/- as cremation charges. The
heirs and legal representatives of Prem Chand were, thus, held entitled to a
total compensation of Rs.5,16,000/-. In case of the heirs and legal
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representatives of the deceased Nikku Ram, the Claims Tribunal held that
they were entitled to a total compensation of Rs.2,42,000/-.
6. Coming next to the question of liability of payment, the issue that is
most crucial for the claimants from the practical point of view, the Claims
Tribunal held that no liability for payment of compensation to the claimants
would attach to Jitender Gupta since he had ceased to be the owner of the
vehicle after its sale to Salig Ram on February 2, 1993. It further held that
even though an insurance policy for the truck was taken out from Oriental
Insurance Company Ltd., the policy was in the name of Jitender Gupta, who
was no longer the owner of the truck on the date the policy was taken out
and there was no privity of contract between Salig Ram, the owner of the
truck and the insurance company. Hence, the insurance policy was of no use
for indemnifying Salig Ram, the owner of the truck. In short, Salig Ram
alone was liable for payment of the compensation amount to the two
claimants. In this connection, the Claims Tribunal in paragraph 46 of its
judgment held and observed as followed:
"Because the subsequent policy was taken by respondent no.2
effective from 08.12.1993 to 07.12.1994 when he was not
owner having no right, title or interest to obtain the policy. The
owner at that time was respondent no.1 who never entered into
any privy of contract with respondent no.3 to cover third party
risks qua the vehicle."
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7. Against the judgment and award made by the Claims Tribunal the
claimants filed appeals before the Himachal Pradesh High Court being FAO
no.459 of 2000 (by the heirs and legal representatives of Prem Chand) and
FAO no.77 of 1999 (by the heirs and legal representatives of Nikku Ram).
Both the appeals were dismissed by the High Court by a common judgment
and order dated July 15, 2004.
8. We have examined the judgments passed by the Claims Tribunal and
the High Court and we find that both the Tribunal and the High Court
addressed the question of the liability of the recorded owner of the vehicle
on the basis of a provision that has no relevance to the issue. Both the
Tribunal and the High Court discussed at length the provision of section 157
of the Motor Vehicles Act, 1988 ("the Act" for short) that deals with
"Transfer of Certificate of Insurance". So far as that section is concerned the
Tribunal and the High Court were right in holding that section 157 of the
Act would apply only to the earlier policy (being that of New India
Assurance Company Ltd.) taken out by Jitender Gupta during the validity
period of which the truck was sold by him to Salig Ram and it can have no
application to the second policy taken out from Oriental Insurance Company
Ltd. in the name of Jitender Gupta after the sale of the truck. But as stated
earlier, section 157 has no application in the facts of this case.
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9. The question of the liability of the recorded owner of the vehicle has
to be examined under different provisions of the Act. Section 2(30) of the
Act defines "owner" in the following terms:
"2(30) "owner" means a person in whose name a motor
vehicle stands registered, and where such person is a minor,
the guardian of such minor, and in relation to a motor vehicle
which is the subject of a hire-purchase agreement, or an
agreement of lease or an agreement of hypothecation, the
person in possession of the vehicle under that agreement;"
(Emphasis added)
10. Then, section 50 of the Act lays down the procedure for transfer of
ownership. It is a long section and insofar as relevant it is reproduced below:
"50. Transfer of ownership.
(1) Where the ownership of any motor vehicle registered under
this Chapter is transferred,-
(a) the transferor shall,-
(i) in the case of a vehicle registered within the
same State, within fourteen days of the transfer,
report the fact of transfer, in such form with such
documents and in such manner, as may be
prescribed by the Central Government to the
registering authority within whose jurisdiction the
transfer is to be effected and shall simultaneously
send a copy of the said report to the transferee; and
(ii) xxxxxxx
(b) the transferee shall, within thirty days of the transfer,
report the transfer to the registering authority within
whose jurisdiction he has the residence or place of
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business where the vehicle is normally kept, as the case
may be, and shall forward the certificate of registration to
that registering authority together with the prescribed fee
and a copy of the report received by him from the
transferor in order that particulars of the transfer of
ownership may be entered in the certificate of
registration.
(2) xxxxxxx
(3) xxxxxxx
(4) xxxxxxx
(5) xxxxxxx
(6) On receipt of a report under sub-section (1), or an
application under subsection (2), the registering authority may
cause the transfer of ownership to be entered in the certificate
of registration.
(7) A registering authority making any such entry shall
communicate the transfer of ownership to the transferor and to
the original registering authority, if it is not the original
registering authority."
11. It is undeniable that notwithstanding the sale of the vehicle neither the
transferor Jitender Gupta nor the transferee Salig Ram took any step for the
change of the name of the owner in the certificate of registration of the
vehicle. In view of this omission Jitender Gupta must be deemed to continue
as the owner of the vehicle for the purposes of the Act, even though under
the civil law he ceased to be its owner after its sale on February 2, 1993.
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12. The question of the liability of the recorded owner of a vehicle after
its sale to another person was considered by this Court in Dr. T.V. Jose vs.
Chacko P.M., (2001) 8 SCC 748. In paragraphs 9 and 10 of the decision, the
Court observed and held as follows:
"9. Mr. Iyer appearing for the Appellant submitted that the
High Court was wrong in ignoring the oral evidence on record.
He submitted that the oral evidence clearly showed that the
Appellant was not the owner of the car on the date of the
accident. Mr. Iyer submitted that merely because the name
had not been changed in the records of R.T.O. did not mean
that the ownership of the vehicle had not been transferred.
Mr. Iyer submitted that the real owner of the car was Mr. Roy
Thomas. Mr. Iyer submitted that Mr. Roy Thomas had been
made party-Respondent No.9 to these Appeals. He pointed out
that an Advocate had filed appearance on behalf of Mr. Roy
Thomas but had then applied for and was permitted to withdraw
the appearance. He pointed out that Mr. Roy Thomas had been
duly served and a public notice had also been issued. He
pointed out that Mr. Roy Thomas had chosen not to appear in
these Appeals. He submitted that the liability, if any, was of Mr.
Roy Thomas.
10. We agree with Mr. Iyer that the High Court was not right in
holding that the Appellant continued to be the owner as the
name had not been changed in the records of R.T.O. There can
be transfer of title by payment of consideration and delivery
of the car. The evidence on record shows that ownership of
the car had been transferred. However the Appellant still
continued to remain liable to third parties as his name
continued in the records of R.T.O. as the owner. The
Appellant could not escape that liability by merely joining
Mr. Roy Thomas in these Appeals. Mr. Roy Thomas was not
a party either before MACT or the High Court. In these
Appeals we cannot and will not go into the question of inter se
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liability between the Appellant and Mr. Roy Thomas. It will be
for the Appellant to adopt appropriate proceedings against Mr.
Roy Thomas if, in law, he is entitled to do so."
(Emphasis added)
13. Again, in P.P. Mohammed vs. K. Rajappan & Ors., (2008) 17 SCC
624, this Court examined the same issue under somewhat similar set of facts
as in the present case. In paragraph 4 of the decision, this Court observed
and held as follows:
"4. These appeals are filed by the appellants. The insurance
company has chosen not to file any appeal. The question before
this Court is whether by reason of the fact that the vehicle has
been transferred to Respondent 4 and thereafter to Respondent
5, the appellant got absolved from liability to the third person
who was injured. This question has been answered by this
Court in T.V. Jose (Dr.) v. Chacko P.M. wherein it is held that
even though in law there would be a transfer of ownership
of the vehicle, that, by itself, would not absolve the party, in
whose name the vehicle stands in RTO records, from
liability to a third person. We are in agreement with the view
expressed therein. Merely because the vehicle was
transferred does not mean that the appellant stands
absolved of his liability to a third person. So long as his
name continues in RTO records, he remains liable to a third
person."
(Emphasis added)
14. The decision in Dr. T.V. Jose was rendered under the Motor Vehicles
Act, 1939. But having regard to the provisions of section 2(30) and section
50 of the Act, as noted above, the ratio of the decision shall apply with equal
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force to the facts of the case arising under the 1988 Act. On the basis of
these decisions, the inescapable conclusion is that Jitender Gupta, whose
name continued in the records of the registering authority as the owner of the
truck was equally liable for payment of the compensation amount. Further,
since an insurance policy in respect of the truck was taken out in his name he
was indemnified and the claim will be shifted to the insurer, Oriental
Insurance Company Ltd.
15. Learned counsel for the insurance company submitted that even
though the registered owner of the vehicle was Jitender Gupta, after the sale
of the truck he had no control over it and the possession and control of the
truck were in the hands of the transferee, Salig Ram. No liability can,
therefore, be fastened on Jitender Gupta, the transferor of the truck. In
support of this submission he relied upon a decision of this Court in
National Insurance Company Ltd. vs. Deepa Devi & Ors., (2008) 1 SCC
414. The facts of the case in Deepa Devi are entirely different. In that case
the vehicle was requisitioned by the District Magistrate in exercise of the
powers conferred upon him under the Representation of the People Act,
1951. In that circumstance, this Court observed that the owner of the vehicle
cannot refuse to abide by the order of requisition of the vehicle by the
Deputy Commissioner. While the vehicle remained under requisition, the
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owner did not exercise any control over it: the driver might still be the
employee of the owner of the vehicle but he had to drive the vehicle
according to the direction of the officer of the State, in whose charge the
vehicle was given. Save and except the legal ownership, the registered
owner of the vehicle had lost all control over the vehicle. The decision in
Deepa Devi was rendered on the special facts of that case and it has no
application to the facts of the case in hand.
16. In light of the discussion made above it is held that the compensation
amount is equally realisable from respondent no.3, Oriental Insurance
Company Ltd. and it is directed to make full payment of the compensation
amount as determined by the Claims Tribunal to the appellants within two
months from the date of this judgment.
17. Even though the claimants in the other case, the heirs and legal
representatives of Nikku Ram, have not come to this Court, we consider it
appropriate to give the same direction in respect of their case. There is
absolutely no difference in the case of Nikku Ram and Prem Chand. Nikku
Ram, being a daily wage earner was given a compensation of Rs.2,42,000/-.
It is quite possible that his heirs and legal representatives were unable to
come to this Court simply for want of sufficient means. The insurance
company must pay the compensation amount determined in case of Nikku
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Ram to his heirs and legal representatives in case the amount has so far not
been realised from Salig Ram as directed by the Claims Tribunal.
18. The appeal is allowed but with no order as to costs.
....................................J.
(AFTAB ALAM)
....................................J.
(R.M. LODHA)
New Delhi
January 12, 2011.
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