Pushpa @ Leela & Ors vs Shakuntala & Ors

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 2

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 3

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 4

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 5

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."

6 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. 7

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 8

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. 9

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 10

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 11

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 12

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 13

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.