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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3645 OF 2015 (Arising out of S.L.P. (Civil) 2343 of 2014)

Central Bank of India … Appellant

Versus

Jagbir Singh … Respondent

J U D G M E N T

Prafulla C. Pant, J.

This appeal is directed against order dated 19.11.2013,  

passed  by  National  Consumer  Disputes  Redressal  

Commission  (for  short  “NCDRC”),  New  Delhi,  in  Revision  

Petition No. 3648 of 2013 whereby the revision filed by the  

present appellant is dismissed.

2. We  have  heard  learned  counsel  for  the  parties  and  

perused the papers on record.

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3. Brief facts of the case, giving rise to this appeal, are  

that  respondent  Jagbir  Singh  purchased  a  tractor  bearing  

registration No. HR-14B-3913, after getting loan sanctioned  

from the appellant-Bank.  In terms of conditions of loan the  

respondent was making deposits of the loan instalments of  

loan  to  the  Bank.   The  vehicle  was  initially  insured  as  

required under Motor Vehicles Act, 1988, but no premium of  

insurance was paid by the respondent for the period after  

25.5.2005.  On 24.9.2007 at about 11.50 a.m., an accident  

occurred between the above vehicle and motorcycle bearing  

registration No. DL-3S-AY-0421, in which Pankaj son of Babu  

Ram Garg, died due to rash and negligent driving on the part  

of Diwan Singh, driver of the tractor owned by respondent  

Jagbir  Singh.   The  parents  of  the  deceased  filed  claim  

petition  No.  208/11/2007  before  Motor  Accident  Claims  

Tribunal-II, Dwarka Courts, New Delhi, which was allowed by  

said  Tribunal,  vide  its  order  dated  17.11.2012  awarding  

compensation to the tune of Rs.4,01,460/- with 7.5% interest  

per annum, against driver and owner of the vehicle.  It has

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not been disputed between the parties that on the date of  

accident the vehicle No. HR-14B-3913 was not insured with  

any of the insurance companies, as required under Section  

146 of the Motor Vehicles Act, 1988.

4. The respondent filed complaint (No. 157 of 208) before  

District Consumer Disputes Redressal Forum, Jhajjar, praying  

that the Central Bank of India (appellant), i.e., the creditor  

bank  should  be  made  liable  to  pay  the  compensation,  

awarded against him by the Tribunal.  The District Consumer  

Disputes Redressal Forum, vide its order dated 11.11.2009,  

held that the Bank (present appellant) is liable for the legal  

consequences for not getting the insurance renewed.  The  

State Consumer  Disputes  Redressal  Commission,  Haryana,  

Panchkula, before whom the Central Bank of India (creditor  

bank) filed First Appeal No. 40 of 2010, vide its order dated  

18.10.2012,  dismissing  the  appeal  on  the  ground  that  in  

terms of  loan agreement the Bank has a right  to  recover  

insurance premium,  held  that  the Bank cannot  escape its  

liability.  It appears that the Bank finally approached NCDRC

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by filing Revision Petition No. 3648 of 2013, but same was  

filed with delay of 230 days, and NCDRC in its wisdom did  

not find the explanation advanced for condonation of delay  

as sufficient, as such, the revision petition was dismissed as  

barred  by  limitation.   Hence,  this  appeal  through  special  

leave.

5. Learned counsel for the appellant pointed out before us  

that  the  order  of  the  State  Consumer  Disputes  Redressal  

Commission  was  received  by  the  appellant  only  on  

26.11.2012,  after  the  same  was  dispatched  by  the  

Commission on 19.11.2012.  It is further submitted that the  

branch of the appellant bank is situated in a remote village  

and due to shortage of staff the matter could be taken up by  

the Regional Office only in December, 2012.  It is contended  

that since it took time in obtaining the necessary permission  

for  filing  the  revision,  as  such,  the  delay  of  230  days,  

occurred  in  filing  the  revision  petition,  should  have  been  

condoned by the NCDRC.  Admittedly, the revision petition  

was filed on 11.10.2013.

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6. Having heard learned counsel for the parties and after  

going through the papers on record, we find that NCDRC has  

not considered properly the well explained delay in filing the  

revision petition before it.  In our opinion, the time taken by  

the appellant bank in seeking permission to file the revision  

petition, as the matter had to be processed at various levels,  

cannot be said to have been not sufficiently explained for  

the  purpose  of  condonation  of  delay.   Therefore,  the  

impugned  order  dismissing  the  revision  petition,  in  the  

present case, cannot be sustained.

7. On the  merits  of  the case,  we find that  none of  the  

authorities under the Consumer Protection Act, 1986, in the  

case at hand has taken note of the law laid down by this  

Court on the issue of liability of the financer, in the cases of  

accident occurred, after the vehicle is purchased with loan  

sanctioned to the owner of the vehicle.  In Pradeep Kumar  

Jain v. Citi Bank and another1, discussing Section 146 of  

Motor Vehicles Act, 1988, this Court has held as under: -

1 (1999) 6 SCC 361

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“5. Under  Section  146  of  the  Act  there  is  an  obligation on the owner of a vehicle to take out an  insurance policy as provided under Chapter XI of  the Act. If any vehicle is driven without obtaining  such  an  insurance  policy  it  is  punishable  under  Section  196  of  the  Act.  The  policy  may  be  comprehensive  or  only  covering  third  parties  or  liability may be limited. Thus when the obligation  was upon the appellant  to  obtain such a policy,  merely by passing of a cheque to be sent to the  insurance company would not obviate his liability  to obtain such policy. It is not clear on the record  as  to  the  nature  of  the  policy  that  had  been  obtained  by  the  appellant  earlier  when  he  purchased  the  vehicle  and  which  was  to  be  renewed  from time  to  time.  It  is  also  not  clear  whether  even  in  the  case  of  renewal,  a  fresh  application has to be made by the appellant or on  the old policy itself  an endorsement would have  been made.  In  the absence of  such material  on  record, and the nature of the insurance policy or  any anxiety shown by the appellant in obtaining  the policy as he could not ply such vehicle without  such  an  insurance  policy  being  obtained,  he  cannot claim that merely because he had passed  on  the  cheques,  the  entire  liability  to  pay  all  damages  arising  would  be  upon  the  first  respondent.”

8. A Three-Judge Bench of this Court, in HDFC Bank Ltd.  

v. Kumari Reshma and others2, has further explained the  

law relating to liability of the creditor bank, and it has been  

held that the liability of such bank to get the vehicle insured  

is only till the vehicle comes out on the road.  In other words,  2 AIR 2015 SC 290

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the creditor bank is not liable to get renewed the insurance  

policy on behalf  of  the owner of the vehicle from time to  

time.  Paragraphs 23, 24 and relevant part of paragraph 25  

of that judgment are reproduced as under: -

“23. In the present case, as the facts have been  unfurled,  the  appellant  bank  had  financed  the  owner for purchase of the vehicle and the owner  had entered into a hypothecation agreement with  the bank. The borrower had the initial obligation to  insure the vehicle, but without insurance he plied  the  vehicle  on  the  road  and  the  accident  took  place. Had the vehicle been insured, the insurance  company  would  have  been  liable  and  not  the  owner.  There  is  no  cavil  over  the  fact  that  the  vehicle  was  subject  of  an  agreement  of  hypothecation and was in possession and control  under  the  respondent  no.2.  The  High  Court  has  proceeded both in the main judgment as well as in  the review that the financier steps into the shoes  of the owner.  Reliance placed on  Mohan Benefit  Pvt. Ltd. v. Kachraji Rayamalji & ors. [(1997) 9 SCC   103], in our considered opinion, was inappropriate  because  in  the  instant  case  all  the  documents  were filed by the bank. In the said case, two-Judge  Bench of this Court had doubted the relationship  between the appellant and the respondent therein  from the hire-purchase agreement.  Be that as it  may,  the said case rested on its  own facts.  The  decision  in  Rajasthan  State  Road  Transport   Corporation  v.  Kailash  Nath  Kothari  &  others   [(1997) 7 SCC 481], the Court fastened the liability  on  the  Corporation  regard  being  had  to  the  definition of the ‘owner’  who was in control  and  possession of the vehicle. Similar to the effect is  the  judgment  in  National  Insurance  Co.  Ltd.  v.  

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Deepa  Devi  &  ors.  [(2008)  1  SCC  414].   Be  it  stated, in the said case the Court ruled that the  State  shall  be  liable  to  pay  the  amount  of  compensation  to  the  claimant  and  not  the  registered owner of the vehicle and the insurance  company.   In  the  case  of  Godavari  Finance  Company  v.  Degala  Satyanarayanamma  and  others  [(2008)  5  SCC  107],  the  learned  Judges  distinguished the ratio in Deepa Devi  (supra) on  the ground that it hinged on its special facts and  fastened  the  liability  on  the  insurer.  In  Uttar  Pradesh  State  Road  Transport  Corporation  v.   Kulsum  and  others [(2011)  8  SCC  142],  the  principle  stated  in  Kailash  Nath  Kothari  (supra)  was distinguished and taking note of the fact that  at the relevant time, the vehicle in question was  insured with it  and the policy was very much in  force  and  hence,  the  insurer  was  liable  to  indemnify the owner.  

24. On a careful analysis of the principles stated in  the  foregoing  cases,  it  is  found  that  there  is  a  common thread that the person in possession of  the  vehicle  under  the  hypothecation  agreement  has  been  treated  as  the  owner.  Needless  to  emphasise, if the vehicle is insured, the insurer is  bound to indemnify unless there is violation of the  terms of  the policy under which the insurer can  seek exoneration.  

25. In  Purnya Kala Devi v. State of Assam & Anr.  [2014  (4)  SCALE 586],  a  three-Judge  Bench  has  categorically held that the person in control and  possession of the vehicle under an agreement of  hypothecation should be construed as the owner  and not alone the registered owner and thereafter  the Court has adverted to the legislative intention,  and ruled that the registered owner of the vehicle

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should not be held liable if the vehicle is not in his  possession and control……..”

9. In view of the above discussion and the principle of law  

laid down by this Court, the impugned order passed by the  

NCDRC  and  the  orders  passed  by  the  State  Consumer  

Disputes  Redressal  Commission,  Haryana  and  the  District  

Consumer Disputes Redressal Forum, Jhajjar, are liable to be  

set aside.  

10. Accordingly  the  appeal  is  allowed  and  the  impugned  

order  and  the  order  passed  by  the  authorities  under  

Consumer Protection Act, 1986, in the present case, are set  

aside.  No order as to costs.

……………….....…………J. [Dipak Misra]

     .……………….……………J. New Delhi; [Prafulla C. Pant]

April 16, 2015.