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IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO 1427 OF 2018  (Arising out of SLP (C) No.18943 of 2016)

NAVEEN KUMAR               ..Appellant

VERSUS

VIJAY KUMAR AND ORS         ..Respondents

J U D G M E N T

Dr D Y CHANDRACHUD, J.

1 An accident took place at about 7:30 pm on 27 May 2009 when Smt.

Jai Devi and her nephew Nitin were walking down a street in their

village.  A motor vehicle driven by Rakesh in the reverse gear hit

them.  Nitin was run over by the rear wheel of the car and died on

the  spot.  Smt.  Jai  Devi  received  multiple  injuries.   Two  claim

petitions were filed before the Motor Accident Claims Tribunal (‘the

Tribunal’). One of them was by Smt. Jai Devi. The second was by

Somvir and Smt. Saroj, the parents of Nitin.  The vehicle involved in

the accident (a Maruti-800 bearing Registration DL-3CC-3684) was

registered  in  the  name  of  Vijay  Kumar,  the  First  respondent.

REPORTABLE

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According to the First  respondent,  he had sold the vehicle to the

Second respondent on 12 July 2007 prior to the accident and had

handed  over  possession  of  the  vehicle  together  with  relevant

documents including the registration certificate, and forms 29 and 30

for transfer of the vehicle. The Second respondent stated before the

Tribunal  that  he  sold  the  vehicle  to  the  Third  respondent  on  18

September 2008.  The Third respondent in turn claimed before the

Tribunal to have sold the vehicle to the petitioner.  The petitioner, in

the course of  his  written statement  claimed that  he had sold  the

vehicle to Meer Singh. The succession of transfers was put forth as

a defence to the claim.  

2 By  its  award  dated  6  October  2012,  the  Tribunal  granted

compensation in the amount of Rs 10,000/- to Smt. Jai Devi and of

Rs.3,75,000/- on account of the death of Nitin, to his parents.  The

Tribunal noted that the registration certificate of the offending vehicle

continued to be in the name of the First respondent. The Tribunal

held the First respondent jointly and severally liable together with the

driver of the vehicle.  The vehicle was uninsured on the date of the

accident.

3 The award of the Tribunal was challenged by the First respondent in

appeal  before  the  High  Court  of  Punjab  and Haryana.  A learned

Single Judge of the High Court allowed the appeal on 25 January

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2016 on the ground that there was no justification for the Tribunal to

pass  an  award  against  the  registered  owner  when  there  was

evidence that he had transferred the vehicle and the last admitted

owner was the appellant herein. In the view of the High Court, the

Tribunal ought to have passed an award only against the appellant

as the owner. In coming to this conclusion the High Court relied upon

two decisions of this Court :  HDFC Bank Limited v  Reshma1 and

Purnya Kala Devi v State of Assam2.   

4 On behalf of the appellant, it has been submitted that the High Court

has proceeded on a manifestly erroneous construction of the legal

position. It has been urged that Section 2(30) of the Motor Vehicles

Act, 1988 indicates that the person in whose name a motor vehicle is

registered is the owner and the only two exceptions to that principle

are where such a person is a minor or where the subject vehicle is

under  a  hire  purchase  agreement.  The  decision  of  this  Court  in

Purnya  Kala  Devi (supra),  it  has  been  submitted,  related  to  a

situation where the offending vehicle had been requisitioned by a

state government.  Similarly, the decision in  Reshma (supra) dealt

with  a  situation  where  the  vehicle  had  been  financed  against  a

hypothecation agreement.  It was in this background that this Court

held  that  the  person  in  possession  of  the  vehicle  under  a

hypothecation agreement was to be treated as the owner.  Having

1  (2015) 3 SCC 679 2  (2014) 14 SCC 142

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regard to the definition contained in Section 2(30), it was urged that

the High Court was in error in foisting the liability on the appellant

who is not the registered owner of  the vehicle.   Learned counsel

appearing on behalf of the appellant submitted that in Pushpa alias

Leela v Shakuntala3, the position has been clarified by holding that

where notwithstanding the sale of a vehicle, neither the transferor

nor the transferee have taken any step for change in the name of

owner in the certificate of registration, the person in whose name the

registration stands must be deemed to continue as the owner of the

vehicle for the purposes of the Act.  

5 On the other hand, learned counsel appearing on behalf of the First

respondent  supported  the  judgment  of  the  Tribunal  by  submitting

that the appellant as the person in physical possession and control

of the vehicle was liable. Learned counsel appearing on behalf of the

First respondent also relied on the decisions of this Court in Purnya

Kala Devi and Reshma. Learned counsel submits:

(i) “The  sale  of  a  vehicle  also  results  in  a  presumable  change  of physical possession and control of the vehicle from the vendor to the vehicle.  The registered owner at  the best  can be regarded as an ostensible owner of the vehicle but not the real owner after the sale of  the  vehicle,  even  if  his  name  is  there  on  the  Registration Certificate of the vehicle;

(ii) The definition of   owner in  the Section 2(30)  of  the Act,  is  not  a complete  code  and  the  exceptions  contained  therein  are  not exhaustive;

(iii) The  Court/Tribunal  should  apply  the  test  whether  the  registered owner  has,  through  legitimate  means,  fully  relinquished  his possession and control over the vehicle or not. If the answer is in the

3  (2011) 2 SCC 240

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affirmative,  he  cannot  be  made  liable  and  the  person  who  is  in physical possession and control of the vehicle should be made liable; and

(iv) Section 50 casts the onus of changing the name in the registration certificate,  on  both  the  transferor  as  well  as  the  transferee,  and hence the transferor (the registered owner) cannot be made liable, and the transferee who has control over the use of vehicle should be made liable.”   

6 The expression ‘owner’ is defined in Section 2(30) of the Act, 1988,

thus: “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.”

The person in whose name a motor vehicle stands registered is the owner of

the vehicle for the purposes of the Act.  The use of the expression ‘means’ is a

clear indication of the position that it is the registered owner who Parliament

has  regarded as the  owner  of  the  vehicle.  In  the  earlier  Act  of  1939,  the

expression ‘owner’ was defined in Section 2(19) as follows: “11…2. (19) ‘owner’ means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase agreement, the person in possession of the vehicle under that agreement.”

Evidently, Parliament  while enacting the Motor  Vehicles Act,  1988 made a

specific change by recasting the earlier definition.  Section 2(19) of the earlier

Act stipulated that where a person in possession of a motor vehicle is a minor

the guardian of the minor would be the owner and where the motor vehicle

was subject to a hire purchase agreement, the person in possession of the

vehicle  under  the  agreement  would  be  the  owner.   The  Act  of  1988  has

provided in the first part of Section 2(30) that the owner would be the person

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in whose name the motor vehicle stands registered.  Where such a person is

a minor the guardian of the minor would be the owner. In relation to a motor

vehicle  which  is  the  subject  of  an  agreement  of  hire  purchase,  lease  or

hypothecation, the person in possession of the vehicle under that agreement

would be the owner.  The latter part of the definition is in the nature of an

exception  which  applies  where  the  motor  vehicle  is  the  subject  of  a  hire

purchase  agreement  or  of  an  agreement  of  lease  or  hypothecation.

Otherwise the definition stipulates that for the purposes of the Act, the person

in whose name the motor vehicle stands registered is treated as the owner.  

7 Section  50  deals  with  the  procedure  for  transfer  of  ownership,  and

provides as follows: “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) in  the  case  of  a  vehicle  registered  outside  the  State, within  forty-five  days  of  the  transfer,  forward  to  the registering authority referred to in sub-clause (i)—  (A)  the no objection certificate  obtained under section 48; or  (B)  in  a  case  where  no  such  certificate  has  been obtained,—  (I) the receipt obtained under sub-section (2) of section 48; or  (II)  the  postal  acknowledgement  received  by  the transferred if he has sent an application in this behalf by registered post acknowledgement due to the registering authority referred to in section 48,  together with a declaration that he has not received any communication  from  such  authority  refusing  to  grant such  certificate  or  requiring  him  to  comply  with  any direction  subject  to  which  such  certificate  may  be granted;

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(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 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) Where—  (a) the person in whose name a motor vehicle stands registered dies, or  (b) a motor vehicle has been purchased or acquired at a public  auction  conducted  by,  or  on  behalf  of, Government,  

the person succeeding to the possession of the vehicle or, as the case may be, who has purchased or acquired the  motor  vehicle,  shall  make  an  application  for  the purpose of transferring the ownership of the vehicle in his  name,  to  the  registering  authority  in  whose jurisdiction he has the residence or place of  business where the vehicle is normally kept, as the case may be, in such manner, accompanied with such fee, and within such  period  as  may  be  prescribed  by  the  Central Government.  

(3) If the transferor or the transferee fails to report to the registering authority the fact of transfer within the period specified in clause (a) or clause (b) of sub-section (1), as the case may be,  or  if  the person who is  required to make an application under sub-section (2) (hereafter in this section referred to as the other person) fails to make such  application  within  the  period  prescribed,  the registering  authority  may,  having  regard  to  the circumstances of the case, require the transferor or the transferee, or the other person, as the case may be, to pay, in lieu of any action that may be taken against him under  section  177  such  amount  not  exceeding  one hundred rupees as may be prescribed under sub-section (5):  

Provided that  action under section 177 shall  be taken against  the  transferor  or  the  transferee  or  the  other person, as the case may be, where he fails to pay the said amount.  

(4)  Where  a  person  has  paid  the  amount  under sub-section  (3),  no  action  shall  be  taken  against  him under section 177.

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(5)  For  the  purposes  of  sub-section  (3),  a  State Government  may  prescribe  different  amounts  having regard to the period of delay on the part of the transferor or  the  transferee  in  reporting  the  fact  of  transfer  of ownership of the motor vehicle or of the other person in making the application under sub-section (2). 32  

(6) On receipt of a report under sub-section (1), or an application  under  sub-section  (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.”

8 The decision of the Bench of two judges of this Court in Pushpa alias

Leela (supra) was in a case where the offending vehicle was registered in the

name of J who had sold it to S on 2 February 1993 and had given possession

to the transferee. On the date of the transfer the truck was covered by a valid

policy of insurance.  Despite the sale of the vehicle the change of ownership

was  not  reflected  in  the  certificate  of  registration.  The policy  of  insurance

expired on 24 February 1993. Subsequently S took out an insurance policy in

the name of the registered owner and it was valid and subsisting when the

accident took place on 7 May 1994. The Tribunal held that no liability to pay

compensation attached to  J  since he  had ceased to  be  the  owner  of  the

vehicle after its sale on 2 February 1993.  S alone was held to be liable for the

payment of compensation to the claimants. On these facts the Bench of two

judges of this Court held as follows: “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 2-2-1993.”                          (Id at page 244)

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In  the  course  of  its  decision,  the  two  judge Bench  referred  to  the  earlier

decision in  Dr T V Jose v  Chacko P M4, which had arisen under the Motor

Vehicles Act 1939.  In that context, this Court had held thus:

“12…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  RTO  as  the  owner.  The appellant could not escape that liability by merely joining Mr Roy Thomas in these appeals.” (Id at page 244)  

The decision in Dr T V Jose was followed in P P Mohammed v K Rajappan5.

Noticing that  the decision in  Dr T V Jose was  rendered under  the Motor

Vehicles Act, 1939, the Court in  Pushpa held that the ratio of the decision

“shall apply with equal force to the facts of the cases arising under the 1988

Act” in view of the provisions of Section 2(30) and Section 50.  Consequently,

the view of  this  Court  was  that  the  person whose name continues  in  the

record of the registering authority as the owner of the vehicle is equally liable

together with the insurer. 9 The decision of a three judge Bench of this court in Purnya Kala Devi

(supra) involved a situation where the registered owner of a vehicle involved

in  an  accident  denied  his  liability  to  compensate  the  legal  heirs  of  the

deceased victim on the ground that the state government had requisitioned

the vehicle. On the date of the accident, the vehicle stood requisitioned under

the Assam Requisition and Control of Vehicles Act, 1968. The state failed to

establish  that  the  vehicle  was  released from requisition  after  service  of  a

4  (2001) 8 SCC 748 5  (2008) 17 SCC 624

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notice in writing to  the owner, to take delivery, as required by Section 5(1) of

the state Act. Under the Assam Act, it was only upon the service of a notice to

that effect that no lability for compensation would lie with the requisitioning

authority. The High Court absolved the state government on the basis of the

definition of the expression ‘owner’ in Section 2(30) of the Motor Vehicles Act,

1988. Reversing the judgment, this Court held thus :  

“16..the High Court, without adverting to Section 5 of the Assam Act, merely on the basis of the definition of “owner” as contained in Section 2(30) of the 1988 Act, mulcted the award payable by the owner of the vehicle. The High Court failed to appreciate that at  the  relevant  time  the  offending  vehicle  was  under  the requisition of Respondent 1 State of Assam under the provisions of  the  Assam  Act.  Therefore,  Respondent  1  was  squarely covered under the definition of “owner” as contained in Section 2(30) of the 1988 Act. The High Court failed to appreciate the underlying  legislative  intention  in  including  in  the  definition  of “owner”  a  person  in  possession  of  a  vehicle  either  under  an agreement of lease or agreement of hypothecation or under a hire-purchase agreement to the effect that a person in control and  possession  of  the  vehicle  should  be  construed  as  the “owner”  and  not  alone  the  registered  owner.  The  High  Court further  failed  to  appreciate  the  legislative  intention  that  the registered owner of the vehicle should not be held liable if the vehicle was not in his possession and control. The High Court also  failed  to  appreciate  that  Section  146  of  the  1988  Act requires that no person shall  use or cause or allow any other person  to  use  a  motor  vehicle  in  a  public  place  without  an insurance policy meeting the requirements of Chapter XI of the 1988 Act and the State Government has violated the statutory provisions of the 1988 Act. The Tribunal also erred in accepting the allegation of Respondent 2 that the vehicle was released on the date of the accident at 10.30 a.m. and the accident occurred at  10.30 a.m.  without  any evidence even though in  the claim petition, it  was stated that the accident had occurred at 10.15 a.m.”           (Id at page 147)

10 The  above  observations  would  indicate  that  a  combination  of

circumstances  cumulatively  weighed  with  this  Court.  Significantly,  for  the

purposes of the present discussion, what emerges from the above judgment is

the  circumstance  that  the  motor  vehicle  was  on  the  date  of  the  accident

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requisitioned by the state  government.  Requisitioning by its  very nature is

involuntary  insofar  as  the  person  whose  property  is  requisitioned  is

concerned. This Court observed that it is the person in control and possession

of  a  vehicle  which  is  under  an agreement  of  lease,  hypothecation or  hire

purchase who is construed as the owner and not the registered owner. The

same  analogy  was  drawn  to  hold  that  where  the  vehicle  had  been

requisitioned,  it  was  the  state  and  not  the  registered  owner  who  had

possession  and  control  and  would  hence  be  held  liable  to  compensate.

Purnya Kala Devi  does not hold that a person who transfers the vehicle to

another but continues to be the registered owner under Section 2(30) in the

records of the registering authority is absolved of liability. The situation which

arose before the court in that case must be borne in mind because it was in

the context of a compulsory act of requisitioning by the state that this Court

held, by analogy of reasoning, that the registered owner was not liable.  

11 The subsequent decision of a Bench of three judges of this Court in

HDFC  Bank  Limited v  Reshma (supra)  involved  an  agreement  of

hypothecation.  The Tribunal  held the financier  of  the vehicle to jointly and

severally liable together with the owner on the ground that it was under an

obligation to ensure that the borrower had not neglected to get the vehicle

insured. The High Court had dismissed the appeal filed by the Bank against

the order of the Tribunal holding it liable together with the owner. In the appeal

before this Court, Justice Dipak Misra (as the learned Chief Justice then was)

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adverted during the course of the judgment to the principles laid down by this

Court in several earlier decisions, including of this Court6.    Noticing that the case before the court involved a hypothecation agreement,

this Court held:

“22. 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 the subject of an agreement of hypothecation and was in possession and control of Respondent 2.”(id at page 693)

Since the Second respondent was in control and possession of the vehicle

this Court held that the High Court was in error in fastening the liability on the

financier.  The  failure  of  the  Second  respondent  to  effect  full  payment  for

obtaining an insurance cover was neither known to the financier nor was there

any collusion on its part. Consequently, the High Court was held to be in error

in fastening liability on the financier.  

12 The  consistent  thread  of  reasoning  which  emerges  from  the  above

decisions is that in view of the definition of the expression ‘owner’ in Section

2(30), it is the person in whose name the motor vehicle stands registered who,

6  Mohan Benefit (P) Ltd. v. Kachraji  Raymalji, (1997) 9 SCC 103 : 1997 SCC (Cri) 610;   Rajasthan SRTC v. Kailash Nath Kothari, (1997) 7 SCC 481 ;  National Insurance Co. Ltd. v. Deepa Devi, (2008) 1 SCC 414 : (2008) 1 SCC (Civ) 270 : (2008) 1 SCC (Cri) 209;   Mukesh K. Tripathi v. LIC : (2004) 8 SCC 387 : 2004 SCC (L&S) 1128, Ramesh Mehta v. Sanwal Chand Singhvi  (2004) 5 SCC 409, State of Maharashtra v. Indian Medical Assn. (2002) 1 SCC 589 : 5 SCEC 217, Pandey & Co. Builders (P) Ltd. v. State of Bihar (2007) 1 SCC 467  and  placed  reliance  on Kailash  Nath  Kothari [Rajasthan  SRTC v. Kailash  Nath  Kothari,  (1997)  7  SCC 481, National  Insurance Co.  Ltd. v. Durdadahya Kumar Samal :  (1988)  1 ACC 204 :  (1988)  2 TAC 25 (Ori) and Bhavnagar Municipality v. Bachubhai Arjanbhai : 1995 SCC OnLine Guj 167 : AIR 1996 Guj 51;  Godavari Finance Co. v. Degala Satyanarayanamma, (2008) 5 SCC 107 : (2008) 2 SCC (Cri) 531;  Pushpa v. Shakuntala, (2011) 2 SCC 240 : (2011) 1 SCC (Civ) 399 : (2011) 1 SCC (Cri) 682;   T.V. Jose  [(2001) 8 SCC 748 : 2002 SCC (Cri) 94] , SCC p.  51, para 10;  U.P. SRTC v. Kulsum, (2011) 8 SCC 142 : (2011) 4 SCC (Civ) 66 : (2011) 3 SCC (Cri) 376;  Purnya Kala Devi v. State of Assam, (2014) 14 SCC 142 : (2015) 1 SCC (Cri) 304 : (2015) 1 SCC (Civ) 251.”

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for the purposes of the Act, would be treated as the ‘owner’. However, where

a person is a minor, the guardian of the minor would be treated as the owner.

Where a motor vehicle is subject to an agreement of hire purchase, lease or

hypothecation, the person in possession of the vehicle under that agreement

is  treated  as  the  owner.  In  a  situation  such  as  the  present  where  the

registered owner has purported to transfer the vehicle but continues to be

reflected in the records of the registering authority as the owner of the vehicle,

he would not stand absolved of liability. Parliament has consciously introduced

the definition of the expression ‘owner’ in Section 2(30), making a departure

from the provisions of Section 2(19) in the earlier Act of 1939. The principle

underlying the provisions of Section 2(30) is that the victim of a motor accident

or, in the case of a death, the legal heirs of the deceased victim should not be

left  in  a state of  uncertainty. A claimant  for  compensation ought  not  to be

burdened  with  following  a  trail  of  successive  transfers,  which  are  not

registered with the registering authority. To hold otherwise would be to defeat

the salutary object and purpose of the Act.  Hence, the interpretation to be

placed must facilitate the fulfilment of  the object  of  the law. In the present

case,  the  First  respondent  was  the  ‘owner’  of  the  vehicle  involved  in  the

accident  within  the  meaning  of  Section  2(30).  The  liability  to  pay

compensation  stands  fastened  upon  him.  Admittedly,  the  vehicle  was

uninsured.  The  High  Court  has  proceeded  upon  a  misconstruction  of  the

judgments of this Court in Reshma and Purnya Kala Devi.

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13 The submission of the Petitioner is that a failure to intimate the transfer

will only result in a fine under Section 50(3) but will not invalidate the transfer

of the vehicle. In Dr T V Jose, this Court observed that there can be transfer

of  title  by  payment  of  consideration  and  delivery  of  the  car.   But  for  the

purposes of the Act, the person whose name is reflected in the records of the

registering authority is the owner.  The owner within the meaning of Section

2(30) is liable to compensate.  The mandate of the law must be fulfilled.

14 For the above reasons we allow the appeal and direct that the liability to

compensate the claimants in terms of the judgment of the Tribunal will stand

fastened upon the First respondent. The judgment of the High Court is set

aside. In the circumstances of the case, there shall be no order as to costs.     

.............................................CJI   [DIPAK MISRA]

                                                   ...............................................J            [A M KHANWILKAR]

                                                   …............................................J            [Dr D Y CHANDRACHUD]

New Delhi; February  06, 2018