REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6924 OF 2005

Pushpa @ Leela & Ors.                 … Appellants

Versus

Shakuntala & Ors.                … Respondents

J U D G M E N T

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

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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